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Fly to the Real Arabia

Interview - September 30, 2014
Oman is in the midst of huge development of its transport. United World asked Mr. Paul Gregorowitsch, CEO of Oman Air, about the overall role of the national carrier in the field of transport and infrastructure as Oman's infrastructure investment is spearheading GDP and socio-economic growth in the country.
The construction of the new terminal of Muscat International Airport aims to position the country as a new gateway for the Middle East. What is the role of Oman Air in this new airport?

The new terminal at Muscat will bring a wealth of new opportunities for the tourism sector in Oman, and for Oman Air. We are working closely with the Government and Oman Airports Management Company (OAMC) to both ensure that visitors receive the very best services at Arrivals and Departures and that the infrastructure prepares the way for further significant growth.

The development of the new airport is being undertaken in four phases. These comprise the initial development, followed by three phases of expansion. The current airport handled more than seven million passengers in 2013, and 2.2 million in the first quarter of 2014 alone. The first stage of the new airport’s development will be able to accommodate up to 12 million visitors a year. The three subsequent phases will ultimately boost the airport's capacity to 24, 36 and 48 million passengers per year. Once the new airport has opened, it will offer 96 check-in counters, 29 passenger boarding bridges and 30 aircraft remote stands, and will be able to process up to 5,500 bags per hour.

Oman Air’s role in this development, as the Sultanate of Oman’s national carrier, is crucial. It will see us not only deploying more staff at check-in and arrivals, but also in vital behind-the-scenes roles, such as baggage handling, ramp staff, marshalling, catering and cargo handling. This is in addition to the increased number of flights that Oman Air will be operating from the airport, as our expansion program develops. As the aircraft that we have on order arrive, we will be offering more domestic and international services, as well as increased frequencies on already-established routes.

Domestic services have already received a boost with the increase in frequencies between Muscat and Salalah and the launch of our new service to Duqm. However, the opening of more new airports in Sohar, Adam and Ras Al Hadd will enable Oman Air to easy and affordable air travel around the Sultanate for both Omani citizens and overseas visitors. Oman Air’s increased international services will also make full use of the new airport’s enhanced capacity. Following the launch in December 2014 of new services to Jakarta and Manila, we anticipate further new routes to a number of exciting destinations. Details of these will be announced closer to the time of their launch.

Salalah Airport and the other regional airports: How is Oman Air the vessel for development in those areas?

Oman Air’s role at Muscat International Airport will be mirrored by that at Oman’s new airports at Duqm, Ras Al Hadd and Sohar, as well as at the expanded Salalah Airport. As regional airports, Duqm, Ras Al Hadd and Sohar will provide much-needed ease of travel for both visitors to Oman and for Omani citizens and Residents in Oman. Oman Air will operate to these Regional Airports and also provide the Ground Handling services the operational staff needed to ensure that our passengers enjoy a smooth journey. Ras Al Hadd, especially, is planned to serve the tourism industry, as the area is already developing a well-deserved reputation for its eco-tourism. Meanwhile, Duqm and Sohar play increasingly vital roles in Oman’s industrial development and economic growth. Duqm Airport commenced operations from July 23, 2014, Sohar Airport is planned to commence in November 2014 and Ras Al Hadd next year.

Salalah Airport is a much larger venture and already welcomes around 10% of the total number of visitors to Oman. The expansion of the airport reflects Salalah’s growing profile as a tourism destination. This profile has already seen Oman Air operate major increases in the number of services offered to the city from Muscat. Southern Oman, of which Salalah is the principal city, is a superb tourism destination throughout the year. It is especially noted, however, for the Khareef, the region’s summer monsoon which brings cooling rains and relief from the heat found elsewhere in the Gulf. As a result, it is attracting large numbers of visitors from throughout the GCC and we expect those numbers to increase steadily for years to come. The development of Salalah Airport is central to this growth and we are proud to be working in partnership with OAMC to bring even greater success and economic prosperity to this stunningly beautiful part of Oman.

