Financial Times

HolidayAir to offer 'cheapest' tickets; mulls IPO in 3rd year
By Duruthu Edirimuni
HolidayAir Airways (Pvt) Limited, aiming to be Sri Lanka's first low cost airline and awaiting approval from the Civil Aviation Authority (CAA), will offer cheap tickets to lure travellers and has ambitious plans for an IPO in the third year of operation.

CEO, Arjun Ruzaik, told The Sunday Times FT that the company's long-term plans include going public. "It is fundamental in our business plan and we will be seeking an IPO in our third year," he said, adding the Colombo bourse is very healthy at the moment due to the peace process, and going public is a great opportunity.

Ruzaik, who is presently a Kenyan passport holder, said Bizone Ltd., a Nairobi consortium running a poplar radio station in Kenya for Kenyan Indians called East FM, and East African Safari Air, the second national carrier for Kenya, will be investing in HolidayAir Airways.

"We are awaiting CAA approval on Delhi, Chennai, Bangalore, Cochin, Trichy and Trivandrum initially," he said, adding other destinations the airline plans to launch into include Abu Dhabi, Dubai, Male, Singapore and Bangkok.

CAA, Director General, H.M.C. Nimalsiri said that he is optimistic the airline's Air Operating Certificate (AOC) will be processed within two months. "The HolidayAir team is very proactive, which will make it easier," he added.

Meanwhile, Ruzaik said the airline, presently in talks with five leasing companies to lease five Boeing 737 aircraft, will be ready to fly in six months after route approval is granted. "We are in talks with five leasing companies; two in Ireland, two in Singapore and one in the US," Ruzaik said, adding that it will cost US$ 12 million to lease them. "If we decide to purchase the aircraft, which are 148 seaters, it will cost us US$ 50 million. Therefore we will take the leasing route.,"

He emphasised that HolidayAir aims to provide substantial savings on the ticket prices compared to traditional airlines, while giving only what the passengers need. "We will have nothing extra such as complimentary giveaways and frequent flier programmes," he said.

"The basic concern of passengers is to get from point A to point B. They will not need a toothbrush and other toilet accessories on a three to four hour flight," he said, adding that HolidayAir wants to provide low cost air travel in 'relative comfort' to people who have never been on a flight.

Ruzaik said the airline hopes to capture a market between 20 to 25 percent from traditional airlines, to all the destinations it flies within a year. "We hope to create our own niche as well, because right across the world, the entry of a low cost carrier generates a market that has not travelled before," he said.

"We will not have posh offices with plush carpeting, because we don't want to pass all these costs to the passengers," he said, adding that their policy will be to sell tickets at the cheapest prices, only through the Internet.

The firm, keeping to its 'no frills' theory, will not have extra costs such as Public Relations agencies to boost its image. "We will not have a PR agency, but will be having a marketing team doing essentially three jobs; PR, marketing and sales," he said.

He said most airports the airline flies to will allow the first hour absolutely free for ground handling. "We are quite comfortable in turning around the aircraft in one hour," he said. "Where possible we are looking to use secondary airports, so that our ground handling costs will be cheaper," he added.

Meanwhile, the company is in talks with SriLankan Airlines about their 'exorbitant' ground handling charges. "I am literally fighting with them," he said, adding HolidayAir has submitted a proposal to SriLankan Airlines, who will be taking it up at the Board level in the near future.

"I firmly believe that because Sri Lankan Airlines has had a monopoly for so long, they have an undue advantage," he said, adding that all other carriers using the Bandaranaike International Airport complain of their 'horrendous' ground handling charges. "What is it that SriLankan Airlines is doing different to other parts of the world that they are charging so high? Are SriLankan Airlines equipment made of gold?" he asked.

He said that within 12 months everyone from the CEO to the tea boy will be Sri Lankan, except for the captain and the first officers. "We need a total of 30 first officers and 30 captains whom Sri Lanka does not have," he said.

However, he said that at the end of four years, the company will be completely Sri Lankan, because by then captains and first officers from Sri Lanka will be trained. "We are hoping to train them in the US, Hyderabad, Singapore or Dubai. "It may be a combination of all these places or whichever place that gives us a decent contract," he added.

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