RAK Airways, Full Circle.

On January 1, 2014 RAK Airways suspended operations for the second time, citing rising costs, the conditions of the aviation industry and geopolitics. The airline indicated that the board will review the state of the airline and decide whether the airline will resume operations.

As usual things move fast in MENA. On February 2, 2014 Ras Al Khaimah Directorate of Civil Aviation signed an agreement with Air Arabia, designating it the National Carrier of Ras Al Khaimah. This morning February 4, 2014 Adel Ali, Air Arabia Group CEO confirmed to Dubai Eye that Ras Al Khaimah will be the airline's fourth hub and will be basing its aircraft there to operate to destinations in the Middle East and the Indian Sub Continent.

RAK Airways was founded in 2006 as the fifth UAE national carrier based in Ras Al Khaimah. It started operating in 2007. By 2009 the airline suspended operations. It announced the resumption of operations in 2010 but actually restarted in 2011. The second time around the airline was more organized and operated to ten (10) cities  (Abu Dhabi, Riyadh, Jeddah, Doha, Amman, Peshawar, Lahore, Islamabad, Calicut and Katmandhu) using two A320s in two (2) class configuration 8 Business and 160 in Economy.  RAK Airways operated to Abu Dhabi and had a code share with Etihad to London Heathrow, Manchester, Dublin, Geneva and Bangkok.

RAK Airways never had a defined business plan, other than the usual rhetoric of development of tourism and aviation in Ras Al Khaimah, and if it did it was never published. The airline had 7 CEOs in as many years.

Ras Al Khaimah is emerging as a tourist destination with 1.2 million visitors last year and global hotel chains like Hilton, Waldorf Astoria, Crowne Plaza, Rotana and others opening hotels and resorts in the emirate. These tourists preferred to fly to Dubai, since the majority of them came from destinations not served by RAK Airways.

Ras Al Khaimah government realized that going it alone in the Northern Emirates with their 800,000 inhabitants is not going to work out. Developing tourism using limited regional destinations does not work when most of the tourists hail from Europe and North America.

The question that raises itself now is how would Fujairah react to all of this, if at all? The emirate is developing into an important oil terminal with oil related industrial activities after the inauguration of the pipeline from Abu Dhabi to Fujaira. It boasts tourist areas like Khor Kalba, Massafi and the proximity to Khor Fakkan, the Sharjah resort on the Gulf of Oman. It is linked by a modern super highway to the major cities of the UAE, reducing travel times.

Another interesting issue will be the Ajman International Airport (under construction) which is in close proximity to Sharjah International Airport and Dubai International Airport and is raising ATM concerns within the UAE.

We wait and see

Anniversaries

It appears that everything I was involved with in my professional life has an anniversary and a milestone this year.

• Royal Jordanian (RJA) is celebrating its 50th Anniversary
• Air Arabia (ABY) is celebrating its 10th Anniversary
• Etihad (EY) is celebrating its 10th Anniversary
• Al Jaber Aviation (AJA) celebrated its 5th Anniversary

My involvement with each organization varied but I always managed to learn  and contribute.

I joined RJA at a time when the airline was expanding its fleet with new B727s, B747 and L1011s. A new cycle of  B707 heavy maintenance (D) checks was starting and the decision was made to bring the capability inhouse. The planning was done and the new hangar at QAIA was used before the airport was completed. It was an exciting time, then capabilities for B727 and L1011 was developed, it felt like routine. The next milestone was the introduction of the A310s and A320s into the fleet.

Of course there were other challenges some good others not so good. The development of third party contract maintenance that went a long way to cover the Maintenance and Engineering Department costs. Then the first Gulf War that shut down the airlines for four (4) months; but every challenge is an opportunity we performed a B727 D check and B707 D check for a customer. RJ has a pioneering spirit, it was always a tad bureaucratic, but when the chips were down everyone came together and made things happen, a real can do attitude.

At the age of 50 the airline still has this attitude, it has the ability to rebound from challenges; most of them global geopolitical (wars, uprisings, financial crisis, etc.).

