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Oman Air aims to break even within five years: chief

Middle Eastern carrier Oman Air aims to break even at group level within the next five years as it presses ahead with building up its network, despite the difficult market conditions.

The carrier has recently added new flights from Muscat to Frankfurt, Munich and Paris in Europe, and will open links to the Maldives and Colombo in Sri Lanka later this month. The carrier plans flights to Africa and is eyeing southeast Asia and China.

Oman Air's international expansion is part of an effort to support the Omani Government's ambitions to diversify from oil revenues by developing the country as a high-end tourism destination.

"It goes hand-in-hand," explains Oman Air chief executive Peter Hill. "We focus on Oman to-and-from traffic. While we will carry traffic beyond Oman, that is not our main driver."

The carrier's expansion is fuelled by the arrival of new Airbus A330s and Boeing 737-800s and Hill estimates the carrier operating up to 40 destinations and around 25 aircraft during its growth phase.

"It is probably what Oman needs for the next five years," he says. "In five years' time when, hopefully, the world economies have come back, we will have network that is nicely spread, both in terms of inbound tourism and our growing outbound market."

The long-term aspirations of the Omani Government mean the carrier can continue with its expansion, while other network carriers are scaling back. "We are striking deals [with suppliers] for three to five years on prices we wouldn't ever have thought of a few years ago," says Hill. "When the market is depressed, you can get some increased benefits."

It also means Oman Air is able to withstand losses incurred during this growth phase. The carrier posted a RO42 million ($109 million) loss in 2008 and will remain in the red this year. But Hill says the airline is aiming to become a sustainable operation: "Within the next five years we will have the group at break-even, at the very least."

The carrier initially launched its long-haul flights to London Heathrow using Airbus A310s, and upgraded the aircraft with A330s leased from India's Jet Airways, before this year taking the first of its own new-build examples. "That has given us a new dimension and some of our competitors who have enjoyed the front-end business out of Oman may start to see some change."

Oman Air is due to take Boeing 787s, the arrival of which Hill describes as something of a "moveable feast". These were originally scheduled to arrive in 2012, but delays in the programme mean they are not due until 2014.

Hill says that, should the aircraft fly by year end, the carrier will be more confident of taking delivery of the aircraft in 2014. "That's our growth aircraft, [so we have to work out] whatever we will do in the meantime," he adds.

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