The Middle East is one of the world’s fastest-growing and economically strongest aviation markets, bolstered by its geographic position between major populated regions like Europe and Asia and its continued economic growth. The first carriers to find sustained success in this market were Emirates, Etihad Airways, and Qatar Airways, all of which expanded from small airlines to global superconnectors by embracing models that funneled traffic between continents through their hubs at Dubai International Airport (DXB), Abu Dhabi International Airport (AUH) and Doha Hamad International Airport (DOH).
Other Middle Eastern nations noticed the success of these airlines and wanted in, with today’s Middle Eastern landscape heavily saturated with carriers beyond just these three legacy airlines. Also present in the market are airlines like Saudia, young upstarts like Riyadh Air, and even low-cost carriers like the state-owned flydubai. While many legacy carriers have thrived by attempting to build their own niche within this heavily saturated market, there are a few carriers with bold visions to challenge the big Middle Eastern carriers.
Photo: Hafit Irawan | Shutterstock
One such airline is Oman Air, the flag carrier of the Gulf nation, Oman. Since its foundation in 1993, this airline has grown to become the nation’s largest airline, operating a fleet of 34 aircraft to 44 different global destinations. Based out of Muscat International Airport (MCT), the airline – which is owned by Oman Investment Authority – has bold ambitions to become an Emirates-type superconnector. Let’s take a deeper look at the story of Oman Air, and how the carrier believes it can challenge the Middle Eastern giants.
Foundations and early history
Oman Air’s story begins in 1970, when Oman International Services was founded by the Omani government, an organization that provided civil aircraft management on the ground at Beit Al Falaj, before moving to Muscat’s primary airport. This organization took over a significant portion of aircraft management within Oman from Gulf Air, a joint legacy carrier project supported by various Middle Eastern governments.
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By 1981, the organization had become a joint-stock company with 13 aircraft, all of which were previously operated by Gulf Air. The airline began its first jet services in 1982, which operated from the city of Salalah in cooperation with Gulf Air. The carrier continued improving its operations through the decade, and the Omani Government eventually believed it was time to launch a full-fledged passenger airline.
Gulf Air still operates today as the flag carrier of Bahrain.
International expansion followed shortly after
The carrier was officially launched in 1993 and began operating domestic services with Boeing 737-300 aircraft between the nation’s largest cities. According to Flight International, Oman Air launched its first international routes later that year, including service to all the following destinations by the time 1997 came around:
- Dubai, United Arab Emirates
- Trivandrum, India
- Kuwait, Kuwait
- Karachi, Pakistan
- Colombo, Sri Lanka
- Mumbai, India
- Dhaka, Bangladesh
- Abu Dhabi, United Arab Emirates
- Doha, Qatar
- Chennai, India
The airline soon began a long fleet modernization process, upgrading its 737-300 aircraft with leased Airbus A320s. In 1998, the carrier joined the International Air Transport Association (IATA) and launched even more routes to cities in India and across the Middle East in the following years.
A complete departure from Gulf Air and Oman Air’s drive to maturity
In 2007, the Omani government decided to completely depart from the Gulf Air joint venture, in favor of developing and expanding its national flag carrier. The government expanded its stake in Oman Air significantly to become the majority stakeholder with an 80% share.
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While earlier international expansions were mostly focused on destinations not already served by Gulf Air, the carrier began to launch flights to global destinations, including London and Bangkok. The airline soon sought to expand its fleet significantly, ordering a total of seven Airbus A330s, which would become the airline’s first widebodies, and five Embraer E175 aircraft to improve regional connectivity.
Matching up with the big players in the region
While the carrier was now launching an impressive international route network, the airline still had a long way to go to match up with airlines like Emirates and Qatar Airways. Over the next decade, the airline improved its inflight offerings significantly, with mobile phone service and Wi-Fi available on most routes. The carrier began offering more luxurious premium cabins, and would eventually be recognized for having the best inflight cabin crews in the entire Middle East.
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Nonetheless, although the carrier had made strides to improve in terms of the passenger experience, it was still lacking in network scale. This can easily be seen by comparing the number of destinations and the size of the fleets of these airlines:
Industry observers have commented that the carrier will need to carefully expand with cost optimization in mind to compete at scale with the major Middle Eastern airlines. Entering markets where they directly compete with Emirates and Oman Air could be challenging. A paper published in the Asian Journal of Management Cases by James Rajasekar and Unnikammu Moideenkutty in 2007 examined the airline’s long-term path to success in close detail and argued that aggressive cost reduction measures would be the airline’s only path to success.
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Rajasekar and Moideenkutty argued that the long-term expansion of airlines like Emirates and Etihad Airways was mostly bankrolled by oil-rich governments which were able to provide carriers with heavy fuel subsidies. Oman, however, produces a fraction of the oil that the United Arab Emirates does, placing the carrier in a far more vulnerable position when oil prices rise. Nonetheless, continued operational improvements, including network and fleet reorganization, could allow Oman Air to compete with the big players in this space, especially if jet fuel prices begin to fall significantly.
