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January 2015 | the gulf the gulf | January 2015 37
featureeature AV I AT IO N AV I AT I O N
‘We’re quite clear where
we’re going now. 2015 will
be about looking to fill
what we have, get a better
load factor and better
yield on what we have.
If that drives expansion
later on, happy days’
Paul Byrne, flynas
THERE was no shortage of
sceptics in the airline indus-try when flynas, SaudiArabia’s only private sched-uled carrier, began operat-
long-haul flights in early 2014.
re enough it took just a few monthsthe airline to scrap the new routes;
urn its widebody Airbus A330s; ande yet another chief executive - therth in three years.
ncoming boss Paul Byrne, who tookhelm on 1 November, admits thatairline made a strategic blunder by
ng long-haul. Its limited overseasnd awareness and semi-budgetduct was always going to struggle
en competing with better-ablished flag-carrier Saudia.ut while undoubtedly chastened
the experience, flynas is commit-to developing its hybrid offering
oss the regional market. Though noger a low-cost carrier, the airlines differentiated itself by retaining aquely minimalist product for thegdom. Byrne’s predecessor, Rajami, brought several colleagues
m previous employer AirAsia to thempany during his tenure, and flynasl continue to draw from its extensive
w-cost expertise. Azmi himself willmain in an advisory capacity.
ollowing three management upheav-
UDI ARABIA
ollowing three management upheavals in as many
ars, Saudi low-cost carrier flynas is thinking carefully
bout its next move
Turning overanother new leaf
by Martin Rivers
line. Dammam-Riyadh and Dammam- Jeddah account for 12 per cent and10 per cent of the airline’s existingdomestic network. Given that
SaudiGulf has contracted Bahrain’sflag-carrier Gulf Air in an advisorycapacity, its new base of operations
seems particularly worrying. Gulf Airhas a well-established presence in the
eastern Saudi city, so future codesharesbetween the affiliates could quicklyerode flynas’ proposition.
With these three routes accountingfor half of flynas’ domestic operations,the loss-making Saudi carrier is staring
down the barrel of a veritable competi-tive onslaught at home. And that makesthe failure of its long-haul programmeall the more troubling.
In late 2013, when the Global Flight
Routes initiative was unveiled, flynas
promised to launch a raft of European,North African and Asian routes withthree leased A330s. The airline rapidlyadded scheduled flights to London
and Manchester in the UK; Casablancain Morocco; Islamabad, Lahore andKarachi in Pakistan; Kuala Lumpur in
Malaysia; and Jakarta in Indonesia.Services to the French capital Paris
were also in the pipeline, pending thenecessary traffic rights.
But almost as soon as the strate-gy began, cracks emerged. Azmi hadstretched the long-haul network toothin, laying on multiple low-frequen-
cy services that would take years tofully mature. Sustaining losses in theinterim was a tough pill to swallow,even for well-endowed Nas Holding.
More fundamentally, the rationale
behind adding markets such as London
New boss Byrne aims to reverse some of flynas’ strategic blunders such as going long-haul
was baffling. UK tourism boardVisitBritain estimates that by 2020Saudi Arabia will have the highest
projected value percentage growth (181per cent) of the UK’s 20 key inboundtourism markets. While this may haveseemed an attractive opportunity forflynas, the airline’s budget product waspoorly positioned to capitalise on thetrend. Saudi tourists spend an average
of £2,354 when staying in the UK,compared with £600 by the averageoverseas visitor. Saving pennies on theflight over is simply not a priority formost Saudis, who will happily splash
out on full-service airfares with Saudiaand British Airways.
Flynas had been hopeful of addingUS routes and deploying 12 widebodyaircraft by 2017. That kind of scale -
if combined with a re-think of somemarkets - could perhaps have deliveredprofitability. But it was always goingto be a gamble. Recognising that Azmihad bitten off more than he couldchew, the airline abandoned the strate-
gy and Byrne is now returning its focusto the challenging but more sustain-able regional network.
“We’re quite clear where we’re goingnow,” he says. “We need to just get
what we’re doing right consistently,so 2015 will be about concentratingand doing what we do best … we’relooking to fill what we have, get abetter load factor (seat occupancy) andbetter yield (average airfare) on what
we have. If that drives expansion lateron, happy days.”
Any talk of aircraft orders is firmlyoff the table. The airline had originallytargeted up to 60 aircraft under its
expansion programme, but will now
ing traffic through its parent’s hub inDoha, largely avoiding point-to-pointcompetition with flynas.
When SaudiGulf gets off the ground,however, flynas’ next two largest
routes will also come into the firing
als in as many years, the airline isthinking carefully about its next move.Parent company Nas Holding is now“ready for us to make a profit”, Byrne
candidly told The Gulf . Flynas has beenloss-making since it was establishedin 2007, floundering in a regulato-ry environment that bestows clearadvantages on state-owned Saudia.
And its challenges will only becomemore pronounced in 2015, as twonew market entrants inject somelong-overdue competition into thelucrative but protected Saudi sector. Al
Maha Airways, a fully-owned subsid-iary of Qatar Airways, will launchoperations early this year with A320narrowbodies. After initially focusingon the Jeddah-Riyadh trunk route, AlMaha aims to rapidly add destina-
tions and reach 30 aircraft by 2018.Dammam-based SaudiGulf will alsoshortly begin domestic flights, having
ordered four A320s and 16 smallerBombardier CSeries CS300s.
“There’ll obviously be disruptionto the Jeddah-Riyadh service,” Byrneadmits, when asked about the citypair that accounts for nearly half of alldomestic seats in the kingdom.
But he is optimistic that flynas can
defend its 24 per cent market share onthe trunk route, arguing that demandis “yet to be satisfied, so there’sprobably room for us to expand, andfor Saudia, and Al Maha”. He further
believes Al Maha will focus on funnel-8
flynas’ limited overseas
brand awareness
and semi-budgetproduct was always
going to strugglewhen competing with
better-establishedflag-carrier Saudia
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