We have also been actively supporting the economic growth of, and inward investment into, the Duqm area and its Special Economic Zone. Have already started operating a successful charter service to the city and our investment in such domestic services will continue when the new airports at Sohar, Adam and Ras Al Hadd open.

Challenges: Oil prices increase and competition from other GCC carriers -> Oman Air’s different strategy.

Oil prices remain volatile, but this is an inevitable part of the landscape for any airline and Oman Air plans ahead in order to minimize the impact on ticket prices. Whilst Oman is an oil producing nation, our output is nowhere near as large as some of our neighbors and we always pay market rates for our fuel.

Whilst this could be seen as a disadvantage, it does mean that our fares are set at a realistic level and remain fairly stable, with variations reflecting only the levels of demand within our markets. This is one of a number of elements which make Oman Air’s ongoing strategy different from other GCC carriers. The most significant difference is that Oman Air is a reflection of the Omani national character. Wherever we fly to, we offer an introduction to Oman’s unique hospitality, culture and way of life, and we fly our national flag with pride. Our corporate logo depicts a swirl of frankincense smoke – a product that has been associated with Oman for thousands of years – and many of our overseas staff are Omani, giving travelers and business partners an insight into what they might expect when they touch down in the Sultanate.

Another key differentiator is our aim of bringing as many overseas visitors to Oman as possible, thereby helping to expand our tourism industry and support the national economy. Tourism is a major element in Oman’s ongoing economic development, so Oman Air primarily operates a point-to-point strategy. This means that every Oman Air flight originates in Oman and even those passengers who fly, for example, from London to Bangkok touch down in Oman and get to see – however briefly – a little of the Sultanate. Some of those passengers will be sufficiently charmed to want to visit again for a longer period of time.

We further differentiate ourselves from other GCC carriers not by the size of our fleet or the number of destinations we fly to, but by focusing on quality. Our First Class and Business Class long haul cabins offer some of the longest-flat beds in the skies. Our Business Class seat has been named the world’s best at the Skytrax World Airline Awards for two years running. We were recently voted ‘World’s Best Business Class Airline - Middle East’ and ‘World’s Best Economy Class Airline – Middle East’ at the World Travel Awards. At this year’s Skytrax World Airline Awards, we were delighted to receive the award for ‘Best Staff Service – Middle East’ and we were the first airline in the world to introduce both in-flight mobile phone and in-flight Wi-Fi connectivity. Our website, amenity kits, cabin service and even our annual reports have each won awards. This international acclaim demonstrates that every aspect of our service is achieved to the very highest quality standards. The outcomes include year-on-year increases in the numbers of passengers we have carried and the number of visitors we have introduced to Oman.

The new cargo terminal will have the capacity to handle 260,000 tons of freight annually. Explain the impact of the new airport regarding the logistics sector in Oman and the development of Oman Air Cargo.

Our Cargo operation is a key part of our current strategy. We have invested in cargo facilities in Muscat and Salalah airports, as well as in Pan-GCC and Pan-European trucking operations. We have also entered into a joint venture with DHL to operate a cargo service between Oman and Dubai. The value of our cargo operation to the overall business can be seen by looking at the last two years’ figures. In 2012, our cargo business grew by 29 percent and in 2013 it grew by 15 percent – significantly outstripping global and regional averages in both years. So, not only is cargo a vital element of Oman Air’s operations, but it is also providing effective support for Omani businesses.

The potential for future growth in cargo operations is significant. The port at Salalah already has strong links with Salalah International Airport and Oman Air’s cargo handling here continues to expand. With the imminent opening of the new airports at Sohar and Duqm, the potential for expanding sea-air cargo handling at these locations is considerable. Oman Air is well-placed to take the lead in this area of business.

Major investment opportunities you would highlight for any American companies looking into Oman’s air transport sector?

