CASE STUDY-New ’Shariah-compliant airline’ Firnas Airways reveals strategy ahead of maiden flight mid-2017

Photo: UK-based Firnas Airways claims to be Shariah-compliant / Promotional material from Firnas Airways

The Brexit decision set back its maiden flight and sent the company back to the drawing board. Kazi Shafiqur Rahman, founder of UK-based so-called Shariah-compliant airline Firnas Airways, reveals the company’s strategies ahead of its planned maiden flight mid-2017.

1. A key takeaway that new airline Firnas Airways has learnt is that a business cannot rest merely on its ‘Shariah-compliant’ appeal. Learning from the experience of Malaysia’s now-grounded so-called Shariah-compliant Rayani Air, and set back by the Brexit decision, Firnas Airways is taking more time to solidify its business and operational planning in order to reach the Muslim and wider non-Muslim market.
2. The airline reveals that there is a market for premium-economy air travel among both Muslim and non-Muslim travelers.
3. New businesses should focus on gaps and unmet needs in the market; Firnas is doing this by identifying under-served, low-cost routes.

Firnas Airways is a London-based Shariah-compliant airline that takes its name from Abbas ibn Firnas, the Spanish Muslim inventor who was arguably the first person to attempt to fly, hundreds of years before Leonardo da Vinci drew his flying machine and the Wright brothers made the first flight.

At the heart of its business is its vision to appeal to the wider non-Muslim market and become the third largest long-haul operator in the United Kingdom, after British Airways and Virgin. The company believes it has an opportunity to succeed because of its solutions to gaps left by major carriers, chief of which are: its hybrid-and-bespoke positioning for short-haul flights, its focus on underserved destinations, and use of turboprop planes.

While still in pre-takeoff mode, the company says it has: working relationship with airports and other airline partners, secured good deals with airports to get a lot of incentives, and working relationships with aircraft lessors and manufacturers.

The project will be launched in three phases:  

• Phase 1 is planned to launch in Spring of 2017 and will focus on short-haul domestic and regional flights that are between one to three hours in duration. These will include domestic flights within the United Kingdom as well as flights to some European destinations.

• Phase 2 is planned to launch in 2019 and will focus on mid-haul flights that are up to six hours long, which will include destinations such as Tehran (Iran) and Accra (Ghana) and possibly Lagos (Nigeria).

• Phase 3, which is planned to launch in year three or four, will focus on long-haul flights and will complete the airline’s mission of scaling up the business globally by serving underserved destinations, and those with strong commercial demand. Underserved destinations include Bangladesh and Pakistan, for which travelers in the United Kingdom and other parts of Europe have limited options in terms of flights. Destinations with strong commercial demand include popular destinations such as New York, Toronto, Hong Kong and Bangkok.

HYBRID OR BESPOKE POSITIONING FOR SHORT-HAUL SECTOR

The company plans to offer hybrid and bespoke options for short-haul flights and full service for long-haul flights. For the short-haul sector, Firnas will assume a hybrid stance, positioning itself between full service and low cost. What this means is that customers will be offered the flexibility to pick and choose the services they would like to pay for. “Whether you are a low-cost traveler or a full service traveler our doors will be open, we don't want to turn away customers,” says Kazi. The airline will offer the following three tiers on their short-haul flights:

Bronze: This is comparable to low-cost models, with no room for any perks or adjustments. It targets travelers who book in advance, knowing that their plans will not change, and are just looking for a cheap flight.

Silver: This is a new tier that the company has created for the industry. Here, the customer can tailor their ticket and experience. “It is ideal for someone who wants a bit of both worlds. Perhaps he wants the full meal but does not want other features, such as seat selection or free [amendment] of the ticket,” said Rahman.

Gold: This is comparable to business class in a full-service short-haul operator. It will allow passengers to be fully flexible, with fast-track check-in and additional perks thrown in, including airline meals.

DRIVEN BY CUSTOMER NEEDS

The company recently launched a survey to inform their short-haul strategy and to understand what impacts the customer’s decision-making process when selecting an airline. The results of the survey confirmed that people want something between low-cost and full-service. Around 86 percent agreed that there is a market for a hybrid airline that combines the best of both budget and full-service airlines, according to Firnas.

“We feel customers are demanding more choice, so we will create a whole new industry [with] a new hybrid/bespoke solution by positioning ourselves between [the low-cost airlines] that charge for everything … and full-service operators that charge you for something you may or may not use. For example, many people don’t drink alcohol and they should not be paying for it either,” said Rahman.