RJ brought home the value of "if there is a will there is a way" and doing great things on a budget. I spent eighteen (18) years there and made life long friends.

Start ups are messy affairs. They are hard work and require focus, perseverance and resilience, and all that before first flight. Once operations start it is even messier.

I was at GAMCO now ADAT at the time Air Arabia and Etihad started. I was tasked to ensure an MCC and a scheduling unit are operational at the time the airline begin operations. Both airlines started within a week of each other, ABY on 28 October and EY on 5 November 2003. Small beginnings leading to greater things.

Working for an LCC is a life changing experience. I joined Air Arabia on November 1, 2004, a year after commencing operations. An LCC is a way of life that looks at value for money, efficiency and productivity in a way no legacy airline ever does. I worked for RJA and we were frugal, ABY took that to a higher standard.

Legacy airlines ignored ABY at first as a flash in the pan and an experiment that is bound to fail. Until they felt the heat and then we felt the pressure. Ten profitable years later, ABY is there to stay, true to its business model when others came and failed or changed.

I joned Al Jaber Aviation in October 2008 going from an LCC to a VVIP Corporate Jet Operator. Getting an AOC must be one of the most challenging things a person can do. I heard stories in ABY of working out of a few offices in Sharjah Cargo Building. Well at AJA it was a few offices out of Al Bateen Airport when it was still an air base. Having GCAA inspections while still building offices and  getting manuals approved and licenses accepted before starting operation requires staying power. The first aircraft, an Embraer Legacy 600 was delivered three weeks before the AOC was issued. The proving flights and final GCAA inspections were performed and the AOC was delivered on June 1, 2009 at the time of the second Legacy 600 delivery. The AMO Certificate was issued on 28 May 2009. Operating business jets is totally different than scheduled carriers. There is no schedule and flights are launched at relatively short notice, because even planned flights change at short notice as clients' change plans.

Thirty Five years later, I am starting all over again. Start ups are still messy and require focus, staying power and resilience.

Well 2013 is definitely a year of challenges and milestones. These four (4) airlines regardless of their age still face challenges some are internal but most are external. They all need to look internally and determine what is needed for them to thrive in the next decade. What brought them so far may not and probably is not what will take them forward. After all, successful companies fail because they insist on doing what made them successful in the first place, ignoring the ever changing environment they operate in. Things change and so should organizations.

For now, Happy Anniversary to all four airlines and to my friends and colleagues who are still there, moved on or retired. We all shared experiences, challenges and yes good times. Looking forward to the continued success of Royal Jordanian, Air Arabia, Etihad and AJA.

All Happening in the UAE

The United Arab Emirates Aviation sector is by far the most dynamic and vibrant in the region both the GCC and the wider MENA. No day passes without an amazing activity.

Emirates Airlines is the most valuable airline brand in the world for 2012, ahead of Singapore Airlines and Lufthansa at USD 3.7 Billions. The airlines continues as the role model and bench mark for its regional competitors. The airline signed a 10 years code share agreement with Qantas, an agreement that has far reaching implications in Asia and to oneworld.

In Seattle, Tim Clark said that Emirates will buy another 40 A380s to bring the total to 130 aircraft. One problem is space at Dubai Airport. The airline will become the largest airbus customer. On the same note Emirates started its A380 service to Melbourne this Thursday, 27 September 2012. He also told Boeing that the first B777-300ER will be retired by 2017 and the airline would like to replace the fleet with a new updated B777. It was a good time to start "bellyaching" to get a new jet started.

On the domestic front, Rotana Jet started its double daily flight to Al Ain from Abu Dhabi Thursday,
27 September 2012, bringing its domestic network to four (4) destinations. Ten (10) days after the inauguration of its daily flight to Fujairah. Rotana Jet is planning flights to Sharjah, Ras Al Khaimah and Al Ruwais.

Air Arabia will fly to Erbil on 14 October, its second Iraq destination. Not to be outdone Flydubai is launching new destinations to Bucharest on 1 October 2012 and Skopje from 18 October 2012.

