Low Cost Airlines: Tales of Arabian Flights

 

Adel Ali and John Strickland - ATM 2014Just back from Dubai, where I was impressed by how the arid desert landscape is nurturing some stunning success stories for low cost airlines in the region.

Take Air Arabia, now 10 years old. It’s Chief Executive Officer, Adel Ali, has been there from start. His inspiration for the airline came from understanding the potential monotony of crossing the desert for anyone in a rush.
There were then 600 weekly buses leaving the UAE (United Arab Emirates) for destinations around the Gulf and Adel recognized the boredom that the bus passengers can face. After the first kilometer the next 1,000 kilometers would be exactly the same. Endless sand punctuated with checkpoints. Nor was it cheap to take one of these buses. This simple understanding of the passenger market has repaid him in spades.

It was easier to get people off the buses with affordable flights, but harder to tempt passengers off rival carriers due to early misconceptions of low cost carriers. Never the less the airline filled 60% of seats within 2 months and broke even in its first year. It’s been a story of profit ever since – with the model extended to Morocco and Egypt and just this May, Ras Al Khaima in the UAE.

This is pretty impressive when you consider the airline has had to roll with the punches of the Arab spring, the tensions in Egypt and now in Ukraine. One solution has been to move aircraft around, exploiting new opportunities thus keeping the company profitable.

It’s worth remembering that not everyone in the Gulf is rich and there is a demand for low fares. Yet Adel has succeeded in creating a company that can attract passengers and manage finances. He successfully launched the airline on the stock market becoming the only quoted gulf carrier.

The CEO of the Saudi low cost carrier FlyNas has had different challenges to face. Raja Azmi arrived with vast experience in the successful Asian low cost air market, Air Asia, as well as long haul Air Asia X. However the Saudi market is different.
The national airline, Saudia has been protected and it was felt that there was not a level playing field – with the state airline benefiting from subsidised fuel. This, along with domestic fare capping, are 2 issues that need “sorting out”.

Under Raja ,FlyNas has evolved into a hybrid low cost carrier “plus”. It has high service standards and even a business class. Untypically for an LCC it has recently gone into long haul – a model that is not yet proven in the global market. However, FlyNas sees the opportunity to tap into the unique Saudi religious market. 5 million passengers travel by air to make the Umrah pilgrimage to Mecca and Raja expects to get a fair share of that on routes from the UK and Malaysia for example.

The key message coming out of this region was full of optimism, vision and energy. Not arid at all.

Leave a Reply

  

  

  

*