CASABLANCA (Reuters) - Three Moroccan private business groups teamed up with German tourism TUI AG to create Morocco's first low-cost private airline, after the country initialed an "Open skies" deal with the EU to spur tourism growth, officials said on Tuesday.

The airline, named Jet4you, will start its operation in March next year, with two leased planes and envisages to expand its fleet by two aircraft each year to 10 jets in 2010, its chairman Jawad Ziyat told a news conference.

The airline projects to carry 160,000 passengers in the first year of its operation before reaching 900,000 in 2008 and 1.7 million passengers in 2010, he said.

It has an initial capital of 60 million Moroccan dirhams and officially owned by a newly created company named Aviation Investment Company (AIC), he added.

German TUI owns 40 percent in AIC and in Jet4you while Morocco's largest private bank Attijariwafa and investment fund Investima, investment arm of Societe Generale Marocaine de Banques (SGMB), a French bank Societe Generale subsidiary, has 20 percent share each.

Private businessmen Guy Marrache and Ahmed Benabbes Taarji, co-owned of Moroccan leisure conglomerate Holidays Services own 20 percent stake in the airline together.

"That initial capital is enough for the airline to start its business without borrowing from banks," said Ziyat.

The government in Morocco needs the creation or the presence of more airlines in the country to carry the rising number of tourists it aims to attract to the North African kingdom.

MOROCCO NEEDS AVIATION CAPACITY

It plans to double the number of tourists to 10 million holidaymakers by 2010, with an expected tourism revenue of 10 billion euros, more than triple the estimated tourism earnings this year.

The government, to lure more airlines and tourists they would carry, had liberalised the aviation industry in 2004 to allow more market openness and initialed a deal with the European Union early in December to expand aviation services and energise airline competition.

The so-called "open skies" agreement with the EU, to be effective next year after parliamentary ratification, came after negotiations between Rabat and the European bloc.

Without such a deal and the aviation liberalisation, the government would have had to invest 30 billion dirhams to expand the national carrier flag Royal Air Maroc's fleet by 60 new planes over the next five years to fly the expected additional tourists, officials said.

Transport Minister Karim Ghellab, who is spearheading the aviation reforms, told the news conference on the new airline:

"With the liberalisation of the aviation business and the open sky deal and with the participation of such a partner like TUI, the airline operation has all the ingredients of success, though the airline business is a difficult and risky one."

Ghellab added that "Morocco has a significant need to add more aviation capacity as it seeks to develop tourism."

TUI's representative Elie Bruyninckx said his group invested in Jet4you because it is encouraged by Morocco's policy to develop the tourism industry and open the air travel business for competition.

"We are partners in such an operation because Morocco has a vision of the future and a potential of growth," he said.

source: Reuters