Oman Air: MEED Assessment

05 May 2010

Growing competition for passengers will put pressure on the state carrier

Oman Air
Profit and loss (OR millions) 
Year 
2004628
20051,006
20062,893
20074,020
2008-42,755
2009-63,533
Passenger traffic (millions) 
Year 
20040.98
20051.1
20061.2
20071.5
20081.98
20092.4
Seat utilisation (percentage) 
200471
200576
200676
200774
200864
200961
Source: Oman Air

When an airline launches a new destination, it can take several years before the route becomes profitable and Oman Air was always going to be under immense financial pressure as it repositioned itself from being a small regional carrier to an international airline. The launch of many of its new routes also coincided with the worst economic recession in decades, making it even harder for the airline to make money.

Fortunately for Oman Air, it enjoys strong backing from the government, which stepped in to help during these difficult times. The government sees the airline as an ambassador for the sultanate, and its plan to increase the contribution of the tourism sector to the economy, rests heavily on the fortunes of Oman Air. More support is likely to be forthcoming if necessary.

However, there are challenges ahead. The global travel industry is forecast to show only a partial recovery in 2010, and growing competition for passengers, both regionally and globally, will put pressure on the state carrier.

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