Jazeera Airways to cut costs and double passengers by 2029

Jazeera Airways

• 9.5m passengers target
• Larger jets due next year
• Ancillary revenue to grow

Kuwait’s Jazeera Airways plans to add more seats to its aircraft, expand its fleet and cut costs as part of a new five-year strategy to almost double the number of passengers in 2029.

Adding seats this year will raise the average number per aircraft to 180 by the third quarter, the airline CEO Barathan Pasupathi said in an earnings call this week, without giving a comparison.

Next year the low-cost carrier will start taking delivery of new, larger aircraft –Airbus A320 neo and A321 neo. This will increase the average number of seats to 188 in 2029. By then it hopes to carry 9.5 million passengers, compared with 4.9 million last year.

Pasupathi said he plans to be more cost efficient, more prudent in expanding the airline’s network of destinations and boost ancillary revenue in his five-year strategy.

“If you look at Jazeera numbers (for ancillary revenue), on average we’ve been hovering between 8 to 10 percent,” Pasupathi said. “Good numbers, but they can be better.”

Ancillary airline revenue includes things like paying to choose a seat early, for lounge access or insurance. Comparing ancillary revenue’s share of total ticket cost with other carriers, Pasupathi said that in the Far East and Australia it averaged between 25-30 percent. In European airlines like Ryanair and Easyjet, the share is as much as 40 percent. 

Jazeera now runs its own terminal at Kuwait airport, which could boost ancillary revenue, Pasupathi said.

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The airline, which trades on the Kuwaiti stock exchange, narrowed its fourth-quarter loss by 42 percent, improving operating revenue by 15 percent year on year, it said in results announced this week. Full-year profit rose 66 percent to KD10.2 million ($33 million). 

Ancillary revenue last year was KD3.6 per customer, a slight increase over 2023. The aim is to increase this to KD4.5 this year and KD6.5 in 2029.

Load factor, used to measure the percentage of available seating capacity filled with passengers, was 78 percent last year. Jazeera has a target of 85 percent in 2029.

Bahrain’s Sico Bank said in a note that the five-year strategy is “pretty ambitious”. “The airline is targeting a very high load factor [while] adding more seats to each plane,” it said.

The bank expects increased competition for Jazeera in the coming years, particularly on Saudi routes where Riyadh-based low-cost carrier Flynas is expanding.

Midas Aviation consultant John Grant said the “sensible and reasonable” plan is exactly what is expected of a low-cost carrier. They have to “continually grow their fleet, otherwise their production costs begin to rise”.

“Ancillary revenues are where every airline is looking for revenues today, but delivering the increase is the challenge,” Grant said.

“It will need them to fully embrace the concept by perhaps adding other features or products. For example, insurance, lounge access and perhaps partnering with others in the travel space for a larger share of the passengers’ total travel wallet.”