DUBAI/KUWAIT: Since its maiden flight in June 2009, flydubai, the world's fastest growing start-up airline and the Middle East's largest low-cost carrier, has flown 10.4 million passengers, extended its global network to 52 routes, and most recently posted its first annual net profit of $41.4 million for 2012. The total revenue for the budget carrier in 2012 was $756 million. Currently, flydubai is eyeing a fleet expansion.
Speaking at a press conference held in Dubai earlier this month to announce flydubai's financial results and future growth prospects, flydubai's chairman Sheikh Ahmed bin Saeed Al-Maktoum said, "We are talking about another 50 aircraft. If the team reaches a decision, we hope to make an announcement at the Dubai Air Show."
Perfect location for success story
The synergy created by Dubai's location and the government's forward-looking vision, in addition to the service-centric environment, contributed to flydubai's success story.
In the words of Al-Maktoum, in just over three years of operations, flydubai has made air travel more accessible. Al-Maktoum said, "The privilege of carrying Dubai's name set huge expectations for flydubai. We, therefore, knew that we had to challenge the conventions around low-cost travel if we were to meet the standards of aviation and innovation that the UAE is known for internationally. Like the city it represents, flydubai strives on imagination and boldness."
Primary location: Core of a hub strategy
Dubai is one of the most vital travel crossroads and as such it serves a two-pronged purpose - it is a stopover air hub for traffic connecting the East and the West and it has become one of the region's most attractive year-round destinations for leisure travel. More importantly, being a trade, commerce and retail hub, Dubai is increasingly becoming day-trippers' destination for business, leisure and shopping - a market that flydubai tapped and continues to expand in. Passenger numbers at Dubai, currently the world's third busiest airport for international passenger traffic, has grown by double digits since the start of the Arab Spring.
The wealth of travel options match the demand that state-owned flydubai caters to. More importantly, low-cost carriers, an aviation expert argues, play a vital role in linking regions, not just busy capital cities. "By providing feeder services to major hubs and new services to other regions in the Gulf, low-cost carriers play a vital role in bringing communities together and connecting smaller cities to the global economy. Low fares make it possible for whole new sectors of society to travel - and when this is linked to Internet-based booking services, it is like giving new market power to travellers," says Phillip Butterworth-Hayes from PMI Media, an aviation consultancy.
In 2012 alone, flydubai carried 5.1 million passengers and has increased its weekly flights to more than 1,000. Launched in the throes of the global recession, flydubai had flown 1 million passengers within just first 13 months of operation - a number that serves as a testimony to the swelling demand for services for the price-conscious flier. In addition to its recession-proof business model established at its inception, flydubai's unbundled approach and commitment to innovation add to the airline's exponential growth. The innovative airline is the first air carrier to offer updated digital newspapers through a premium in-flight e-reader platform featuring 45 newspapers from around the world.
With a fleet of 28 brand new Boeing 737-800 aircraft that will grow to a total of 50 by 2016, flydubai's strategy continues to draw on adding frequencies and extending its geographical footprint. Currently, flydubai is the second largest air carrier operating out of Dubai International Airport right besides its sister carrier Emirates, the world's largest international airline in terms of international passenger traffic. Operating alongside and complementing each other's networks fuels further opportunities for expansion.
Connecting the Gulf
The Middle East remains the kernel of the growth strategy of flydubai, the largest budget carrier in the Middle East market based on seat capacity, according to a recent report released by CAPA Centre for Aviation - provider of independent aviation market intelligence, analysis and data services. Today flydubai spreads wings across the Middle East, Central and Eastern Europe and the Commonwealth of Independent States (CIS). The low-cost carrier operates to 16 destinations in the Middle East. Its inter-Gulf passenger growth last year alone was 63 percent with the total market for all airlines growing by 21 percent. According to CAPA's report flydubai is currently the largest budget carrier in each of the Gulf markets.
The commitment to the Gulf is demonstrated by the expansive capacity and frequency growth within the region. For example, there are 10 daily flights between Dubai and Kuwait today, which is the carrier's second largest route based on frequencies and the third largest based on seat capacity, CAPA's report said. Asked about the importance of Kuwait's route in the flydubai's network, its Chief Executive Officer Ghaith Al-Ghaith explains, "We are very proud of the Dubai-Kuwait route... We are happy to contribute to the strengthening of the ties between our two nations with the increasing number of flights between Kuwait and the Emirates. Having 10 flights a day is a clear indication of our strong relations."
Adding frequencies side by side, legacy carrier Emirates provides greater travel choices and further increases the opportunities for business, trade and tourism in the region. Since its launch, the no-frills carrier has made travel more affordable and accessible. It has opened up new markets granting access to Dubai and many other destinations in a catchment area within a five-and-a-half hour radius from their hub. "Our focus is to build our hub in Dubai," says Al-Ghaith when asked if flydubai eyes potential markets that have recently liberalized their markets.
Aircraft orders and financing
Explosive traffic and network growth are linked to a fleet expansion. With the announcement made earlier this month about a possible 50-plane order, flydubai's fleet is set to double. Boeing's 737 and the fuel efficient Airbus A320 are purported as the aircraft of choice for flydubai's expansion. "We do not plan to go beyond the five-hour radius and to buy wide-body aircraft," Al-Ghaith said in response to a question about whether hybridization could be the possible next stage in the airline's evolution.
Which airlines does flydubai benchmark itself against? Al-Ghaith replied: "We like to always challenge ourselves to always be the best. Our guiding light is that we represent a very forward-looking country and especially Dubai. We would like to always be the leader in our segment. We will try to always develop that way in the future - to be better than what we are now."
His viewpoint is what aviation experts have been predicting - that flydubai is soon to become the world's leading low-cost carrier. The projection for some 98 million passengers to pass through United Arab Emirates' airports by 2020 in sync with the airline's growth-driven strategy bring flydubai closer to the top spot.
© Kuwait Times 2013
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