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Onwards and upwards

Interview - May 23, 2012
Since 2006 Oman Air has more than tripled the size of its fleet, and now connects with London, Frankfurt, Munich, Paris, Zurich, and Milan, along with regular flights to Dubai and Abu Dhabi. Mr. Wayne Pearce, CEO of Oman Air, talks about his company’s history and impressive growth, while discussing the region’s thriving aviation sector

For our readers to better understand Oman Air, could you give us a brief overview of the history of civil aviation in Oman and the milestones in Oman Air’s existence?

Oman was a participant in the founding of Gulf Air, which was a carrier that represented four nations – Bahrain, Qatar, Oman and Abu Dhabi.. Oman Air goes back to 1993, when it was created as a ground handling company and it slowly emerged into a company that started providing regional operations.

Oman is an expansive territory (an equivalent country in terms of geographical space could be the UK). As a result of that, there was always a greater need for internal flights and providing domestic operations. We operate Salalah, which is our single biggest route in terms of passenger numbers, even though the flight time is about an hour and a half. We currently operate up to 7 flights per day on peak days, and during the Khareef season we will operate as many as 10 flights per day. This gives you an idea of the extensive volume of this route. Muscat - Salalah is our equivalent of a New York – Washington, or a London - Paris flight for instance. It is a heavy route that we put a lot of focus on.

We also have very high-density routes in the region – we operate up to 7 flights a day to Dubai, and Abu Dhabi is building up with 3 flights a day. 

One of the interesting things about Oman is that it has a great trading history. Sinbad came from Oman. He was a great explorer of the Indian Ocean, he sailed down the Coast of Africa, and across onto the West Coast of India. So Sinbad is a real part of the culture of Oman. That reflects the great trading history of Oman. And it also reflects where we fly.

Oman Air flies to 10 cities in India and 3 cities in Pakistan. We fly into Sri Lanka, the Maldives and Asia, and into countries such as Thailand and Malaysia. We now also fly into East Africa to Zanzibar and Dar es Salaam. That regional network built up very quickly. If you go back to 2006, there were 8 aircraft with six 737s and two ATRs.

Now we have 26 aircraft and we have wide-bodied operations. That was the real change that came in 2008. We operate seven A330s and we go to six cities in Europe - London, Frankfurt, Munich, Paris, Zurich, and Milan. We are getting good growth.

We have truly exceptional first and business class products, and we have won many awards including having the best business class seat in the world. It is a great product.

In our order books we have another 14 aircraft. We have two Embraers coming this year, and six 787 Dreamliners, and another six 737 800s, which will take us to 40 aircraft. We are actively evaluating further fleet purchases at the moment. We are looking at strengthening our current network and adding to our long haul operation. There are places that we have identified which we could fly to, but even more importantly there are places that are doing very well, but clearly we need more capacity. 

Due to your rapid expansion strategy, 2011 was a remarkable year for Oman Air in terms of growth in revenue and passenger and freight figures. However, the whole industry worldwide was heavily impacted by the sharp rise in fuel prices, which increased by 38%. To what key factors do you attribute your successful operations in 2011?

We have an advantage. Oman in itself is this exotic destination that attracts so many people. We do not actually have to create traffic to the Gulf, as that is a well-established trend. There are large volumes going into other citie, so that traffic exists. But there are so many people who have already gone to the established destinations and want to see something different. Oman can indeed provide an experience with a far greater variety. If you come to Muscat, you can go to the Wadis, you can travel down a vast and beautiful coastline, you can see authentic architecture, you can go shopping in genuine souqs, you can go into the desert, and if you are very keen you can access the Empty Quarter, a place that Westerners are just becoming aware of.

The other place that is really quite extraordinary is Salalah. In Oman, a lot of people go down to Salalah over the summer during the monsoon season. When we have real heat in Muscat, the temperature in Salalah is much lower, with constant rainfall so the Wadis flood. You get a totally different climate there. The Salalah monsoon (Khareef) brings a soothing relief, compared to the usual climate of the Gulf countries. So it is definitely a fascinating experience worth trying.

Oman has all the necessary assets to become one of the favorite tourism destinations in the world. However, a lot more needs to be done to increase the international awareness about its potential. How critical is the role of the national carrier in promoting Oman as a destination? How closely do you cooperate with the Ministry of Tourism in raising the profile of the country?

To me, Oman Air and Oman as a destination are synonymous. Carrying traffic just through Oman to another destination isn’t our core strategy. We need to generate a certain amount of through traffic because we cannot get 100% seat sales on every flight to Oman every day, and through traffic gives our network a balance. But our prime goal is to sell traffic into Oman and promote Oman as a destination. In order to do that, we work very closely with the Ministry of Tourism. We also need to work with the hotels, the inbound operators, and the rest of the tourism infrastructure which we are keen to promote the country.

The Ministry of Tourism is doing a great job and we are doing several programs together. For example we do joint press campaigns in Europe; we encourage stops in Oman, we are building a common data bank so that we can use the same photographs, etc. We have a lot of programs in common and are cooperating very well.