As Oman Air’s cargo operation with DHL shows, we are always open to working in partnership with other businesses with which we have shared goals. Whether this is in the area of cargo, or other aspects of the aviation industry, such as maintenance, repair and overhaul, training or the provision of technology such as ATC infrastructure, the expansion of Oman’s aviation sector holds huge opportunities for both Omani and overseas businesses.

With the Oman Government bowing out of its part ownership in Gulf Air in 2007, it decided to focus on Oman Air as a vessel for national strategy. Unlike Emirates, Etihad and Qatar that primarily focus on network traffic, Oman Air has a large focus on driving traffic and tourism to Oman.

Please tell us about the new destinations and fleet expansion.

Since we launched our first long haul routes to London and Bangkok in 2007, Oman Air’s network has expanded rapidly and we now fly from Muscat to 43 destinations across the Middle East, Europe, Asia and East Africa. We have a fleet of 30 aircraft – seven Airbus A330s, 17 Boeing B737s, four Embraer E175s and two ATR42s.

We will soon enter a new phase of expansion, which will be heralded by the arrival of the first of 24 aircraft we currently have on order. They comprise 15 Boeing B737s, six Boeing B787 Dreamliners and three Airbus A330s, which will enable us to both open new routes and increase frequencies on a number of our existing routes. We will also be retiring some of our older B737s, so that by the end of next year we will have one of the youngest fleets in the skies.

The first of the new routes that we will offer are to Manila and Jakarta. These services have been planned for some time and will start from December, giving both business and leisure travelers a wonderful opportunity to discover these exciting destinations. Many more new routes will follow and we will be announcing these, alongside increased frequencies, closer to the time of their launch.

The opportunities presented by our investment in new aircraft, however, are not limited to increasing frequencies and opening of new routes. We have also invested in the passenger experience by commissioning new Business Class seats. Following the global acclaim that our current long haul Business Class seats have attracted, these will offer even greater comfort and amenity. They have also been cleverly configured to allow us to offer even more Business Class seats without compromising in any way on the luxury our customers have come to expect. Furthermore, the new in-flight entertainment systems that we have also invested in will offer passengers an even greater range of options and maintain the reputation for innovation that Oman Air first developed when we pioneered in-flight mobile phone and Wi-Fi connectivity.

How is tourism promotion in Oman the main objective of the company?

As I explained previously, an important part of Oman Air’s mission is to increase the number of visitors to the Sultanate and our point-to-point approach is a key part of achieving this. Every international service we operate brings people to Oman, even if they then connect to another onward service. This means that every international passenger stops, however briefly, in Oman. They have the opportunity to stay, or, having seen a little of our nation, to return at a later date.

Alongside this strategy, our partnerships with the travel and hospitality trades – whether they are with hotels and resorts in Oman, or with tour operators overseas – give us the opportunity to offer customers fantastic value on packages, and to jointly promote Oman as an ideal leisure destination. The proof of how well this is working can be seen in the increased numbers of visitors flying with Oman Air and staying in the country. We look forward to developing even more initiatives with the travel and hospitality sector, and to seeing even more visitors discover Oman for themselves. An illustration of how well we work with the trade is the short listing that Oman Air has achieved in two industry awards: the TTG Travel Awards and the Travel Agents’ Choice Awards 2014. The final results of these awards will be announced over the next few weeks, but just being shortlisted is a huge achievement.

Our partnerships with the travel industry are strengthened by the close working relationship we have with the Oman Ministry of Tourism. Over recent years, we have run joint family trips for travel agents and tour operators, and a wide range of press trips to Oman. Furthermore, joint promotions, such as stopover offers and free extra nights in some of Oman’s most prestigious hotels, have attracted many additional visitors. Some of those promotions, such as the stopover offer, continue and we continue to work alongside the Ministry to develop new ideas and creative ways to showcase the Sultanate to international travelers.

International recognition of the airline and potential code-share agreements are good ways of assessing the potential of new markets with low costs for the company. Interested in becoming a partner of any airline alliance following the steps of competitors/partners such as Qatar Airways?

