Budget airline goes upmarket

Jazeera Airlines plans to add additional cabin classes as part of a bold plan to boost revenues by attracting business and leisure travellers.

Jazeera Airways plans to move away from its budget airline roots and add additional cabin classes as part of plans to boost revenues by attracting business and leisure travellers. New management is ushering in changes at the Kuwait-based airline, including the new cabin classes as well as targeting other travel segments and adding more bases of operation throughout the region, in a bid to become one of the top regional carriers.

"Our vision is to become a leading regional network provider in the Middle East and North Africa, and to do this the company will become a multi-market, multi-hub and multi-class operator," said Stefan Pichler, the new chief executive. Mr Pichler joined as chief executive in June and had worked for Thomas Cook, Lufthansa and Virgin Blue. The publicly traded airline launched as a low-cost carrier in 2005 and added economy-plus seats a year later, but Mr Pichler declined to be drawn into what additional services, such as first and business class, he planned to develop.

The airline was adding new cabin offerings partly to cater to the unique travel tastes of the Gulf, where passengers expect quality services, he said. "The Middle East has a different cultural background," he said. "People expect to be offered an all-inclusive product and a certain level of service, and you can't just neglect that." Jazeera was launching direct services to Abu Dhabi on October 1 because the emirate was "one of the fastest growing cities in the Middle East and has a highly ambitious growth strategy", he said.

To demonstrate its commitment to its Dubai route and wider Gulf services, it is also opening a sales and service office in Dubai today. Jazeera expects to fly to 82 routes in the Middle East within the next five years and is in talks with the Kuwaiti government to set up a terminal for its operations, according to officials last year. Jazeera has been hit by the global slump in air travel this year, which is forecast to cause losses of US$11 billion (Dh40.67bn) worldwide. In the first half of the year, it posted a loss of 2.23 million dinars (Dh28.5m).

Last year, the airline launched a separate company, Sahab Aircraft Leasing , to finance its deliveries of Airbus A320s aircraft. This will allow it to free up capital and use cash flow reserves for the expansion into new hubs and new cabin products, Mr Pichler said. In its plans to become a "multi-market" airline, Jazeera plans to court business and leisure travellers by adding a corporate sales team as well as improving its brand image, he said.

Its focus on adding hubs will pit it against Air Arabia, the Sharjah-based low-cost carrier, which opened a new arm in Morocco earlier this year and announced plans for Air Arabia Egypt earlier this month. Although Jazeera opened a second hub in Dubai in 2007, it pulled out this summer, saying the performance did not meet expectations. But Mr Pichler declined to comment on how rapidly Jazeera expected to implement its plans.

"Some developments are very imminent, while others will take a little time. We want to stay in the driver's seat in terms of market expectation," he said. [e-mail]