Structure

Oman Air was established in 1993, following the merger of Bahrain-based Gulf Air’s light aircraft division and Oman International Services. Its first flight that year was to Salalah in the south of the country, and its first regional flight, also in 1993, was to Dubai.

In 2007, it was officially recognised as the national carrier of Oman, and the government provided a RO57m ($148m) capital injection to facilitate Oman Air’s transformation from a regional carrier into an international airline. The state’s shareholding in the carrier increased to 82 per cent from 34 per cent as a result.

Currently, the Muscat-headquartered airline flies to more than 30 destinations and employs 5,300 people, of which more than 60 per cent are Omani nationals.

Like most airlines, Oman Air has been hit by the drop in travel spending brought about by the global financial crisis. The airline posted a loss of $165m for 2009. It was the second consecutive year the carrier failed to make a profit, having recorded a net loss of $108m in 2008. Its financial performance was also impacted by the costs associated with its expansion programme.

Nonetheless, Oman Air is pushing ahead with its plans. At the end of March, the airline’s capital was increased by a further 67 per cent to $1.3bn to continue its programme of adding new routes and increasing its fleet size. The airline aims to fly to eight new destinations by the end of this year. The government’s stake in Oman Air now stands at 99.6 per cent, following the latest capital increase.

Oman Air also operates an air services business, which provides charter flights, and ground and cargo handling and catering services to other airlines using Muscat International airport. Peter Hill was appointed chief executive officer of Oman Air in April 2008, following the death of Ziad Karim al-Haremi, who had led the company since 2005. Hill previously served as head of Sri Lankan Airlines.

Operations

Oman Air operates direct flights to most major GCC cities from its hub in Muscat, as well as to Cairo, Beirut and Amman in the wider Middle East. The airline also flies to 10 cities in India, and offers services to Bangladesh and Pakistan. Since November 2007, the carrier has been flying to long-haul destinations, starting with Bangkok and London.

In 2009, the airline increased its fleet size by 28 per cent, with the addition of five Boeing 737s and four wide-bodied aircraft, and began flights to five new long-haul routes: Paris, Frankfurt, Munich, Male and Colombo.

The airline also operates internal flights in Oman between Muscat, Salalah and Khasab. This month, it will start flights to Al-Ain and Ras al-Khaimah, in the UAE, and to Kuala Lumpur, in Malaysia.

In 2009, the airline carried 2.4 million passengers, a 19 per cent increase on the previous year, and seat utilisation was 61 per cent. In 2004, the airline flew less than 1 million passengers.

Oman Air’s fleet includes five Airbus A330s, 15 Boeing 737s and two ATR jets, used primarily for short-haul routes. The airline will take delivery of an A330 in May, with another due in the first quarter of 2011. 

Oman Air was the first airline in region to add the Boeing 737 to its fleet, and in February, it became the first in the world to introduce in-flight mobile phone and wi-fi connectivity.

Ambitions      

With its ongoing transition into an international airline, Oman Air expects to break-even in 2014 and return to profitability thereafter. The airline aims to continue adding new routes and increasing the frequency of its flights. Later this year, it will launch flights to Milan, Kathmandu and Dar es Salaam.

The airline expects to spend about $300m over the next two years expanding its fleet to service the new routes. In November 2009, the airline signed a $178m deal with Brazil’s Embraer for five E175 aircraft, with the purchase rights for another five. Four of the five single-aisle jets will be used by the airline and one will serve the Royal Omani Police. The first delivery is scheduled for the first quarter of 2011.  

In 2007, the airline signed a memorandum of understanding to acquire six Boeing 787 Dreamliner aircraft from Kuwait-headquartered Aviation Lease And Finance Company. The aircraft are scheduled to be delivered in 2012, 2014, and 2015.

The Oman government is investing in expanding and improving airport infrastructure to support the airline’s growth. The new terminal at Muscat International airport, due to open in 2014, will increase passenger capacity and provide a boost to Oman Air’s airport services division, with additional demand for in-flight meals and ground handling services.

The airline is also considering expanding its capabilities to offer maintenance services and hotel accommodation for transit passengers.