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Royal Air Maroc Buys 66% stake in Jet4You PDF Print E-mail
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Tuesday, 13 July 2010
If you can't beat them,Does the low cost model pose a threat to traditional companies? Atlas Blue, hybrid group company of Royal Air Maroc, is now back in the fold, not having managed to lower costs. But, RAM has continued to raise the need for a low cost alternative, knowing that its own attempt didn’t work “due to the size of the fleet and to an insufficiently powerful commercial internet site”, explains Driss Benhima, CEO of the group. As a result, Atlas Blue is now an RAM airliner and no longer has a commercial side. Thus, it has become a mere subcontractor, selling flight hours to Royal Air Maroc. RAM’s new low-cost experiment, being finalised with the TUI group through its own group low-cost company, Jet4you, is very different. According to Behima “it’s a major equity investment of about two thirds of the company.” For the time being, the cost of the deal remains undisclosed.

When contacted by L’Economiste, the two new partners said that “the evaluation of this project is ongoing”.

Nevertheless, the choice of this “strategic alliance” is clear: “to leave the management of operational factors to the aircraft division of the TUI group, JetAirfly, while RAM deals with coordinating the network”. For Benhima, this operation allows his group to access a fleet of 147 airplanes, “all low-cost”, but also to “benefit from a dedicated commercial internet site”. In other words, commercially and operationally Jet4you has all the elements needed for a low-cost company. “Which is not the case for Atlas Blue which was affiliated with a standard company and the operating costs which go with it”, admits the CEO of RAM. It is well known that low-cost companies primarily operate a strategy of dominating prices, a strategy which aims to minimise production costs to provide the cheapest possible product. More than ever, this objective is essential for Jet4you as “having a low-cost ticket is the primary asset of the company”.

According to early indications on this deal, the agreement signed between the TUI and RAM groups addresses the network, routes and prices in order for Jet4you to become the natural complement of the RAM network. Further, “above all this agreement makes it possible to offer the company’s clients competitive tariffs on routes with high-density traffic”.

For Driss Benhima “that’s what makes sense” in this deal. In addition, “this transaction allows the Royal Air Maroc group to regain its share of the market”, he exclaims a little provocatively. Clearly, the group intends by 2011 to raise its current 45% share to 55%.

Royal Air Maroc, that they said was dying, that they said was a struggling company, in great financial difficulties, only a few months ago, has shown by this project that it has retained its aggressive temperament. Moreover, “it is keeping its dominant position”. Benhima’s meaning is clear.

Morocco Newsline

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