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.

2 comments:

  1. Since years airlines such as KU or QR or even AI have been in business due to their Govt restricting all ministries to travel on these national carriers. Such business' & revenues can not survive long.
    Fact is Watania has delivered beyond travelers' expectations since its inception what KU failed to achieve in so many years.

    KU as a brand is at its lowest currently; Even by privatising, it will never become a preferred airline by global or even local travelers. There are quality options available around.

    Thnx,
    Yogesh Pagar

    ReplyDelete

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