Exclusive Interview: Omar Jahameh, RAK Airways CEO
There was noticeable excitement on a recent passenger flight from Ras Al Khaimah to Cairo last month, although not from eager holidaymakers seeking a little rest and relaxation in the Egyptian capital. Instead, a senior delegation from RAK Airways was making the journey to celebrate the start of a three-weekly service that would entice passengers by offering ‘small fares, big deals’. That’s the slogan of the UAE’s youngest airline, which re-launched its services with much fanfare last year after a hiatus of just over 12 months.
“There are many reasons to celebrate,” states Omar Jahameh, chief executive officer of RAK Airways, who was joined on the flight by the carrier’s vice chairman, Sheikh Salem Bin Sultan Al Qassimi. “We had a mandate to introduce three additional routes for our passengers within two months of launching. So, with Cairo, Dhaka and Chittagong now operational, alongside our launch routes of Calicut and Jeddah, we have achieved that goal.”
While the young executive has unwavering confidence that RAK Airways can compete with both full-service and low-cost rivals in the Middle East, there’s no doubt that lessons must be learned from the airline’s suspension of services at the end of 2008. “Being a young carrier, we were affected by the global recession, as well as crazy fuel prices. So we had a couple of options at the time. Either we could take the hit and continue to fly, or re-arrange our internal house in a better way to face such market conditions,” explains Jahameh. “We choose the second option. Was this the right decision? I think so yes, as the crisis was very harsh on most of the airlines, including us.”
The global recession was difficult to predict when RAK Airways initially launched in February 2006. With total capital of AED1.5 billion, of which AED850 million was paid-up capital, the airline’s original chief executive was Jack Romero, who wanted to commence operations the following year with a fleet of two aircraft. However, with delays in obtaining an Airline Operators Certificate (AOC), a management decision was made to replace Romero with Indian aviation veteran Kishu Teckchandani, who managed to secure the AOC, but exited the company before its inaugural flight to Dhaka in November 2007 – only four months into the job.
Management responsibility was then shifted to RAK Airways chief operating officer Captain Khalid Almeer, with new routes launched and orders signed for Boeing 737-800 aircraft. Unfortunately, that momentum was brought to a sudden halt with the global recession later that year, resulting in staff redundancies and ultimately, the suspension of scheduled services. Little is known about the company’s operations between this time and June 2010, when the re-launch was revealed with Jahameh as chief executive, apart from the fact that an interim CEO, Kristian Kirchheiner, was appointed and disappeared soon afterwards.
“A lot has happened in past, I know, and it’s important that such events are not hidden. People should know that our business model has been adapted, it’s stronger, and we are placed in a much better position to capitalise on passenger growth forecasts for the region,” says Jahameh. “The new concept of the airline will keep costs down and attract enough passengers to ensure the success of our business model.”
Under its new business model, RAK Airways is being positioned in the niche market between well-established commercial airlines such as Emirates and Etihad and the more recently established low-cost carriers such as FlyDubai and Air Arabia. “Although our fares are extremely competitive, we are focused on providing a value offering that differentiates RAK Airways from the low-cost carriers,” argues Jahameh. “For instance, on every flight to and from Jeddah and Calicut, seats were initially priced starting from AED10. In addition, we allow passengers to take up to 30kg of luggage with them as well as the normal hand baggage allowance. They will also get a complimentary full hot meal with beverages served on board. We should not concentrate too much on ancillary revenue, as we are a generous airline.”
There will be one travel class throughout the entire cabin, he continues, and passengers will be able to choose their seats when they book, which they can do online, via travel agents or directly with the airline’s call centre. “In addition, to ensure Ras Al Khaimah International Airport is easily accessible for our passengers from Dubai or Sharjah, RAK Airways will provide a free shuttle service between the neighbouring emirates for each flight that we operate.”
Such initiatives have already been well-received by the public. More than 400 bookings were made on the RAK Airways website within four hours of the portal being unveiled and 70% of sales from the UAE have hailed from the northern emirates. “The response from customers is very positive and our load factor is around 80% at the moment, which is amazing,” reveals Jahameh. “Initially we will depend on existing demand, for instance Ras Al Khaimah has a lot of factories with a lot of labourers, so the demand is already there and that’s a priority. After that, we believe that demand can also be motivated from new markets by offering the right fare at the right time, maybe with a certain package. This will encourage people to travel more often. For example, we have an amazing Umrah package and people from the northern emirates, especially locals, have reacted very well to that. They enjoy the experience with us and it’s our target to serve the community in which we are located.”
With fares starting at AED10 as part of a launch promotion, there is still a common misconception in the market that RAK Airways in a low-cost carrier, something Jahameh is quick to refute. “I know that people have been comparing us to FlyDubai and Air Arabia, but we are not a low-cost airline,” he reinforces. “When you compare fares, you must compare apples to apples. We’re a high-value airline and will pioneer that concept in the Middle East.”
At present, RAK Airways is operating with a couple of single-aisle Boeing 737-800 commercial jets, with plans to expand the fleet as demand grows in the future. “In the short term at least, we are looking to introduce more of the same type of narrow-body aircraft. After that will depend on traffic rights, which is a challenge,” says Jahameh, while explaining that flight slots secured by the UAE General Civil Aviation Authority (GCAA) must be distributed amongst all of the country’s airlines.
“RAK Airways is planning to launch between five to eight destinations, with a focus on the Indian subcontinent, GCC, Africa and CIS regions. We have specific destinations in mind, but traffic rights are not an easy issue,” he adds. “Maybe we want to travel to a certain country that has one airline, but we have Emirates, Etihad, FlyDubai, Air Arabia, as well as RAK Airways, so we’re sharing flight slots. However, we believe that open sky policies will soon be adopted throughout the world and that will fuel our growth.”
Jahameh has a few more tricks up his sleeve to encourage high-levels of growth. For starters, he’s in discussions with other airlines to finalise codeshares and alliances, and expects an announcement to be made with an Asian carrier later this year. A business plan is also being developed with RAK Airport authorities for joint expansion projects. So, the final question has to be, when will the airline breakeven? “In terms of overall breakeven, I think by the end of this year,” he claims with a smile. “All signs are indicating that we’re on the right track to achieve that.”