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Low cost airlines are storming into the regional market. Are they challenging the full service carriers or risking overkill? Trends magazine reports.
February 10, 2010 12:34 by Emily Meredith
During the financial downturn, Middle Eastern airlines felt the pressure. “The airline industry faced a challenging year in 2009,” says Abdul Ali, the chief executive of Air Arabia Group. “Middle Eastern carriers lost $500 million collectively due to a mismatch between capacity and demand, pressure on prices and, correspondingly, net income.”
But the region’s low cost carriers were not as severely affected by the downturn as were the full service airlines. Concentrating on frequency and flights between destinations that previously had no direct links, the low cost carriers are answering to a demand that full service airlines could not.
Jazeera’s Pichler said that the company has catered to families who need to rein in their holiday costs. “Traditionally our customers are families and people who are traveling for leisure purposes.” Recently – and especially with the downturn – a larger portion of Jazeera’s customers are business travelers and government officials.
The chief executive of recently launched Flydubai, Ghaith Al Ghaith, said that customers are people who use the company in order to be able to fly more and who are couldn’t travel before.
“I’m sure there are a lot of people who wanted to travel who travel more now.” Flydubai, like other regional carriers, has expanded its coverage by opening up routes that did not previously exist. “Quite a few of the routes weren’t direct,” Al Ghaith says.
In the past year, more and more companies have been trying to take advantage of the gap that existed in the market, with a flurry of announcements about expansion. Jazeera Airways announced delivery of new aircraft and Air Arabia’s chief executive told Reuters news agency in Morocco that the 44 Airbus planes the company had ordered may not be enough to meet demand.
Founded in 2003, Air Arabia is one of the oldest of the region’s 14 low cost carriers. Four companies operate out of Turkey, two from Saudi Arabia, and two from Kuwait. And while many of the Gulf carriers are looking to the Levant to expand their business, Menajet, operating out of Lebanon, competes for the same business.
But announcements of expansion, particularly ones made in headier days, have sometimes been premature. In 2008, Flydubai, which was established for $68 million, committed to spending $4 billion on a fleet of Boeing 737s at the 2008 Farnborough air show.
The company appears to have learned a lesson about announcements. When asked how many routes Flydubai is planning to open in 2010, Al Ghaith was cautious. “It’s a very difficult number to give,” he said. “We said we would do 12 by this year.”