Gulf's low-cost airlines find a niche: the Middle East offers almost limitless opportunities for growth to operators of low-cost airlines, in the light of increased demand and growing hubs.

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Low-cost airlines are finding a ready market in the GCC for regional passenger traffic despite severe competition from some of the biggest, government-backed, players. FlyDubai is one of the most successful: founded in 2008 with support from the Chairman of Emirates Airline, Sheikh Ahmed bin Saeed Al Maktoum, it has carried more than one million passengers on 8,000 flights since its launch. It currently operates a fleet of nine Boeing B737-800NG aircraft to a network of 22 destinations, including Doha, Beirut, Damascus, Aleppo, Amman and Alexandria. It is now planning to buy more than 40 new aircraft, with financing of $750 million provided for leases by General Electric Capital Aviation Services (GECAS) and other private-sector backers.

Air Arabia, based in Sharjah, is the region's oldest low-cost carrier, having begun operations in 2003. Listed on the Dubai stock market, it currently operates 23 A320s to 65 destinations. A further 44 aircraft are on order.

The airline has succeeded partly through its launch of secondary hub operations in Morocco, Egypt and Jordan. "The number of people flying is on the rise and so yields are gradually improving," comments Adel Ali, Air Arabia's chief executive. He expects this year to be one of "stability", with profits and growth resuming in 2011. Asked about competition from other low-cost airlines in the region, he responds: "I've always said there is excess capacity, with every airline bringing more airplanes to the region. But I still believe the market is underserved, maybe not in the UAE, but in the broader Middle East."

His words are echoed by FlyDubai CEO, Ghaith Al Ghaith, who said in August: "There is a tremendous opportunity in this region to grow the low-cost market and I believe there is enough potential traffic here for all well-run airlines to be successful. Increasing competition is good for everyone, especially the consumer."

Growing hubs

Another successful regional low-cost operator, Kuwait-based Jazeera Airways, is planning to make new acquisitions to expand its market share in the Middle East and North Africa. Plans to launch new business-class airfares are proceeding, along with others to increase frequency on routes such as Dubai-Bahrain.

Jazeera is also planning to build a new dedicated terminal at Kuwait International Airport to distinguish itself from the incumbent national carrier, Kuwait Airways, and Kuwait's premium-brand airline, Wataniya. Altogether, the airline expects to...

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