Saudi’s emboldened low-cost carrier Flynas returns to growth

Chief executive Paul Byrne says he expects September to be the ninth consecutive month of profitability (Image courtesy of Flynas)

Saudi Arabia’s Flynas is drafting a five-year expansion plan as the airline nears its first ever annual profit, gaining momentum from a strong Hajj season and the simplification of its business model.

Chief executive Paul Byrne – who was appointed last year after the failure of an ambitious long-haul expansion program – says he expects September to be the ninth consecutive month of profitability.

That marks a dramatic turnaround for a company that has been consistently loss-making since launching nearly a decade ago.

“We took care of what was losing money, and we just kept doing what was making money,” Byrne tells Al Arabiya. “The difficulty in our business is not being tempted to do something strange and wonderful. It does take a lot of discipline internally – to keep people focused on saving costs, getting the flight out on-time, getting the pricing right.”

Flynas was established as Nas Air in 2007 following the liberalisation of the kingdom’s aviation sector – until then monopolised by flag-carrier Saudia. It is 63% owned by National Air Services and 37% by Kingdom Holding Company.

Despite branding itself as a low-cost carrier, Flynas is widely considered a hybrid operator outside of Saudi Arabia.

Another start-up airline, premium-focused Sama, was established around the same time but ceased operations in 2010, blaming the kingdom’s high fuel prices and burdensome regulations. Two more airlines – SaudiGulf and Al Maha Airways – are planning to join the local market in a second wave of liberalisation, though successive launch dates have been shelved.

Five-year plan

Confirming that Flynas has begun working on a five-year growth plan, Byrne says he expects to launch new domestic and regional routes shortly.

“There’s a lot of cities in the region that we’re not flying to at the moment [but] that we should be, especially in the GCC [Gulf Cooperation Council],” he notes. “Bahrain is one we have on our list. It’s going to be one of our first to start.”

Flynas presently serves 13 international destinations in Egypt, Turkey, the UAE, Kuwait, Jordan and Sudan. It also flies to 11 points within the kingdom.

The airline will not be revisiting the long-haul expansion strategy led by predecessor Raja Azmi, which involved serving destinations as far afield as London and Kuala Lumpur. Rather than launching widebody flights with its own metal, Flynas is instead developing long-haul connectivity through codeshare agreements with foreign airlines.

Byrne is particularly keen to expand the partnership already in place with Etihad Airways, thereby facilitating connections through Abu Dhabi.

Efforts to regularise the “shuttle service” between Jeddah and Riyadh are also continuing apace, despite ground-handling difficulties at Riyadh’s King Khalid International Airport.

Flynas had wanted to offer departure times from both hubs at half-past every hour – complementing Saudia’s shuttle service at the top of the hour – but turnaround delays in Riyadh have pushed some flights back by about 20 minutes. “I’m confident the team will get us back on the half-past out of Riyadh,” Byrne says. “It’s just [a matter of] better scheduling.”

He adds that demand on the trunk route – by far the kingdom’s busiest, accounting for nearly half of all domestic seats – remains exceptionally strong: “Typically whatever capacity gets put on gets taken. We had one [Airbus] A320 that sold out in three minutes.”

Low-cost philosophy

As well as suspending long-haul routes, Byrne’s tenure to date has focused on strengthening the airline’s low-cost philosophy.

While Flynas has no intention of becoming a European-style no-frills airline, it nonetheless exploits many of the practices pioneered on the continent. These include high utilization rates for aircraft, and revenue-management systems that dynamically alter ticket prices.

Byrne has further capitalized on rising demand for charter flights during the Hajj, deploying wet-leased widebodies to about 17 countries this season.

Asked about the challenges facing the airline, he says the domestic fare cap imposed by the General Authority of Civil Aviation (GACA) remains a major bugbear. Flynas is also expecting a temporary drop in passenger yields when SaudiGulf and Al Maha are given clearance to launch. More imminently, it is bracing for the historically weak month of November.

“In the past it’s been possible to lose your entire summer’s profit in November,” Byrne cautions. “We’re trying to steel ourselves against that by doing a high level of our maintenance [during the month], taking aircraft out of the fleet to make sure we’re not over-capacity.

“But, other than that, we’re very optimistic. We’re developing confidence in ourselves as an airline, and people like us. They keep flying with us.”

 

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Last Update: Wednesday, 20 May 2020 KSA 09:46 - GMT 06:46
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