Kuwait’s Jazeera Airways is considering new narrowbody orders for its Saudi subsidiary, despite the jet fuel crisis caused by the Iran war posing a bigger crisis for airlines than the Covid-19 pandemic, according to the carrier’s boss.
The airline is looking to add more planes to its all-Airbus fleet of single-aisle jets as it prepares to launch domestic and international charter services from Saudi Arabia in the fourth quarter of this year, Barathan Pasupathi, chief executive of Jazeera Airways, told The National at this week's Iata annual general meeting in Rio de Janeiro.
“Further growth is imminent for Jazeera Airways. It’s very clear that the current aircraft numbers are not enough for Jazeera Airways, hence we are at the drawing board,” Mr Pasupathi said. “We need them very soon.”
CEO, Jazeera Airways
He declined to specify the number of aircraft required but said: “We’re a very sensible, disciplined airline. You’ll never see Jazeera ordering 200, 300 aircraft.” He also did not specify the plane models as “everything is on the drawing board”.
Mr Pasupathi also teased the possibility of buying planes from other manufacturers if earlier slots become available as airlines become increasingly frustrated with jet delivery delays at both Airbus and Boeing. “We will also not be shy of changing types because if you need aircraft to come in at a certain time faster, then we may have to change types.”
The move comes after Jazeera Airways’ Saudi subsidiary won a licence to operate charter flights from Jeddah. It expects to serve up to 33 destinations, offer about 1.4 million seats and operate a fleet of seven aircraft.
The comments come as regional airlines navigate the fallout from the Iran war that caused operational disruptions, flight suspensions, longer flight reroutes, airspace closures and higher jet fuel costs.
“Aviation is facing its biggest crisis in history. It is worse than the pandemic,” Mr Pasupathi said, pointing to jet fuel prices of more than $200 per barrel and fuel shortages facing airlines.
While the pandemic hit airlines worldwide, the Iran war has disproportionately affected Middle East operators. Collectively, they are projected to generate a net loss of $4.3 billion this year, from profit of $7.2 billion last year, while other regions are still in the black, according to Iata.
Mission Barakah
Jazeera Airways was among the carriers directly affected when Kuwait International Airport was closed for 57 days following attacks on it. It shut down again briefly after strikes in June.
Jazeera responded to the disruptions in March by relocating its operations to Saudi Arabia where it set up a base in Qaisumah with five planes before moving its operations to Dammam, Mr Pasupathi said.
During the 46 days of operations out of Saudi, Jazeera moved 200,000 passengers from the kingdom, ran 9,000 bus rotations between the two countries and converted, he said.
The strategy, dubbed Mission Barakah, allowed it to operate 14 planes to 27 destinations. Operations returned to Kuwait on April 26 when the airport reopened, albeit under curfew.
The disruption came with a substantial financial cost.
“Between last year and this year, our performance went down by $20 million,” the executive said. In the first quarter, it posted a loss of 1.1 million Kuwaiti dinar, down from profit of 4.8 million dinar in the same quarter last year.
Meanwhile, costs rose significantly. Fuel prices hit $220 per barrel, insurance charges reached nearly $50,000 a flight to war-affected destinations, alongside the cost of relocating operations, running buses and housing staff in hotels, Mr Pasupathi said.
As a result, ticket prices went up by nearly 100 per cent compared to last year, as fuel prices shot up 250 per cent, he added, expecting air fares to remain high until year-end.
Jazeera, which is not hedged for fuel, responded with cost control measures. This included sending 80 per cent of its 1,600 staff on leave, operating 12 per cent of capacity, downsizing the workforce by around 3 per cent, renegotiating contracts with lessors and reposting aircraft to destinations like Egypt that became more popular, he said.
Since then, employees returned fully and operating 70 per cent of the flight schedule.
The June attacks on the Kuwait airport led to at least one death and more than 60 injured.
“This sent shivers down everyone’s spine in the aviation ecosystem,” he said.
Iata’s Middle East chief Kamil Alawadhi has estimated that the severe damage at Kuwait’s Terminal 1 will take one year to repair. The terminal serves foreign carriers while Jazeera operates out of Terminal 5.
Summer travel
Looking ahead, Mr Pasupathi said it is difficult to predict summer travel patterns as travellers are only booking seven to 14 days in advance.
However, the airline plans to add 2.1 million seats this summer and is recording “very good” bookings so far especially to diaspora markets like Egypt and India, he said.
As Jazeera and Kuwait Airways are the only carriers operating in the country, “we should do relatively well”.
