As Oman Air undergoes a major restructuring, CEO Con Korfiatis shares insights into simplifying the airline’s fleet, rebalancing the network and charting a course toward financial sustainability.
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Rush Transcript
David Casey:
Hello everyone and thank you for joining us for Window Seat, our Aviation Week Air Transport podcast. I'm David Casey, Editor-in-Chief of Routes. Welcome aboard for this week's episode. I'm delighted to be joined by Con Korfiatis, the CEO of Oman Air. Now Oman Air may be a relatively young airline, they're just over 30-years-old, but it has played a crucial role in putting Oman on the global map, connecting the country with the world. The airline has built an award-winning reputation and was most recently recognized by Skytrax for having the best airline crew in the Middle East. However, like many other carriers in the industry, Oman Air is navigating significant challenges from restructuring its fleet to financial transformation, as well as finding its niche in the highly competitive Middle Eastern market.
On this episode, we'll be speaking to Con about the airline's future and the journey towards financial sustainability. Con, welcome to Window Seat. We're really excited to have you here. So you've been in the role of CEO for about five or six months now, and your previous experience was at LCC Flyadeal in Saudi Arabia, which is obviously a fast-growing carrier with a lot of investment in its network and fleet. It's probably fair to say that you've taken on quite a different challenge at Oman Air. Perhaps you could just start by giving us a little perspective on the airline at the moment and the turnaround process that you've been tasked with leading.
Con Korfiatis:
Thank you, David. Pleasure to catch up again. Thank you for the time. Yes, so I'm coming up to six months actually in the role and Oman has been, albeit I've been in the region and just next door in Saudi Arabia for seven years prior to this, Oman's a revelation for me in many ways, firstly because I've never personally ever traveled here before despite living so close. Secondly, I also, despite 30-plus years in aviation, I had never flown with Oman Air before as well so both the country and the airline was something new to me. And then obviously the job at hand here is to take a legacy airline, you're right, it's a young airline in global terms in a way, but it's 30-years, I'd still call it a legacy airline, it's never been through a transformation to adopt current best practices.
My time here in the last six months has been a revelation in many ways. Firstly, the country itself. If you've never been anywhere, you tend to stereotype it by what you see in its near neighbors and I think Oman has something that is absolutely unique and distinctly different to our neighbors in the region, even though we are part of the Middle East. But I guess therein also lies the challenge is that the awareness of Oman as a destination is not where we'd like it to be, both as a country and as an airline, and that's the opportunity for us to go and do that better and build on that.
The airline itself, also, I mean the fact that I've spent all these years in an industry and never flown Oman Air and live nearby and still not have flown Oman Air, that tells you something about the awareness of the airline more broadly as well. You touched on the awards the airline has won. So actually my first impressions of the airline from a customer point of view, it is a wonderful airline and does a really good job on what we offer our customers. And our customers are loyal and come and fly with us again and they're fantastic brand ambassadors. We just need to build a number of people that are doing that.
And again, in light of the country, we've got to build that awareness of the airline. So the likes of me were so close and actually who came from the industry and wasn't really aware what I was missing out on, that's if you like the customer side of the airline. On the business side of the airline, really the reason I was asked to come and I have accepted the challenge and that is to take a wonderful airline, which is not a good business and bring it into a modern era in terms of its business results. The country has a Vision 2040 program, tourism is one of the pillars of that. In broad terms, we're looking to double the tourism numbers between now and that time and obviously the airline is an enabler of that and the home carriers are critical to that and so we've got to get our business fundamentals right.
David Casey:
So it's really about putting the foundations in place and getting the basics right before you can start to grow your fleet and your network again. Financially then, Oman Air is still supported by the government and your last results really weren't where you'd want them to be. What steps are you putting in place then to reduce dependency on the government so you're better able to stand on your own two feet?
Con Korfiatis:
Well, we start with turning over every stone and if you think of it in terms of business outcomes, we have the commercial side of the business and we have the operations and the cost side of the business. And on the commercial side of the business, I've already touched on the fact that we need to bring more people to Oman and expand the number of people that know about us, particularly as we're building infrastructure to sustain the larger tourism industry than what we have today. So we have to support that.