FOCUS ON UNDER-SERVED DESTINATIONS

The airline plans to focus on underserved destinations such as Bangladesh and Pakistan as well as those with strong commercial demands such as New York, Toronto, Hong Kong, and Bangkok. The United Kingdom’s two major operators are British Airways and Virgin, but they avoid certain service routes for various reasons: their business model is based on three or four classes, a configuration that  underserved routes do not support; both London hub airports, Heathrow and Gatwick, have slot restrictions; and both have a highly unionized workforce that dictates where the airline flies to—as Rahman notes, “no crew will be happy to slip in Tehran or Islamabad or Sylhet for three to four days.” Firnas plans to target these unserved and underserved destinations.

SHARIAH-COMPLIANT

Islamic financing

Firnas Airways is currently working on raising Shariah-compliant funding. “We want all our funding to be via Islamic financing and [we want to] avoid usury, though limited Islamic debt funding options are available, particularly in the part of the world we live in. I’m hoping the halal finance providers will see Firnas as an opportunity and get involved,” said Rahman.

Halal food, no alcohol

The airline will provide halal food on their flights and not offer any alcohol.

Prayer facilities

It is also considering offering prayer spaces on their mid- and long-haul flights.

Pilgrimage services

It also plans to launch a special haj service that will include features such as providing a special haj section at the airport as well as on-board training on haj rituals using the in-flight entertainment systems.

CUSTOMER SERVICE, INNOVATION

Firnas aims to offer customer service not only before customers buy their tickets but also after their purchase. The company is planning for customers to be able to call a number or push a button on an app that will connect them to the airline’s call center, where they can get direct help from the first agent who picks up the phone. “Our agents will be empowered with the right tools, software, and skills to use the one-stop software we are developing, which will serve all customer needs, [including] booking, amending, cancelling, complaining, [and] enquiring,” said Rahman.

For long-haul flights, the company plans to offer a staggered cabin layout to enhance privacy and increase legroom. It also plans to offer in-flight entertainment on its short-haul flights. “We can afford to do things like this because we [will] save a lot of money by operating fuel-efficient planes,” said Rahman.

“We are re-defining, re-inventing, re-engineering, and re-packaging how we fly. It’s boring, and we want to add excitement to flying,” he added.

The need for a quality product at affordable rates in the short-haul sector

According to the airline's founder, there is a growing segment of customers who want an enhanced product at good rates. “We want to offer customers choice, comfort, affordability, [and] flexibility whilst utilizing innovation and the latest cutting-edge technology. As crazy as it sounds, we will offer customers inflight entertainment even on short-haul sectors using consumer tablet-based solutions. We are also pushing boundaries to offer broadband-speed Ku internet (a wi-Fi service that allows high speed broadband Internet) in the air. You can literally watch Netflix or Amazon video at 35,000 feet, or watch YouTube for that matter.”

Lower operational cost of turboprop aircrafts

Firnas Airways plans to operate turboprop aircraft, which cost 50 percent less to operate than the jet aircraft operated by local competitors British Airways, EasyJet, and Ryanair. “There are many other opportunities within [the] short-haul sector, and we will win by offering a very good product at a very affordable rate,” said Rahman.

Traffic rights for UK airlines

The United Kingdom is one of the most influential countries in the world, and as such, it has a lot of airline traffic accessibility. The country enjoys fifth freedom rights, which allow a country’s airlines to carry passengers between two foreign countries.

For example, a flight that originates from London and stops in Dubai to offload passengers can load other passengers before heading to its final destination, such as Karachi in Pakistan. Traffic rights granted to British airlines will also allow Firnas to make high-frequency flights to its chosen destinations. For example, UAE carriers can only fly to Canada six times a week in total for all United Arab Emirates airlines, whereas British carriers can make an unlimited number of flights. British airlines also have access to destinations other airlines do not, such as Sylhet in Bangladesh.

Raising capital

The company is looking to raise between $50 and $90 million to fund operations from now until the fifth year. “Funding is our biggest challenge right now; [the] airline business is known for its risks, but it’s also known for its rewards. We are engaging with various strategic investors for our growth funding and I am sure plenty more will want to invest once we have proven that we can run a profitable airline,” said Rahman.

Brexit

Prior to the Brexit referendum, the company was planning to launch international long-haul operations; however, due to Brexit many of the deals they were working on with a number of international organizations, including a major Chinese airline conglomerate and a major British bank, fell through within a week of the Brexit referendum.

The team had to go back to the drawing board and come up with a new strategy to enter the market; their solution was to launch the project in three phases and postpone the launch of long-haul flights to Phase 3.

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