Friday, March 18, 2011

Kuwait - Airline Consolidation

Effective 16 March 2011 Wataniya Airways has ceased all its operations and will enter in a process to determine its future. Jazeera Airways and Kuwait Airways have agreed to carry Wataniya's stranded passengers  on their flights on space available basis upon presentation of their Wataniya tickets. Wataniya provided high end service on its flights.

So what happened, this is a repetition of SAMA closing down on 24 August 2010 in Saudi Arabia.
The similarities are so close. Three airlines, with the national carrier subsidized by the government and the other two airlines having to compete for traffic with no government assistance.

So what happened in Kuwait.. Kuwait had three carriers; Kuwait Airways, the national carrier, owned by the government who wants to privatize the airline. Kuwait Airways has been subsidized by the government through direct cash infusions and preferential rates. The airline is being investigated and has not made money for two decades. Jazeera and Wataniya are publicly traded companies and have competed against Kuwait Airways unsubsidized and gained market share at the expense of national carrier.

Kuwait has a fairly liberal aviation policy and the three airlines had to deal with competition on every city pair with regional and international airlines. The field was definitely overcrowded. In February last year Jazeera acquired Sahaab Aircraft Leasing to diversify into different businesses.

Now what....  Jazeera Airways gets another shot at dominating the regional share of the market in Kuwait, leaving Kuwait Airways to compete on international destinations. Financially, Kuwait Airways will probably continue losing money and Jazeera will probably return to profitability. Will Wataniya fly again, well we have to see, my guess is not in the near future.

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