We have to adopt more digital solutions. I mean we're still a little bit old school in terms of how we distribute, lots of indirect sales through the traditional channels. We've got to invest a lot more in direct sales. We've got to invest a lot more…in the way we do our data science so that we can digitally expand our footprint and reach more people to help build that, fill the planes better and so on.
There's also some work that we've done on working on our bank structures for the transit traffic where we're not a hundred percent point-to-point in terms of our passenger profile. We still do carry sixth-freedom traffic. We're not the mega hub of our nearby neighbors, but we have our niche, but not insignificant play in that space, where we choose the sectors that we need to get together on an intelligent basis where it makes sense and we find an opportunity that we can make them sustainable. So building that and refining it. I think I've been here through two seasons worth of route network planning so far and we've taken step changing both of those and we'll continue to do so. And I think just moving from northern summer in the coming days to the northern winter schedule, I think we've doubled the number of flights we've got connecting to what it was through the summer period.
So that's quite a material change. We're not talking about single-digit sort of improvements, they're double-digit. And the work we did through summer, we saw improved results. We expect through winter we'll continue to see more of that. On the cost side, again, we've got to look at everything. We've got to look at our contracts and what we're paying for things. We need to look at our productivity, we need to look at our efficiency. We need to look at our adoption of technology and our solutions. We need to simplify the business and automate much more than we can. We know we have more staff than we should for the size of the airline that we are. When we compare the number of employees per aircraft we have with even our nearby competitors and others who are relevant around the world, we're higher.
So we know there's work to do on that front. We know the ecosystem charges are a bit higher as well. And I guess it's a legacy system collectively, the whole aviation ecosystems, not just the airline itself. So work to do on all of that and that's a journey. It's not a sprint. There's a lot of fixes there and as you're turning over the stones, we work on priorities and the ones that deliver the most value quickly. But in doing that, sometimes you find as you're implementing this, follow-on things that you find that all of a sudden come into play and you've got to fix those as well. So we see the transformation journey as being three and a bit years. We're going into our first year of that right now.
David Casey:
So you say you need to simplify the business and part of that of course is to simplify the fleet. Now Oman Air is transitioning to an all-Boeing 787-9 widebody fleet as well as a 737 MAX narrowbody fleet. Can you just tell us a little bit more about this strategy and the fleet plans going forward?
Con Korfiatis:
I mean network and fleet are at the core of every transformation I've ever seen in any airline in the world. So we had a complicated fleet for an airline that had 42 aircraft. I mean we had 20 widebodies out of a total 42. And there were two aircraft types and three sub variants within each of those two fleets. So six different types of aircraft is just insane. So we took the A330s out of our network during the long summer. We are moving to sell those and we have an agreement signed to do so that we'll be executing on in the months ahead.
On the narrowbody side, we are all 737s but we have some NGs and we have some MAXs. The NGs are all leased aircraft. MAXs are a combination of owned and leased and as those leases come to a natural end, which will be by sort of Q3, Q4 2026, we'll then center back around an entire MAX fleet for the airline as well. So that puts a big tick in the box for simplification.
There's lots of benefits that come from that, whether it be training simulators, systems, records, there's so much efficiencies which comes with streamlining that fleet. But that fleet decision had some implications on the network, but they were also driven by cutting routes where the losses were most significant. You touched on our results that we've published for last year, it's not an attractive sight so we had to stop the bleeding and do some urgent surgery.
We're about to go into northern winter and we announced that route as you know, a brand new route, a route that the airline has never flown in its history and that's flights to Rome, and they start in December. But we also had announced a few weeks ago as well going back to Moscow and the Maldives that comes on and next year, we have some more flying actually scheduled and the northern winter schedule will increase, again in summer.
And we are doing that without increasing our fleet because the other thing again in search of reducing that cost base is increasing the productivity of our fleet. And so our plan for 2025 has us getting more hours per day out of both our wide-body and our narrow-body fleet, which will enable us to do more flying with the same number of aircraft.