Also, we recently worked together on the 1st Annual Oman Air International Media Treasure Hunt aimed to take the cream of European journalism on the tour of a lifetime around Oman and promote the history, culture, landscapes and people of the Sultanate. We used social media and got great coverage. The initiative was a huge success, and we are now considering doing a treasure hunt for the local media. Some regional journalists are yet to discover what their country has to offer. There are thus many opportunities together with the Ministry of Tourism.

The government of Oman is currently building six new airports. When the first phase of the Muscat International Airport is completed in October 2014, it should be able to receive 12 million passengers per year. How is Oman Air preparing to cater to this increase in demand?

We are delighted that the new airport is coming up in Muscat. In 2011 our passenger traffic grew by 22% and Muscat airport handled 6.5 million passengers. This year Oman Air passehger traffic grew at around 24% in the first quarter, and that is without adding any aircraft so far.

The big new luxurious airport will make a major difference and it will allow us to effectively compete in the region. The extra runway is important, because it means that we will have no limit on movements. I think it will be the right way for the country to showcase itself and it will help us to grow.

Salalah Airport can currently handle about 400,000 passengers and the new airport will be able to receive 1 million passengers. In the monsoon season when we operate up to 10 flights a day, it can get extremely busy there. The new airport is well and truly justified. I think that Salalah will continue to grow for many reasons, particularly as people in the West and the GCC realize how exotic place it is. By going to Salalah, you actually get an Indian Ocean experience without going further.

There is also a new development project coming up in Duqm around a huge sea port. We see great opportunities there and we are currently examining them in terms of our future cargo strategy. I believe Duqm is a fascinating area and the Government is giving it particular importance. It is one that we are investigating for our own development and we are looking for commercial opportunities.

There are other opportunities with the other airports coming on and we will be examining those as well. We also have to consider our fleet capability as we need to be able to service them when they come online.

What are your top three priorities for the short to medium term?

My first priority is to do everything possible to support the economic development of Oman by bringing tourism and business travel here. We also want to provide an optimum service for people based in Oman to travel to the world.

My second priority is to establish a long-term strategic plan for the airline to be able to grow and meet its ability to service the country adequately.

And thirdly, we need to fine-tune the operation. It already works well, but we want to take it from being a good operation to an excellent operation. We need to continue motivating our staff. We want our customers to be able to buy tickets on internet, or through social media, and be able to check-in before they get to the airport. They have to be able to communicate seamlessly and keep up-to-date with information. We are already undertaking a lot of initiatives in the e-commerce with applications to put onto iPads and smart phones. So a frequent traveler should be able to find Oman Air on an Ipad or phone, and make the booking, check-in, watch the flight status and communicate with the company.

Oman Air was the first airline to provide in-flight mobile phone and wi-fi services for which you got the Passenger Choice Award for the Best In-flight Connectivity & Communications. How popular has that service become?

We have advertised it extensively on our own literature. People are able to log onto the internet conveniently. Our analysis says that a lot of what they do will be related to checking social media. You will get people downloading their e-mails. When you talk about e-mails, you are talking more about the front of the aircraft, and when it comes to social media, you are talking about people in economy.

We are finding that there is a true explosion in the amount of people buying off the internet and the amount of traffic we are getting going to our website to check schedules and initiate the booking process. So even if they end up buying through more traditional purchasing systems, they are getting information from us. We are getting big increases in it, and the biggest increases are coming from mobile devices.

Fuel prices are not likely to come down any time soon, so what is you forecast for the industry on a global scale in the coming years? What is the best way to maintain a profitable business?

The reading I normally take is the price of North Sea Brent Crude, which is what most of the airline people look at, and its running around 121-124. The interesting thing is that even though the average oil price is higher than it was in Q1 last year, overall traffic levels are higher than Q1 last year. There are some reasons for that, but the fact is that it has increased, and we are not seeing any signs of it dissipating.

When the oil goes up, companies seem to pull back on the amount of people they allow into the business cabins, and that is often reported. When the oil goes up, the profits of the airlines are affected, and you can see that from our results last year as we were hurt by the increase in fuel prices. But we have done a lot of things with our economics within the company to try to address this, just like many other airlines have. But overall, I think traffic growth will continue. The airlines will struggle financially and they will have to be innovative to deal with it.

We want people to come to Oman, so we will not be reducing frequencies or anything like that. In fact our view is to evaluate more aircraft and introduce more services.

Oman Air invests a lot in training and developing its human resources. What would you say are the main strengths of your staff and what challenges do you face?

Before I joined Oman Air, people always told me that Oman is a unique place in the Gulf where you actually get to interact with Omanis. At Oman Air, all the male cabin crew staff is Omani and we have a number of Omani female cabin crew staff as well. You will meet Omanis at the check-in process and throughout the airport environment. The taxi drivers and the people in the hotels are Omanis too, so you truly get an authentic Omani experience when you come here.

Oman Air currently employs over 5,000 people, about 2/3 are Omanis and this figure keeps growing. We are trying to develop our people and we are placing a lot of emphasis on training. We want to provide opportunities for Omanis to develop as technical staff and higher management personnel. Most of the people in my management team are Omanis.

If you look at our pilot infrastructure, the dominant nation of origin is Oman. Most of the pilot crew on the 330 fleet are Omanis.

The bigger the company becomes and the greater its infrastructure, the more opportunities there will be to create jobs for Omanis.