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INTERVIEW: Adel Al Ali
Adel Al Ali, CEO of the region’s first low-cost airline, Air Arabia, talks expansion plans and dealing with increasing competition.
June 27, 2012 11:15 by kippreport
You broke even in your first year of operation; doesn’t it make sense, therefore, to acquire small low-cost carriers and replicate Air Arabia’s model?
We should never be complacent in the business. Every airline that is struggling doesn’t necessarily mean they are doing something wrong; it could be that the circumstances are bad for them. Also, it is not right to get a struggling airline to turn it around. So it is extremely important that you don’t become greedy. Businesses fail for two reasons: greed and ego.
Are you looking at the Saudi Arabian license, which was recently in the news?
We have got about 50 to 55 flights into Saudi Arabia; presently we are operating about 51 flights. We are finally seeing a very positive change in Saudi’s aviation sector and that is good because the market in the Middle East is big and the population as well. We will definitely look at it if an opportunity comes, but right now we haven’t applied for the license.
By 2015 your fleet will double in size, what markets do you have in mind to deploy new aircraft?
Yes, by 2015 we will have 60 aircraft. We still have quite a lot of routes to open and we have a lot of number of airports where we need to increase frequency. In Morocco we have got a lot of room to develop and grow. It’s been two years there, so it is still a young airline and there are lots of opportunities there. We have not even touched Africa from Morocco yet, and we are operating only in Europe. We are sending our fourth airplane in May.
In Egypt, we have got to wait to see if the political stability gets back to normal hopefully in June, and as a country we feel it has got a lot of potential once things get back to normality.
The rest of Africa would be something to look at?
I think from both Egypt and Morocco. Africa is an opportunity, because Egypt and Morocco are in North Africa, although they are five hours flying apart, and once the political stability gets back to normal, it would be something to look at.
Air Arabia gave cash dividends of 10 percent in 2009, 20 percent in 2010, but in 2011 it came down to eight per cent and in 2012 it came down to 4.5 per cent. What is wrong?
If the year was too good, you give good dividends, but if you look at the airlines industry to give five per cent dividends is a luxury. Air Arabia is still good, it has a very good profit margin, still giving dividends. The bottom line is among the airlines that are struggling; Air Arabia remains a profitable business.
Has the arrival of flydubai affected your business in any way?
There are some 100 airlines that operate from the UAE, and having one more airlines will not make any difference in the business. flydubai have been in the business more than two years, our seat factor has been good, our profitability has been good and our expansion is continuing. We have giant competitors in the market. Any company who has an economy cabin is our competitor.
By Mas Meghji, TRENDS