What does the new Muscat International Airport represent for SalamAir and for the industry?
The new airport was something that everybody had been waiting for and the way it has turned out is wonderful. It is not only the architecture that is pleasant, but also its functionality and the value it brings to the whole industry. The airport reached completion at the right time as SalamAir started operations one year before its opening. It falls in line with the company and Ministry of Tourism's vision to boost tourism. The new airport also improved SalamAir's passenger experience with its modern features. Moreover, it has attracted more passengers to choose Muscat as a transit point, which was previously avoided due to congestion. The new airport and its facilities have attracted a whole new market.
Has it been an operational challenge to move into the new airport?
Most major changes come with challenges. The airport's decision to move all at once was the biggest challenge, as there were so many stakeholders involved; however, the airport handled the challenge extremely well within a short time.
How did the market come around to understanding the pricing of low-cost airlines?
With Salalah, for example, which accounts for 30% of our capacity, the market was used to one price, whether you booked a year ahead or on the same day. When we came we challenged that norm and managed to provide rates in the market that were previously unheard of. We dropped the price of a round-trip flight from the OMR60-70 range to below OMR40, though the market hasn't completely changed; we still see most customers booking right before they travel. We will be able to bring more efficiency by matching capacity and demand. We are trying to educate customers through pricing techniques and different levels of fares, but it is a long process.
What factors do you consider before opening new routes?
Generally, we respond to the market's demands; therefore, we are always listening to our customers. We start by conducting a route profitability study and work with our civil aviation authority to secure traffic rights. For example, we saw that the figures from last summer were high to Baku, which has no direct flights from Muscat. Therefore, we decided to add a direct flight during the summer as it is only three hours away. In other cases, we expand the number of flights we offer to certain destinations to meet demand. For our route to Shiraz, we started with two flights and soon had to add a third due to additional demand.
What are your plans for fleet expansion and financing required for new aircraft?
In 2019, we will add six more aircraft to the fleet so that we have a total fleet size of nine. Our three operational aircraft are leased, and we will use lease agreements and banks to finance the next six. This is a typical growth pattern for new airlines—leasing aircraft at first is a better way to manage cash and the risk of investing capital into a large asset at the beginning. Within five years we would like to have a fleet of 20 aircraft and reach around 60 destinations.
After over a year of operating, what is the next phase for SalamAir?
Our objective always is to offer a product that is appealing to customers. During the past year and a half, we were going through a start-up phase where we had brought three aircraft and managed to sustain the operation to grow it to its current level. The next phase is to grow our fleet and number of destinations. With that, we will open a lot of opportunities and will be able to have a bigger network which connects more points together to meet the vision of this country to boost tourism.