OMAN AIR TO BEGIN LONG-HAUL OPERATIONS

UNCLAS MUSCAT 000825 SIPDIS SENSITIVE SIPDIS STATE FOR NEA/ARP, EEB/TRA/AN, EEB/CBA COMMERCE FOR ITA COBERG STATE PASS DOT/OST FOR SHATLEY E.O. 12958: N/A TAGS: EAIR BEXP MU SUBJECT: OMAN AIR TO BEGIN LONG-HAUL OPERATIONS This message contains sensitive business information. Please protect accordingly. ¶1. (SBU) On August 20, Econoff discussed Oman Air's long-haul service plans with Alan Arch, the airline's commercial director. Arch confirmed that Oman Air would begin nonstop service from Muscat to London beginning on November 15, though airport selection would depend on obtaining commercially-viable slots at Heathrow. In addition, Oman Air will begin nonstop service to Bangkok on the same day. The national carrier will contract on a wet-lease basis with Portuguese-based Hifly Airlines (previously operating as Air Luxor). The London and Bangkok services will be offered six times per week on A330 and A310 aircraft, respectively. ¶2. (SBU) For 2008, Arch expects Oman Air to expand its long-haul services to Frankfurt and Kuala Lumpur, with Jeddah and Riyadh completing with regional network. He anticipates the delivery of two more Boeing 737-800 series aircraft by November 2007, and is working on arrangements to obtain additional widebody aircraft on a wet-lease basis. These services will replace those formerly provided by Gulf Air, which Oman had divested itself from earlier this year. In response, Gulf Air has quickly halved its Muscat flight schedule from over 150 departures per week earlier in the year to only 77, with many of those going to Gulf Air's sole hub in Manama. Gulf Air is reluctant to shed its profitable routes out of Muscat, however, as it still operates a considerable number of flights to India. ¶3. (SBU) Comment. The Omani government is quickly looking to fill the gap in service from Muscat as a result of its withdraw from Gulf Air. In this effort, coordination efforts between the two carriers have been uneven. For example, Gulf Air has ended its Asian and Saudi services from Muscat, but is continuing its London service until Oman Air is ready to commence operations. Gulf Air may not give up its India service, which would prevent Oman Air from adding flights on these lucrative routes on account that weekly seat numbers are capped between the two countries. ¶4. (SBU) Comment continued. In addition to beefing up Oman Air, the government is actively wooing foreign carriers to begin service to Muscat. Oman's Director of Air Transport noted to Econoff that civil aviation authorities are welcoming new services, and hoped that U.S. carriers would consider serving Muscat in conjunction with services to Dubai or Abu Dhabi. When Econoff noted that the current draft of the U.S.-Oman Open Skies air transport agreement, currently applied on the basis of comity and reciprocity, restricted fifth freedom services from Muscat to Dubai and to points in India, the Director responded that they would "accommodate" such requests from U.S. carriers. The Director also noted that the government would like to sign the Open Skies agreement by the end of the year, but that his office would need to review Language Services comments regarding the Arabic text of the agreement. Recently, KLM announced that it was resuming service to Oman with five-times per week service to Amsterdam via Kuwait, providing Northwest Airlines the opportunity to offer Muscat on a codeshare basis. End Comment. GRAPPO