Kuwait feeling brand new...

As your Kuwait Airways Boeing 777-300ER taxies out from the gate at Kuwait International Airport to the holding area of runway 15L, you pass several anonymous, white-painted Airbus A300-600s and A310-300s parked on remote stands.
Those are the remnants of one of the oldest fleets owned by any national carrier in the Middle East.
By the time this article is read, all are likely to have been flown to the Far East for scrapping. And, as your 777 takes to the air and leaves its former companions dwindling in the distance, there is a sense that the national carrier is also rapidly leaving its past behind it.
A visible sign of this is the airline’s new livery. For more than 30 years, Kuwait Airways’ aircraft have sported a mid-blue cheatline and tail panel with a stylised bird emblem, which has appeared increasingly dated in recent years.
A rebranding exercise has seen the 777s painted all-white with oversize ‘Kuwait’ titles on the forward fuselage and an updated representation of the stylised bird sweeping down the fin and up over the rear fuselage.
After years of decline – made more noticeable in comparison with the explosive growth and elevated service levels of other Gulf carriers such as Emirates, Etihad and Qatar Airways – Kuwait Airways has embarked on a five-year turnaround plan that it hopes will restore it to the front rank of Middle Eastern airlines.
An urgent aim is to reclaim Kuwait-originating traffic from Gulf competitors. The airline’s share of passengers at Kuwait International is around 25%, low for a home hub. It aims to boost that to 40-45% by 2021 as its fleet expands and standards improve.
This, believes deputy CEO, Kamil Al-Awadhi, will allow Kuwait Airways to win back customers who have been siphoned off by other carriers to their hubs further down the Gulf.
At present, around one-third of Kuwait Airways’ passenger traffic transits through the emirate, with the remaining two-thirds split fairly equally between business passengers and leisure travellers. In future, there will be more emphasis on point-to-point services, rather than transit traffic.
“The problem is with the regional market: it’s flooded,” he said, standing in his office with shirtsleeves rolled up – an unusually relaxed look for an Arab airline executive on home turf. “The Kuwait-Dubai route has something like 25 daily flights on it, which is ridiculous. To compete against that sort of capacity is going to be tough.”
Kuwait Airways has to decide whether it’s worth getting involved in a dogfight, or whether to concentrate its efforts on routes that are not so well served, such as Kuwait-Doha.
One aspect of the company’s route network that has been eliminated is its portfolio of fifth-freedom services, such as Kuwait-London-New York and Kuwait-Bangkok-Manila. “We’ve disposed of all fifth-freedom routes. It’s not a profitable way to operate a flight. There was a time, when yield was a lot higher, when you could dilute the cost of landing and parking.” That ‘cushion’ has been eliminated with today’s much lower yields.
As a state-owned company, Kuwait Airways has been supported through heavy losses in the past, although these have been dropping steadily, from KD98 million ($320 million) a few years ago to KD26 million in 2015. “Right now, we’re self-funded with no financial support from the government,” said Al-Awadhi.
A new fleet will cut fuel and maintenance costs, improving the carrier’s operating figures. The new aircraft will largely be used to increase frequencies to existing destinations, rather than add new ones.
“We’re not competing against the ‘Big 3’, Turkish and Saudia,” said Al-Awadhi. “We’re not going to be a mega-connector. It’s a completely different business model that emphasises steady growth.”
Although the arrival of low-cost carriers (LCCs) in the Gulf has been felt by Kuwait Airways, Al-Awadhi firmly believes that they and hybrid carriers actually expand the market.
“I was in a management meeting 10 years ago, before [Kuwaiti hybrid carrier] Jazeera Airways started. There was panic that it was going to start chewing our market. I find that an LCC generally opens up a new market.” He feels that LCCs encourage more people to fly.
Arguably, a more significant problem for Kuwait Airways over the past decade has been the stuttering attempts by the Kuwaiti Government to privatise the nationalised airline. Privatisation would allow the company to be more operationally nimble, but the on-off-on-again process has hindered the company’s progress.
The latest attempt at privatisation in 2015 quickly stalled, with the government apparently changing its mind as to whether the national carrier should be cut free.
It then apparently decided that just 20% of Kuwait Airways’ shares would be sold, but the situation keeps changing, said Al-Awadhi, who admits he has no idea what will happen. He does, however, make the point that the situation is entirely in the government’s hands, not the airline’s.
A further obstacle to Kuwait Airways’ future is the condition of its home base, Kuwait International Airport, which is operating at almost double its annual design capacity of six million passengers. Although Al-Awadhi has no wish for Kuwait Airways to become another Middle East mega-carrier he said: “Even if I did want to, it would be impossible, purely because of the infrastructure.
“My airport is falling to pieces at 11.5 million passengers. The infrastructure is stretched beyond its limits.”
Relief is on the way, in the shape of a new $4.3 billion terminal that will have a capacity of 25 million passengers.
However, that is not due to be completed until around 2022. As an interim measure, Kuwait Airways is building its own, dedicated ‘support terminal’ for its passengers that will have an annual capacity of 4.7 million and which should be operational in the first quarter of 2018. However, the company will outgrow that by 2019-20, which makes the arrival of the new main terminal on schedule vitally important.