MIDEX AIRLINES has grown rapidly to become the largest charter airline in the Middle East and Europe. Dr Issam Khairallah tells Ruari McCallion how it was done.
The year 2007 may have begun by looking like a good time to start an airline; but the emergence of the banking crisis and the global downturn in trade may have caused some air entrepreneurs to think that it could have been a better idea to have sat on their hands. But not Dr. Issam Khairallah, president of MIDEX AIRLINES.
“We decided to establish a cargo operation in Dubai due to the fact that there is a huge amount of products being brought from the Far East to Dubai by sea, to be forwarded by air to Europe and to the USA,” he says. “There was a definite shortage of aircraft. We established ourselves in the United Arab Emirates [UAE] as a competitor to many Russian airlines, with the intention of flying to other parts of the Middle East, Europe and the Far East.”
The company was created in January 2007 under a licence for Passengers & Cargo issued by the government of Dubai; but getting such a licence is not easy. “The UAE has very strict rules applied to airline operators. If you think of the Federal Aviation Administration [FAA]’s standards in combination with those of the European regulatory agency [the EASA], you’ll get to UAE requirements,” Khairallah says. Those demands are a hurdle but also opened up opportunities for MIDEX, as the Ilyushin aircraft of its principal competitor outlived its usefulness and ability to comply with contemporary standards.
In 2008, MIDEX began scheduled flights from Al Ain International Airport, which is just about in the middle of the base of the peninsula occupied by Dubai, Abu Dhabi, Sharjah and other Emirates; but the company’s plans had to be adjusted in the light of the downturn in demand. Scheduled flights were suspended in April 2009 and the company switched to offering charter services.
“We now specialise in charter flights from the UAE to Afghanistan and Iraq, and we lease planes to the contractors of many US Departments for the transport of supplies to American troops,” he explains. “Our planes carry produce and equipment for their daily needs—mostly food, but also housing and living requirements. Everything the Americans need has to be shipped in—they have nothing on-site.” Items such as food are time-critical, of course; flight, rather than surface shipping, is usually the only option.
MIDEX offers ACMI (aircraft, crew, maintenance and insurance) charters; in short, a complete package. It now has a fleet of 10 aircraft: three nose-loaders Boeing 747-228Fs and seven Airbus A300B4-203F aeroplanes. Its reputation—and therefore its competitiveness—is founded on delivering on time, every time, in full.
“We were awarded the prize for the Best Air Cargo Operator 2009 at the Middle East Logistics Awards, which was based on a study of our operations, on-time take-offs and landings, and on our services. We’ve been in business for just a short period of time and were able to compete with leading carriers such as Air France, KLM and so on. We were surprised and greatly honoured to receive the award,” says Khairallah. “We always seek to take off and land on time and in full. Our flights to Afghanistan, for example, are going into military airports, which have heavy traffic. We have to hit our 10-minute arrival slot or turn back. We have to offload and load within 40 to 50 minutes. We have a slogan, which is a promise to our customers: ‘It’s On Time Or It’s On Us’.” It reflects the company’s commitment to service—and it is a rare day when it has to carry responsibility for coming up short.
That commitment is now being manifested in another way—MIDEX is moving its centre of operations from Al Ain to Sharjah airport. “Sharjah airport is right next to the seaport and only 10 to 15 minutes away from Dubai—Al Ain is about 90 minutes away,” Khairallah says. “The European airlines prefer to land there. We simply followed our customers to their preferred destination—it’s better for everyone.”
MIDEX is sufficiently confident in its business model that it is expanding. It has already invested around $600 million and is expanding its fleet during 2011; it intends to buy two more B747F planes before June and another three in the second half of the year. It does not lease or finance its purchases; the company is a wholly-owned subsidiary of MIDEX INTERNATIONAL Group, the Lebanon-based courier company with its main hub at Orly in France. The company is thus able to acquire assets without incurring debt, which helps control its overheads.
“We are one of probably just five companies that own their own fleet,” he explains. “Those airlines that lease or finance their planes are faced with big costs at the end of each month, whether they are flying or not. Our ROI is in the region of 15 to 20 per cent, which means it takes five years to get a complete return—but we are saving a lot of money on bank charges and interest.”
As well as serving growing demand, MIDEX in its existing areas of operation has definite plans for expansion; it began weekly flights to Lagos, Nigeria, a while ago and now operates 10 each week. It is also looking further afield, to the emerging markets in South America. Such ambitions need staff, and the company has been investing there as well.
“We prefer to hire experienced staff,” Khairallah says. “We require pilots with a couple of thousand flying hours with 747s and A300s. Some came when we bought the aeroplanes; we have sent others for training and type rating. Those we send for type rating agree to work with us for a period—otherwise, pilots are on a two to three year contract.”
But aeroplanes aren’t just about flying—they have to be maintained and serviced as well. “Again, we prefer to hire trained and experienced technical staff. Each aircraft needs four or five ground engineers and 10 to 12 crew; most of our pilots are from the USA and engineers are from South Asia and the Middle East.”
Experienced and highly qualified directors, managers and staff, an outstanding delivery record and commitment to customer service add up to an excellent business model for MIDEX.