David Casey:
As you said, it was really exciting to hear you announce Oman Air's new route to Rome, at Routes World in Bahrain earlier in October and I was actually quite surprised that it was the first new route that you've announced in five years given that there was so much network churn during the pandemic. In terms of the development of your network going forward, how do you balance your route development strategy with one the needs of Oman as a nation to add connectivity and bring in tourists but also alongside the need to transform the business and be more profitable and sustainable?
Con Korfiatis:
Good question. Well, the obvious one is to take ownership of the point-to-point market that makes sense for us to own and that's the primary focus and from that flow the transit traffic opportunities. So we have three main groups of customers who fly with us. We have our Omani outbound market, which is predominantly, we're not a big business up here, we're not a big business city for the regional world, so it's predominantly leisure-related, the outbound. Some business predominantly leisure.
We have an inbound tourism market which predominantly comes from Europe and we have expatriate market, both white and blue color market, which comes partly from Europe. A lot of the worker market comes from South Asia and the Far East and so there's a point-to-point market there also. The Far East is also an outbound destination for the Omani outbound market as well. So they're the point-to-point markets and obviously just given the geography of what I've just said, there are some natural transit flows that are possible to come out of that and that then leads to other opportunities.
There's two of those. On the existing transit traffic, we've never had a stop-over product. So there's an opportunity to encourage people to say, well okay, you may be going from A to B, but a stop-over in Oman has its own worth and its own attractiveness attached to it. So there's that element of it. And then there's new markets to look at. I mean you've got to think for example, markets like China and Japan and Korea and what they like to do when they travel for tourism purposes, Oman most their definitely has attractions that would be of great interest for those markets. So there's got to be potential for inbound tourism towards our longer-term tourism targets that can come from markets like there. I think India represents an interesting market for that.
In Europe we have some markets where we're reasonably well-known, we get good numbers every year inbound. Rome wasn't just about outbound Oman. We see that as a very relevant and significant catchment area that we haven't tapped before to come and experience Oman. We know from flights to Milan there is interest to here from the catchment area what sits up in that part of Italy and the countries around it. Rome has its own catchment area and it's significant, so we're going to be attuned to those sorts of opportunities.
Our play in Africa, there is very modest right now. I see opportunities there also going forward, both from point to point. There is obviously historical ties between Oman and the African continent and places there, so that's existing market, but also there's an opportunity to build flows from the Far East through Muscat. We did quite well geographically for that and obviously in the other direction as well.
David Casey:
That actually brings us nicely I think, to talk about partnerships and the fact that Oman Air is set to join the Oneworld alliance. It's obviously a significant milestone for the airline and one I'm sure will support your transformation and those long-term profitability goals. What are the biggest opportunities do you see arising from your membership and are there any markets or routes where you expect new partnerships to have the biggest impact?
Con Korfiatis:
Partnerships and the alliance are what allow us to initially fast-track the network growth because you get an overnight kick immediately, but also even going forward and benefiting over the investment that your partner and alliance airlines are also making in expanding their own footprint. The Oneworld alliance, we already do work with Qatar Airways, we already do work with Malaysian Airlines, so we already had some good partnerships there.
And if you think of the footprint, the other major airlines there, the like of Qantas or Australia or Cathay in the Far East, North Asia and North-East Asia where we're not really well represented. The footprint that British Airways and IAG has through Europe, the footprint that American Airlines has in the U.S. and the ability perhaps to grow in transatlantic. I think as an inbound tourism opportunity, North America would be something of interest to Oman. For the alliance, that gives us a great opportunity to tap that market and to start to build a US-Oman inbound tourism market.
David Casey:
You mentioned Qatar Airways then, which will be one of your new Oneworld partners. Obviously they are a super connector and a big rival in the region at present. How do you see that cooperation with them playing out and how is Oman Air differentiating itself given that you are not going to be able to compete when it comes to that transit traffic?
Con Korfiatis:
Qatar Airways are, as you call them, a super connector. I mean that is their predominant reason for being, it's that transit traffic. It's not our predominant reason for being. So in that sense, we don't have the same business model and an overlapping business model going to exactly the same points.
