When we think of the world's 'most successful airlines', we almost always picture massive carriers - usually legacy airlines - operating gigantic fleets of wide-body aircraft on huge global networks.
But in the wake of the coronavirus crisis, success in the airline industry will no longer be defined by conventional metrics like fleet and network size in the wake of the coronavirus crisis.
That is according to Jazeera Airways’ chief, Rohit Ramachandran, who thinks that the traditional idea of success in the airline business is outdated after a number of businesses were exposed by the Covid-19 pandemic.
Jazeera Airways, which is privately owned and admittedly one of the smaller airlines in the Gulf in terms of fleet and workforce size, entered the coronavirus crisis with solid levels of liquidity and a stronger balance sheet compared to many of its local rivals.
The Kuwaiti budget airline doubled its operating profits last year to KD14 million ($46 million) on the back of its best financial performance ever.
“It’s the resilience of what Jazeera had become pre-corona that has sustained us through this period,” Ramachandran told Aviation Business.
“Has it hurt us? Of course it has. And it’s forced us to take painful decisions but it’s not brought us to our knees. We’re well poised among our peers to recover quickly and take advantage of the opportunities that present themselves coming up.”
Jazeera, which will not resume operations until next month, has laid off nearly 40% of its staff as a result of the coronavirus pandemic, which grounded the airline’s passenger services in 12 March.
But Ramachandran said the company has enough cash to sustain itself “at this pace” for more than two years. Jazeera is certainly in an enviable position compared to most airlines around the world and Ramachandran expects to see further consolidation in the market this year.
“The only [carriers] that are going to survive are the ones that exercise financial and commercial discipline,” he said.
“The ones who gauge their success by biggest network, largest fleet and all these meaningless metrics are going to find it extremely hard. The ones who measure their success in terms of profitability, bottom line, customer satisfaction, these are the ones that are going to thrive.
“A strong balance sheet is key to weathering this crisis. There’s no substitute to having a strong balance sheet and every week brings more bad news in this area with respect to airline failures and unfortunately I don’t think we’re done with that yet.”
But Ramachandran said he would be surprised to see airlines collapse in the Middle East, believinig that most will be protected by government shareholders and the tendency for states to view carriers “more as symbols of national pride than businesses”.
While Jazeera Airways seems to have weather the coronavirus crisis pretty well so far, compared to a lot of carriers, Ramachandran appreciates that the company may be in an easier position than some.
“We’re still very small compared to some of the larger airlines. Perhaps that itself is an advantage in these times as it gives us the ability to be flexible, to be nimble and not be saddled with the huge costs of large fleets that can’t fly.”
On the other hand, as one of very few privately owned airlines in the Gulf region, Ramachandran thinks that Jazeera is faced with the additional challenge of not having a readily available safety net.
“Within the region, most of the airlines have a big daddy who will support them during this situation. We don’t have that, we have to rely on our own resources and our own balance sheet. Even for airlines in the West that are privately owned, most of them received some sort of bailout or stimulus package from their respective governments, which we haven’t.”
Kuwait’s international airport will resume operations from 1 August, initially at just 30% of maximum capacity. As it stands now, from February 2021 to August 2021, the airport will operate at 60% of capacity before returning to full operational capacity after August.