Malaysia’s first Shariah-compliant airline takes to the skies
December 20 2015 10:25 PM

Rayani Air tries to tap the growing market for Muslim travellers with a fully Shariah-compliant service and will also offer Haj and Umrah flights from Malaysia to Jeddah.

By Arno Maierbrugger
Gulf Times Correspondent

A new airline in Malaysia embarked on its maiden flight between Kuala Lumpur and the northwestern resort island of Langkawi yesterday — Rayani Air, a privately-owned carrier designed for a special sales proposition: It is the first Shariah-compliant airline in Malaysia, mainly, but not exclusively, targeting Muslim travelers.
According to Rayani Air managing director Jaafar Zamhar, who spoke at a press conference in Kuala Lumpur on December 18, Rayani Air does not see itself as a low-cost carrier but provides full service including free baggage allowance and business class seats. But what makes it special is that it made it compulsory for Muslim women cabin crew to wear hijab and for non-Muslim staff to wear a decent uniform. The airline also only serves halal food, doesn’t offer alcohol and recites prayers before the departure of each flight.
Founder of the airline is Malaysian businessman Ravi Alagendrran, and the ownership is currently divided between his wife Karthiyani Govindan (49%) and fellow businessman Umad Suhaili (51%). It currently operates two 22-year old Boeing 737-400 bought from Malaysia-based cargo operator Neptune Air and has another two used Boeing 737-400 on order, as well as two Boeing 737-800 which it plans to take over from Scandinavian Airlines by 2017. A new aircraft, a Boeing 777-200ER, is planned to be purchased for long-haul flights to Jeddah to be used during Umrah and Haj at a later point of time.
Originally, Rayani Airlines was planned to be based in Malacca, but it later changed its hub to Langkawi International Airport because the airport has a higher capacity and in order to attract tourists to the resort island. Rayani Air currently has 355 employees, including eight pilots and 50 cabin crew.
Shariah-compliant airlines are a new trend in international aviation as demand for such form of transportation is growing. Rayani Air is now the fourth airline in the world that is Shariah-compliant besides Royal Brunei Airlines, Saudi Arabian Airlines and Iran Air. Another carrier, UK-based Firnas Airways, owned by a Bangladeshi entrepreneur, is currently in the launch process and aims at London-based Muslims flying to South Asia where it will compete with carriers including Biman Bangladesh Airlines and Pakistan International Airways. Other prospective markets include Saudi Arabia and Iran.
The growth of Shariah-compliant airlines is also seen to give Shariah-compliant, interest-free airline funding or leasing a boost. Since the UAE-based Emirates airline tapped the Islamic capital market back in 2005, many other industry players such as AirAsia, Air Arabia, GE Capital, Royal Jordanian, Ethiopian Airlines, SriLankan Airlines and Pakistan International Airlines have already either conducted or expressed their strong interest in Shariah-compliant solutions to fund planes and fleet expansion.
In 2014, the International AirFinance Corporation together with Airbus and Islamic Development Bank launched a $5bn Shariah-compliant leasing fund, acknowledging that sukuk are about to enter the airline financing sector as a new, viable and sustainable alternative to conventional funding. These so-called aviation sukuk could turn out to be a good opportunity for Islamic investors to diversify their portfolios, providing them with the chance to invest a larger amount of capital secured by solid assets such as newly built aircraft.
However, Rayani Air CEO Zamhar said to fund his airline’s expansion, the company is currently studying “all financing option” including a stock listing of the airline which aims at breaking even in three years.

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