We have a destination where we're looking to market in our own right, and I mentioned earlier the importance of doing point-to-point connectivity. I mean our lifestyles today dictate efficiency and maximizing your time you have available and gone are the days where people go away once a year for really long holidays and you don't care about that stuff, and whether you go five stops getting somewhere, as much as when you're trying to get away three, four times a year and they're short, you really want to be in a destination you're ultimately headed to as quickly as you can.
So that's something that gives us a reason for being where you can't just rely on everything coming through a hub that's nearby. If you think of the number of points for example, that Qatar Airways touches in Europe and they're potentially being source markets and driving some stuff here, and we can't be in all of them. It's accredited rather than cannibalization. So I think we see those sorts of opportunities and it's been a healthy relationship we've had with them in that respect and we expect that to continue.
David Casey:
Okay, so turning to your current operations, the geopolitical situation in Israel and neighboring countries has obviously been a significant challenge for many airlines in the Middle East region. How has Oman Air been affected by this and are you seeing a drop in demand for travel to the region? Have you had to alter your strategy in any way?
Con Korfiatis:
No, we haven't. We haven't seen an impact demand in our flights. It's an interesting time for us in the sense that whereas lots of countries go into a low season at this time of the year, we actually head into an inbound peak season. So summer here is more outbound peak than inbound peak, and we have an inbound peak season, which starts in October, November and runs through about April every year.
And it's almost like a few weeks ago I feel like we've hit the switch. I mean just going in and out of the restaurants and the malls and the hotels here in Oman, you see the footfall and you see the number of different nationalities. I've got someone visiting me from overseas at the moment, I went to see them at the hotel for breakfast and the coffee shop was full and it was full of many different faces. So no, so far we're not seeing it. The planes are flying quite full and the inbound market is doing what we would've expected it to.
David Casey:
Well, it's really good to hear that you haven't been affected and let's hope that continues. Well, Con, it's been fascinating to hear you talk about the changes taking place at Oman Air and the direction that you're steering the airline. Before we finish this episode, perhaps you could just finish by outlining where you see Oman Air going. What will it look like in five years’ time when that restructure has been completed?
Con Korfiatis:
I think well most definitely we'll have completed our transformation stage and be on the front foot and back in investing in the airline and investing in our footprint, again within the context of the size of Oman and the size of the tourism market it's aiming for. So nothing crazy, not looking to abandon the strategy of that and try to become a super hub so we're in a better condition. I think those media carrier space is spoken for in this region. I don't think that the region would sustain another one, but we have our area to play in and it is still a growth segment.
And so for a mid-size airline, I do see us growing, but again, not to the sort of numbers of the nearby neighbors. And that footprint, we look to exploiting all those opportunities I've touched on in network discussion earlier. I think we're keen to get on the front foot in terms of recruiting people again and creating jobs and creating talent and building talent. There's a lot of, if you like, lateral industries that rely on the aviation and the connectivity. We're building tourism infrastructure, we're building tourism assets that we have and there's a great diversity of assets here. There's opportunities potentially to build on the local linkage. Our Civil Aviation Authority announced a few months ago, the commercialization of five existing airports.
The country from north to south is quite a distance and there are different things to see in different parts of Oman. I couldn't say that the nice part of Oman is one section, the beauty starts from the northern tip and it goes all the way down to the southern tip almost at the Yemen border. So what we might do in terms of expanding the tourism footprint there. So I think that's something we'll be looking at at some point once we get over the next 12, 18, 24 months. So I think that's an opportunity. And building on the alliances that we're going into and the really being focused on Oman primarily.
David Casey:
Thanks, Con. Certainly sounds like you are embarking on an exciting journey. And for any of our listeners that haven't been to Oman, I do urge you to check it out. It is a fascinating country.
Well, thank you for joining us today. Thanks to you, our listeners, and to our producers, Guy Fernyhough and Cory Hitt. Remember to follow us on Apple Podcasts or wherever you listen. Until next week, this is David Casey disembarking from Window Seat.
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