Saturday, July 31, 2010

Saudia .... Changes on the Horizon

Recently I read an article at Zawya.com regarding some of the problems facing Saudia entitled "What Ails Saudia" (click here to read full story). Saudia blamed its 2008 losses on its passengers not cancelling their bookings when they decide not to fly.

In these modern times, airlines suffer from overbooking their flights and not from passengers not showing up. The problem of Saudia has a simple solution, do what all the other airline in the world do. If you book
1. through the airline website you pay in advance or;
2. through a travel agent or consultant, you are given a date to pay otherwise the booking is automatically canceled.
So simple shift the money problem to the passenger side of the equation.

But to come out and publicly blame your passengers for your problems shows a lack of sensitivity towards the traveling public and a lack of customer support culture within the organisation. No airline can afford to treat its passengers in such a way.

Saudi Arabia is an oil rich country that is liberalizing its civil aviation rules by allowing domestic carriers to operate and is adopting a more open sky policy within the region. The massive government drive to invest in industry and infra structure and the ensuing social changes that comes with development, needs to be supported by the aviation sector both domestically and internationally.

Saudia can not be complacent, as it approaches privatisation. The airline has a modern fleet with the latest technology. However, the competition will not be only with the domestic airlines but also internationally, with the likes of Emirates, Etihad, Qatar Airways and even the smaller carriers such as Gulf Air, Egypt Air or Royal Jordanian. They have to compete on service and customer relation and satisfaction.

To attribute your problems to your customers (those who eventually pay the salaries) is not the best way to approach your organisational problems. Saudia has inefficiencies, lack of sensitivity to customers and a different work ethics to those that exist in the region.

The privatisation effort should address all these problems and resolve them prior to the airline being actually privatised. These are core issues that need to be put in place as they constitue some of the core values of any airline.

Change will be painful as ever, but if Saudia wants to maintain its position it has to move towards a more customer centric culture, where the passenger is usually right.









Sunday, July 25, 2010

Aviation's Green Shoots

Other than what seemed like a global heat wave in the northern hemisphere, July has been good to the airline industry.

The mood is upbeat, the airlines of the MENA region experiencing the usual 10% to 15% increase in traffic uplift coupled with the expanding networks of Emirates, Etihad, Gulf Air, Air Arabia, Flydubai and Royal Jordanian to name a few. The announcement of a 10 years contract for component support between Flydubai and ADAT signals what maybe a new trend of regional work staying in the region instead of going to European MROs and consolidating ADAT's ambitions of becoming the HUB MRO for the region.

As usual, Emirates set the trend at Farnborough with their B777 order. What was refreshing was the resurgence of leasing company orders, a signal that credit and financing may be available.

But the most interesting and exciting news came from the USA. Most carriers there announced Q1/Q2 profits and traffic increases, something we have not seen much of in the last few years.

The outlook for the remainder of 2010 looks good. Most of the Summer and holiday season still ahead of us promising an increase in traffic and hopefully profits. Barring any major political upheaval, unpronounceable volcanoes or pandemics, 2010 may be the year the airline industry starts its recovery with an IATA profit forecast of two and a half billion dollars for 2010.

Green shoots, hopefully a little bit more, and about time too, it really has been overdue

Monday, July 5, 2010

Kuwait Airways .... Privatization Again

The Privatization of Kuwait Airways by the government has been in the news again with Parliament approving Kuwait Airways budget with a 180 million USD deficit for the fiscal year 2010-2011.

However the airline believes it can auction a 35% stake to foreign and local investors and 40% sold to Kuwaiti citizens (click here for full story from Arabian Aerospace On Line News Service)

For some reason the government believes that people will buy into an entity that has not made money in the last decade or so and have blamed the Iraq invasion in 1990 for all its woes. Furthermore, Kuwait Airways has been investigated since March 2010 for allegations of corruption.

A privatised Kuwait Airways will enter a market place that is very competitive supposedly without its government subsidies and losses. There has been a few failed attempts to restructure the airline and renew the fleet.

Kuwait Airways has lost market share to Jazeera and Wataniya in the last few years and will lose even more without the government support.

Kuwait Airways requires an investment in a major restructuring and fleet renewal that will transform it into a dynamic profit making organisation

Only time will tell how the privatization effort will go and how it will pans out.

I wish my friends in Kuwait Airways all the best.

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