Peter Hill, ceo of Oman Air, talks about how his carrier has expanded rapidly despite aviation suffering a deep downturn in demand.
You are expanding very quickly at the moment with new aircraft and new products in economy, business, and first. How has the economic environment affected these plans?
The parting of Gulf Air and the Oman government a few years ago and the re-emergence of Oman Air as a national carrier meant there was a big replacement and fleet renewal programme in place which unfortunately coincided with the economic downturn. Unlike many carriers we have not gone for deferring deliveries. We know that the Oman government is anxious to increase the connectivity between Oman and the rest of the world, so we have taken on the challenge of maintaining our development programme, expanding our network and our fleet and we have continued with our aim of putting on a brand new product.
People say ‘You must be crazy', but we say ‘Not really, because we're developing for the medium/ long term'. And it's surprising how you can leverage opportunities at times like this: we are going into new airports, talking with handling agents and catering suppliers and with all of these things we are welcomed with open arms because of the environment and the downturn in their business. When you're negotiating contracts with these sorts of organisations, it's for three or five years with the opportunity of renewing with not such a big increase so we are finding we can drive some pretty keen deals. We are demanding in our deals, we have a great product and we are demanding suppliers match these products. So there is a number of benefits to doing all of this at such a time as this as well. In addition, a lot of people are interested in what we are doing because no one else is doing very much and we are maximising that exposure. I'd say we're getting known quicker than we would have in a crowded market place.
You've said previously that you are not competing directly with Emirates, Eithad and Qatar Airways, but instead are but a point to point carrier. Does this mean that unless someone is going to Oman, they won't encounter you?
Well Oman is a developing destination. It's never been for everybody and it never will be for everybody and that will keep it special. The airline has positioned itself in the same way. We are good value for money but we'll never be the cheapest. So, yes, primarily Oman Air will be for people seeking to travel to Oman but we can offer for the leisure market other destinations which we believe complement Oman - the Maldives for instance, as a two-centre holiday, Oman for a week and the Maldives for a week. With Sri Lanka coming back now, also some niche hotel developments happening there now, we see that as a growing market. There's always been India and we're a big player there because we still have a large ethnic expatriate labour population in Oman. Not so much as in other countries in the region, not least because most of our staff are Omani.
So we are different. Of course we will pick up some fifth or sixth freedom because of the connectivity that our flights offer. But also going in and out of Oman you'll go at times that are quite attractive, not three in the morning because they are primarily a stop on the route to somewhere else. So we are very attractive to those who want to visit Oman. The domestic market is two and a half million and there's a larger percentage of Omanis than expats. Of the Omanis, 60% of them are under 30 and they are starting to travel broad and seek new destinations. So if you look at places like Munich, which is a great inbound market for us in winter, it's an attractive outbound market for Bavaria for us in summer. We would never go into a market unless we believe we can get a daily service out of it.
Which markets do you think could support a first class product?
Primarily Europe: so Frankfurt, Paris and London. We are already in Frankfurt with the three class product. We will be in London by the end of November and in Paris by early next year (on a permanent basis, we're actually three class temporarily at the moment). And then for those markets, also Male (Maldives) and Colombo.
Do you think there's a future for first class?
For our market there is a serious requirement out of Oman for half a dozen first class seats. And out of Europe there is some demand, not huge but people who wants to come and spend a couple of thousands of dollars a night in a hotel in the Maldives or indeed in Oman, they want to be at the front of the plane.
What about your loyalty programme?
We have around 20,000 members and we are conscious that we need to expand the programme. It is a comparatively modest programme, it needs work and it's the next focus for us. There's a lot of work to be done there, but we're finding that the product will start to sell itself and then you have to start to work on where you can leverage the yield.
When will you join an alliance?
At the moment we are too small for alliances - and it would cost us a fortune if we joined one. We've spent a lot of money on the product, so why would I want to downgrade it by code sharing with an airline which would only disappoint our customers? Having said that I recognise the need to codeshare in regions where we wouldn't go into in the near future. We will be very choosy, so we will probably have a partner in a region. So if we extend our product to Kuala Lumpur, out of KL I'll have some kind of partnership with a carrier out of there and the same for when we return to Africa - Nairobi and Dar Es Salaam - the same again. In Europe, it's very difficult because if you're not a member of one of the three alliances you are out in the cold so you have to creative. There'll be some select carriers to work with.
How has the move to T3 Heathrow gone?
Very well, we're in T3. We bought some slots at Heathrow very cheaply at the beginning of the year - a real steal, when everyone was trying to sell them we got them, a good time to buy. They go at a standard time every day, and we got good positions for our counters, and now we're looking for a lounge in T3 and we'll probably have one within six months. You couldn't have done that two years ago, even a year ago.
For an interview with Oman Air's Chief Commercial Officer Barry Brown, please visit
http://www.businesstraveller.com/news/oman-air-gears-up-for-launch-of-a330s [2]