........speculation to rest
RAK Airways overhauls its strategy
By Ivan Gale, Staff Reporter
Dubai: In May, after arriving just months earlier to serve as chief operating officer at RAK Airways, Jack Romero didn't think he'd stay long enough to see the carrier through till launch.
An experienced operator in the aviation industry, he knew his reputation was on the line. And he was sure RAK Airways' business model as a low-cost carrier that would lure customers from Sharjah and Dubai was wrong. So sure, in fact, that he packed his bags. A flight to take him back home to the UK was just days away.
"I realised the previous business plan was unworkable and unrealistic," said Romero, who is part Leb-anese and part Spanish, with a dark tan and a toothy grin.
Months later, Romero is not only still with the airline, he's taken the helm as CEO. As the company approaches a January 2007 launch, he has transformed its business plan as a budget carrier into the network carrier approach with coach and business classes. With the clock ticking down RAK Airways is feverishly making preparations building its staff, negotiating contracts and preparing for the first flights to Iran and India and soon after the former CIS countries.
From his office in a new office building in Ras Al Khaimah, which looks out over the Arabian Gulf and a string of new villas under construction, Romero recalled the moment that convinced him to stay.
At the time he couldn't tell whether the airline was meant to be a national symbol or a commercially viable. He knew that some carriers that started as low-cost either failed or changed their business plans. After 9/11 he'd gone back to graduate school to study aviation and wrote his thesis on weaknesses in the low-cost carrier approach, and now he didn't want RAK Airways to become supporting evidence.
Shaikh Saud Bin Saqr Al Qasimi, Crown Prince and Deputy Ruler of Ras Al Khaimah, set Romero's concerns to rest. "Shaikh Saud said he wasn't interested in a symbol in the slightest," Romero recalls. "He told me he wanted something that made money."
Romero unpacked his bags, got promoted and began to develop the fledgling carrier's business plan.
When it launches in January, RAK Airways will fly with two used aircraft: a Boeing 737 it owns and a Boeing 757 it leases.
In its first year, the airline will fly twice a week to 15 destinations in Iran and India. In 2008, Romero plans on expanding into nine more markets in India, Pakistan, Sri Lanka and Bangladesh.
By year three, with a fleet of over 10 aircraft, Romero said he will tackle Russia and CIS countries Ukraine, Azerbaijan, Uzbekistan, Kyrgyzstan, Turkmenistan, Kazakhstan, and Tajikistan, and possibly chartered flights to Europe. "We knew we couldn't emulate the other three carriers in the UAE because we don't have a large enough catchment area," he said.
Some 200,000 residents live in Ras Al Khaimah.
He also knew he couldn't convince Dubai and Sharjah residents to drive 90 minutes to RAK airport, although he believes a small number will make the trip for the extra baggage allowance of 45 kilos' check in and 10 kilos' carry on.
Instead, Romero said RAK Airways will primarily serve businessmen and tourists and offer shuttle service to Dubai. A growing number of both groups will head to Ras Al Khaimah as it develops its economy, he said.
Romero said by the end of year three, the carrier should turn a profit even assuming oil at $100 a barrel and 39 per cent occupancy on its flights.
Until that time, RAK Airways will rely on cash reserves of Dh500 million after an initial offering raised Dh850 million. The company, which is majority owned by over 30 Gulf investors as well as the RAK government, is expected to grow from 40 staff today to 200 by launch.
Romero can take solace that he has been here before. In the mid-1990s he created British Mediterranean. At launch, he had just 16 employees. When he left, it stood at 250.