Etihad Airways announced an increase to daily flights to Istanbul starting 1 January 2013. Two (2) weeks ago Etihad CEO led a team of Etihad Airways and airberlin executives to Boeing to look over the B787.
Both carriers are integrating their B787 programs and streamlining their infrastructure and purchasing activities. Etihad has forty one (41) and airberlin fifteen (15) B787s on order. Etihad has nine (9) B777s
to be delivered in the coming fifteen months.

To top it all the GCAA announced that August 2012 had almost sixty (60) thousands air traffic movements
a 6.9% increase over 2011.

Airline Challenges in MENA and GCC

Air Arabia announced its 2010 results which showed a 31.5% decline in net profit compared to 2009 (309.559 million vs 452 million AED) similarly Royal Jordanian announced its 2010 results which showed a 66% decline in net profit compared to 2009 (9.8 million vs 28.6 million JOD). Both carriers had higher revenues, load factors and passenger numbers carried. While passenger numbers and revenues have increased yields are coming under pressure.

The field is getting crowded in the GCC and MENA and not only because of regional airlines but also due to the increase in number of airlines operating into the region.

When everybody advocates  "cost savings" as the immediate reaction to lower financial results, the region in addition to lowering costs has always embarked on expanding their networks. Cost savings are subject to the law of diminishing returns and has a finite contribution whereas expansion, the sky is the limit, through the efficient use of assets and resources. This is why almost every airline in the region is expanding its network in 2011. Of course expansion has its difficulties where European and North American legacy airlines fight it every step of the way.

One thing to remember these profits were made on core business, imagine if ancillary fees are added. North American and European airlines showed increased profits in 2010 as a result of Ancillary Fees revenues.

2011 has started with several challenges, upheaval and regime changes in MENA and GCC and the resultant rise of oil prices which were already on an upward spiral did not deter the increase of January 2011 passenger traffic in several countries. These are resilient economies that have gone through major conflicts in the last few decades. Oil prices while affecting airlines is a good thing for the gulf countries where affluence is dependent on oil revenues.

While 2011 looks more challenging than previously thought, these challenges are potentially great opportunities.

Airline Privatization in GCC/MENA

The region so far has seen two successful IPOs, Air Arabia and Royal Jordanian.

Air Arabia's privatization was quick and easy and it came after 3 profitable years, in March 2007.

Royal Jordanian's privatization was a longer and harder process, the IPO was launched in November 2007, after 3 years of profitability. However, the idea started in the late 1980s and was delayed by political events and armed conflicts. Non core activities were sold or partially sold off by the Government to pay off the airline debts and included the Duty Free, Catering, Training Center and Simulators, Maintenance and Engine Overhaul Facilities and its Corporate Aviation operation. The process was systematic and seriously started in 2000 with the sale of the Duty Free to Aldeasa and ended in 2006 when the government was ready to sell off 74% of the total shares.

At this time there are two airlines that are slated for privatization Saudi Arabian Airlines and Kuwait Airways. Both are unprofitable and highly subsidized by the their owners (governments).

Saudi Arabian Airline's privatization effort included a fleet renewal, a new network management system and sale of assets. 49% of Catering was sold off in July 2008 followed by the Cargo Operations (30%) in October 2008. The airline expects to be privatized in 2012 having signed up Al Ahli Capital and Morgan Stanley as financial advisers. The plan is to sell off Maintenance, Ground Handling and Flying Operations.

As for Kuwait Airways, the government has signed up Citigroup Inc, Ernest & Young and Seabury in August 2010 to handle the privatization of the Airline. The Kuwait Investment Authority is supposed to establish a new legal airline entity which will then be sold to investors, the employees and Kuwaiti nationals. No reports of structuring or fleet renewals have been published and to date all three carriers in Kuwait (Kuwait Airways, Jazeera Airways and Al Wataniyah) are not profitable.

Saudi Arabian Airlines seems to be on track in its efforts to privatize. However, the whole Kuwait Airways privatization process seems to be an enigma. Only time will tell

LCCs Redefining the Travel Market - GCC and MENA

Air Arabia aptly celebrated its 7th anniversary by taking delivery of the first A320 of its 44 aircraft order having finished 28 profitable quarters. YouGov Siraj latest survey revealed that LCCs have changed the travel habits of UAE residents (click here for full story) and I am sure it did the same in the GCC and MENA.

