Interview: Marwan Boodai
What does the privatisation of Kuwait Airways mean for the broader aviation sector in Kuwait?
MARWAN BOODAI: The privatisation of Kuwait Airways is crucial, as is the privatisation of the entire aviation industry in the GCC. There needs to be free and fair competition throughout the GCC if we are going to step forward to the next economic stage as a region.
We have to think more seriously about privatisation. There is no need for governments to subsidise airlines; over the last five years Kuwait Airways has lost billions – money that we could have used instead to build necessary hospitals, infrastructure and schools, rather than purchasing aircraft and running airlines. We firmly believe that the private sector, given the chance, can be innovative and produce economically successful business models within the country.
Within the transportation sector, which specific areas would benefit from the added efficiencies from greater private sector participation?
BOODAI: Privatisation is endless; we believe that the government should only play a regulatory role, and that the entire airport should be privatised. If you take a look at the UK and other airports in the world, they became extremely efficient and productive when they were privatised. At the present time, we do not have a single private airport in the entire region. If you take the US, for instance, it has some of the top airports in the world, with 70% of their income non-airline generated. Because it is privatised, there are also golf courses and business parks, things that all airports should have in order to become profitable for the country in which they are located. Airports should not be terminals only; they can and should be much more than that.
With a number of flag carriers currently struggling to become profitable, can you elaborate on the rationale for buying a stake in Kuwait Airways?
BOODAI: We are firm believers in Kuwait to start with. By living and working here, we see the prospects and positive side. By nature, we look at the glass as half full.
The country has a budget surplus of 50%. We have to appreciate that we live in this part of the world, and make sure we capitalise on this surplus in order to develop it for future generations.
I think the aviation industry here is healthier than anywhere else in the entire GCC region. In 2012 we had 9m passengers in Kuwait, which is a lot for single destinations, particularly given Kuwait’s size, and demonstrates the great potential here. Kuwait Airways can grow and become an economic icon.
However, looking at it from a private sector point of view, there needs to be a clean balance sheet, the right infrastructure in place as well as the knowledge of how to operate economically and profitably without any politics. An airline is a part of the whole economic solution that can really add value. When you compare an airline with any other industry, the airline has the potential to greatly boost the local economy. It is about understanding the local return.
What regulatory or operations changes will allow low-cost carriers (LCCs) to gain a greater market share?
BOODAI: There are many regulatory barriers that hamper the chance for greater LCC penetration. We have recently launched an initiative in the GCC asking for a one-sky policy, which is modelled after the Single European Sky concept. If you look at easyJet, Ryanair and other success stories in Europe, low-cost models can easily operate out of anywhere within the EU and place aircrafts there without any restrictions.
Unfortunately, in our part of the world we have so many restrictions that before penetrating a market, it is extremely difficult to set up local joint ventures and have local air operator’s certificates (AOCs). We cannot just build a network of different AOCs; we must have one like the EU has, so we can have the flexibility to operate within the region. I hope we can do that in the GCC, and I am sure that this is going to happen one day.
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