Global airline alliances can offer carriers enormous benefits in terms of drawing in passengers from markets where they previously had little or no presence, sharing marketing costs and profiting from economies of scale. On the other hand, similar reach into new markets can be achieved through the right balance of code share agreements and, by not becoming an alliance member, you can be sure of maintaining the high standards of product and service that your customers expect when they buy their tickets – something that is extremely important for an airline like Oman Air, which has built a global reputation on its outstanding quality. So there are both benefits and drawbacks to alliances. Oman Air will, for the time being, keep a close eye on the range of opportunities available to us and will take a decision if and when we need to.

In the meantime, we have increased the range of choices we offer our customers, and the opportunities for other airlines’ customers to experience Oman Air’s products and services, by entering code shares with a number of carriers, including Qatar, Emirates, Turkish, Ethiopian, Sri Lankan and Royal Jordanian. These agreements also allow us to gauge the potential for new services in the future and build relationships with customers who may not otherwise have flown with us.

Importance of maintaining services and standards across all worldwide destinations in order to face the rising oil and salary prices?

As I mentioned previously, no airline is immune to rising oil prices, and the same is true of salary costs. Many other airlines open new routes just so they can celebrate the size of their networks, but Oman Air’s strategy of only opening routes which have significant commercial potential means that price rises should impact only on the level of profit we make on a route, rather than increasing it loss. One consideration in deciding whether a route is likely to be profitable is passengers likely to choose Oman Air over any other carrier that might operate on the same route. Here we are at somewhat of an advantage, in that our focus on quality, rather than size, means that customers are increasingly aware that whilst our fares are extremely competitive, we also offer an outstanding passenger experience. In fact, we are offering quality and luxury at affordable prices and this approach stands us in good stead, whatever market fluctuations might occur.

Politically, Oman is a key ally for the US in the Middle East, as it is for countless nations around the world. Meanwhile, in terms of bilateral economic ties, the US-Oman Free Trade agreement, which was reached in 2009, has permitted American firms to establish themselves here without restriction and resulted in a substantial increase in trade and investments.

What is your perception of the international image of Oman, especially regarding the air transport infrastructure? What are the views on the bilateral ties between Oman and the United States regarding the flight connections with the US?

Since His Majesty Sultan Qaboos first led Oman into its Renaissance in 1970, every aspect of the country’s commercial and economic infrastructure has been transformed. Oman is now a modern, peaceful and forward-looking nation, with increased democracy, significant investment in public services and defense and low crime rates. As a result, Oman is an effective and increasingly powerful trading nation and we welcome inward investment. That is especially true of the aviation sector. The Royal Air Force of Oman operates aircraft built in the USA and Europe and Oman Air has entered into many important partnerships with international businesses.

These international relationships encourage increasing numbers of business travelers to visit Oman, including from the US, where we are also seeing growth in the number of leisure visitors. Oman Air is keen to encourage this and we have recently appointed a General Sales Agent for the USA. However, it is too early to say yet whether we will operate flights across the Atlantic, enter a trans-Atlantic code share agreement or pursue other options regarding the North American market. Nevertheless, the US travel media is showing increasing interest in Oman Air’s products and services and awareness of the airline and of Oman as a destination is growing. We are confident that our US sales will, therefore, continue to climb.

A final message to the readers of USA Today to highlight Oman as an exciting tourism and business destination?

Oman is the perfect destination for those readers of USA Today who would like to experience the ‘Real Arabia’. Every visitor to Oman receives the warmest of welcomes and the genuine hospitality that is the Sultanate’s trademark.

Once you are here, we have an excellent range of truly outstanding hotels and resorts, from which you can explore Oman’s awe-inspiring deserts, dramatic mountains and pristine coastline, discover our rich culture and history or just relax on one of our world-class golf courses.

There is something for everyone in Oman and, of course, we are always open for business. And for anyone who wants to do business in Oman, or is curious about what opportunities the Sultanate might offer, there is no better introduction than to fly there with Oman Air.