The LCCs reshaped the market by making air travel more affordable and as a result expanded the market by introducing a segment of the population that traveled by land or sea to air travel and most importantly enabled middle class professionals to travel more often on holiday and business.

Seven years ago when Air Arabia started flying, legacy airlines did not pay attention, for them this was a fad and if you ignore it, probably, it will go away.

Well it did not go away, on the contrary the concept flourished and today there are about 7 or 8 airlines operating. The major ones being Air Arabia, Flydubai, NAS Air, Jazeera Airways and Nouvelair. Air Arabia has 2 operating Startups in Egypt and Morocco with the one in Jordan under set up. Jordan has 2 startups Royal Falcon and Petra Airlines and with Air Arabia Jordan coming up this market should prove to be interesting. Etihad has opted for an all economy operation using the A320 which is its version of a quasi low cost operation.

It is true that this year saw the bankruptcy of SAMA Airways in Saudi Arabia and the exit of Bahrain Air from the market to operate as a legacy type airline.  The market is getting crowded and it will eventually determine who is there to stay (at this time, other than Air Arabia all others are not profitable).

The segment faces many problems that range from

• subsidies to Flag Carriers in Saudi Arabia and Kuwait.;
• crowded markets in the UAE and Kuwait;
• competitive pressures from legacy airlines of the region
• competitive pressures from foreign low cost carriers operating into the region 
• relatively small markets;
• lack of secondary airports;
• governments that will not award traffic authorities in order to protect their airlines 

Having said that, the LCC's market share will increase over the coming few years to beyond the existing 6 to 8 percent as it expands the local markets by enabling more and more people to experience air travel.

Air Arabia Jordan

Air Arabia has in the last six (6) years created a brand that transcends the GCC and MENA into the Indian Subcontinent, Africa, CIS and Southern Europe. The Air Arabia brand is probably one the most well known airlines in the region and the most dominant among the Low Cost Carriers in the region, Kudos.

Air Arabia's hub airlines, although new are proving to be successful, both Air Arabia and Air Arabia Morocco have weathered the global recession fairly well and managed to extend the brand reach into Europe. The start of Air Arabia Egypt will only increase that reach.

The announcement of Air Arabia Jordan will further extend that reach into Europe.

Jordan is a different market;
1. For starters it is the least populous with six millions as compared to the UAE at 8 millions or Morocco at 29 millions or Egypt at 75 millions;

2. Most of the Jordanian expatriate community is located in the GCC where competition is very high; on the other hand

3. Jordan has a very liberal aviation regime with unused bilaterals

4. The Tantash Group has one of the largest travel agencies in Jordan which will allow packaging of holidays.

5. Jordan has a vast tourism potential.

One major pitfall is the pace of expansion, that affects the corporate team.

The expansion into Jordan of Air Arabia will definitely change the way Jordanians view air travel in the same manner it has affected the UAE market.

Air Arabia vs flydubai.... Interesting Times

For starter's I have to admit I am an alumni of Air Arabia, I have spent four (4) years there witnessing its expansion, so I may be a little biased.

Air Arabia and flydubai are starting to look more like easyJet and Ryan Air. Starting from the equipment they fly to how they structure their fares.

Air Arabia is well established and is without any doubt the major force in establishing the LCC sector in MENA. The market is where it is because of Air Arabia and in the process it had to fight off almost every legacy airline in the region. It has revolutionized air travel by providing people with affordable air travel, not only at the traditional major destinations but at other under served population centers.

On the other hand flydubai enjoys the backing of the extensive network of Emirates who provides a link to connect with flydubai on its website. It also allows interlining, through check in and baggage handling throughout both networks.

As flydubai's fleet increases and it adds more destinations, it goes into head on competition with Air Arabia. Notwithstanding the wealth and buying power of the population, the UAE market is after all a finite market that is around five (5) to six (6) million people. This prompted the Air Arabia strategy of starting new subsidiary LCCs like Air Arabia Maroc and Air Arabia Egypt.

