Identifier
Created
Classification
Origin
05KUWAIT4510
2005-10-19 11:14:00
UNCLASSIFIED
Embassy Kuwait
Cable title:  

JAZEERA AIRWAYS TO LAUNCH LOW-COST FLIGHTS FROM

Tags:  EAIR KU FAA 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS KUWAIT 004510 

SIPDIS

E.O. 12958: N/A
TAGS: EAIR KU FAA
SUBJECT: JAZEERA AIRWAYS TO LAUNCH LOW-COST FLIGHTS FROM
KUWAIT

UNCLAS KUWAIT 004510

SIPDIS

E.O. 12958: N/A
TAGS: EAIR KU FAA
SUBJECT: JAZEERA AIRWAYS TO LAUNCH LOW-COST FLIGHTS FROM
KUWAIT


1. (U) SUMMARY On October 18, Econoff met with Suhail Homsi
of the new Jazeera Airways (JA). JA is a publicly-traded
company with the Boodai Corporation holding a controlling
stake of 30% of the shares. The new airline will begin
flights to Dubai on October 30 and to other regional
destinations within the next few months. JA has purchased
four Airbus aircraft with an option purchase four more, which
Homsi expects will happen within a year. JA will operate on
a low-cost model by outsourcing ticketing, maintenance, and
ground crew operations. JA is the first private airline in
Kuwait and the first low-cost airline in the Middle East. END
SUMMARY


2. (U) In an October 18 meeting, Econoff discussed the
impending launch of Jazeera Airways with Boodai Corporation
Senior Director of Support and Development Suhail Homsi, an
American citizen of Lebanese origin. Boodai Corp., a holding
company with investments in commercial transportation and
port operations, owns a controlling 30% share of JA stock;
according to Homsi, over 36,000 public shareholders own the
remaining 70%. GOK-owned Kuwait Airways (KA) is currently
the only carrier based in the country. JA will be the first
low-cost airline in the Middle East and KA's first domestic
competition. JA has purchased four new Airbus MSN2569 planes
configured to seat 165 each; one has been delivered and will
fly the initial daily routes; a second will be delivered on
November 7, and Homsi expects delivery of the other two by
Spring 2006. In addition to these four, JA has an option to
purchase four more of the same Airbus model and Homsi expects
that JA will exercise the option within a year.


3. (U) Initially, JA will fly daily to Dubai, and once
additional planes are delivered will also fly to Beirut,
Amman, Bahrain, and Damascus. Homsi said that JA is
currently negotiating with the Egyptian government for
landing rights in Alexandria and Luxor, but because of the
lack of airport capacity does not expect to initiate service
to Cairo anytime soon.

"They're not flying for the meal"
--------------


4. (U) Homsi explained that JA's low-cost model focuses on
minimizing overhead costs and by "stimulating passengers" who
otherwise would not fly. JA's has a staff of approximately
70, with an expected increase to 100 by the end of 2005.
Homsi stated that JA has outsourced as much of the
services-end of the business as possible, including ticketing
(Navitair),maintenance (Lufthansa),and ground and passenger
handling (Kuwait Airways). Homsi said that JA will offer
reservations via Short Message Service (SMS) in addition to
the more traditional call center, travel agent, and website
model. The airline will not schedule overnight stops or
contract codeshare arrangements. JA will also keep costs
down by not automatically providing meals or drinks, but will
instead sell them aboard flights.


5. (U) Homsi said he does not expect JA to directly compete
with GOK-owned Kuwait Airways, but instead will focus on
using low fares to entice people into flying when they
otherwise wouldn't, or into flying more frequently. He
offered the example of an ex-patriot Egyptian worker who
might choose to fly to Egypt instead of taking a bus if the
airfare were cheap enough. Although JA will focus on this
niche of traveler, Homsi said that he does expect JA to gain
a certain amount of "stolen passengers" who will be attracted
by fares as much as 50% below Kuwait Airways. Airfares in
and out of Kuwait are high, and Homsi expects that the new
competition will force prices downward; he noted Kuwait
Airways's announcement that morning that they will cut fares
by 50% on the routes to be flown by JA.
LEBARON