Oman takes control of SalamAir

The Omani government just took full control of state-linked budget air carrier SalamAir, calling time on domestic airline competition in what was likely a move to support the ongoing recovery of its flagship carrier Oman Air, which is clawing its way back from a debt-fueled solvency crisis. The acquisition aims to “improve financial solvency” and reduce overlap across the two networks, Transport Minister Said bin Hamoud Al Maawali said. The value of the transaction was not disclosed.

The acquisition was made via Asyad, Oman Investment Authority’s (OIA) logistics unit, which bought out SalamAir’s former owner Muscat National Development and Investment Company — a consortium of parastatal entities.

Managed competition doesn’t work: SalamAir launched in 2017 as a private sector-led (and budget-friendly) alternative to Oman Air. The two had been flying head-to-head for the same passengers on 16 routes including Muscat-Dubai and Muscat-Doha. The result: price wars that bled cash from both entities.

What we think will happen next: While the government says the two will continue to operate independently, Asyad is almost certain to merge back-end operations — think maintenance, catering, and ground handling.