So the battle will have to be fought not only in the UAE but in the development of the markets in every station they both compete in. flydubai may have a slight advantage by capitalizing on Emirates ability to provide feed and visas, whereas Air Arabia has been present in these markets for years and knows them very well.

There is no doubt that the LCC segment in MENA will develop to eventually become 15% to 20% of the market. Air Arabia will probably remain the top airline in the segment for the coming few years with flydubai catching up as its fleet and network increase.

These are interesting times ahead to watch for as LCCs develop in the MENA region.

In Memory

This is dedicated in memory of the courageous crew of SD2241 that steered the aircraft away from residential areas. May the rest in peace and God's mercy be upon them.

I first came in contact with her in 1990 when she was 21 years old. ST-AKW operated for the Sudan Air Force flying relief supplies into Juba (the capital of Southern Sudan and the province of Central Equatoria).

It arrived into Royal Jordanian Engineering and Maintenance Base for Heavy Maintenance (D Check) a few months before the first Gulf War. This B707-300C was worked hard transporting humanitarian supplies and it was in need of serious maintenance work. Work started on the check after the beginning of the war and lasted for months, after which she became a frequent visitor to Amman for routine maintenance work (C Checks) with the other B707-300C of Sudan Airways.

It was only after eight (8) years and during my work with Air Arabia at Sharjah Airport that I had glimpses of her and her sister ST-AFB as they came to the cargo terminal. It felt like meeting old friends.

An aircraft crash is a very tragic and sad event. The loss affects not only the families of those directly involved but also those who are associated in one way or another with the crew and the aircraft.

Our prayers go to the crew and their families and a farewell to ST-AKW (2/69-10/09) you have served well and long.

NB Airline Industry review has compiled A Photographic Farewell of the A/C

Walking on Hot Coals

Literally walking on hot coals, have you done it, chances are you did not; will you do it, chances are a big NOOOO. Well I did along with a large percentage of Air Arabia staff as part of a motivational outing. Actually it is not that daunting except for the waiver/disclaimer the organisers make you sign (that scares the hell of everybody).

So why do it, because it focuses the mind and make you look straight ahead at your target. The feeling you get after you have walked on these hot coals is tremendous, it is like you have conquered the world and there is nothing that you can not do.

I personally felt exhilaration and was very focused and generally happy, anyway it lasted for a few weeks until life and work caught up with me. Seriously, this helped bonding among staff, it almost became a rallying cry, " you guys walked on hot coals so what is a little competition" and damn, did it work!!!

OK OK I will tell how it is done, I think it is a stretch of 4 to 5 meters of hot coal, at one end you dip your feet in cold water, look ahead concentrate and move with big strides, no running or looking down at your feet. By the time you cross the water has almost evaporated.

Flashbacks

This short trip to Amman on the week end of the 24th has a special significance. It is the first time that I travel through Sharjah with Air Arabia since I have left almost 10 months ago. I can travel without having to see things through the eyes of Manager QA (like duh, get real once one always one).
Having friends in high places I got to use the HALA service at Sharjah International Airport. The airport upgrade completed, going through it was great, just whizzed through and the new First and Business Lounges were a joy, spacious, well lighted and well run. And yes, everybody SMILED.
Having travelled with the Service/Legacy airlines in the last 10 months, it was refreshing to see the young cabin crew of Air Arabia (mostly in their 20s) perform their duties by the book, brought back memories. The interaction between cabin crew and passengers during the service, almost like a souk, the one you only see on a low cost carrier, none of that chicken or beef and plop comes the tray.
It was such a joy to observe the cabin crew smiling and confidently handle the passengers, typical to Amman flight, with infants and toddlers by the dozen. I have known most of them from the day they joined, green and raw and seeing them perform as seasoned professionals, confident and smiling made me very happy.
I had such uneventful flights, even mother nature smiled upon us barely any turbulence.

Thank you guys for being so efficient and so human, you made me so proud

Life is about people some we know, others we wish we did know