26 August 2010
The head of Dubai's first low cost carrier, welcomed the news that Abu Dhabi-based airline Etihad is the latest to throw its hat in the regional budget ring with economy-only flights as a clear sign of the potential of the sector and underlining the decision to set up flydubai.
"This is an endorsement of this model of business and we do really hope that they do well and yes there is room for everyone, it's just down to how hard that you want to work," said Ghaith Al Ghaith, (pictured) CEO of flydubai which celebrated its first birthday in June. The International Air Transport Association (IATA) credits low cost carriers in the Middle East with up to seven per cent of the regional aviation market share, a number Al Ghaith is certain will rise, even as the recovery sets in and people might consider more upmarket travel.
"I hope it will go into double digits, because we are in single digits now, anywhere between three to seven per cent," he said.
Al Ghaith points out that much of the potential in the sector does not necessarily come from wrestling with competitors, such as Sharjah's Air Arabia, but from expanding into new markets and opening up routes that are yet to be served from the UAE. It is an assertion that the airline has aggress-ively backed up with no less than 23 destin-ations initiated in its first year of operations, served by nine aircraft, a strategy which has earned it the adage of being the world's fastest growing start-up airline.
Despite the rapid route and fleet expansion - kicked off when Al Ghaith signed a $4 billion deal for 54 Boeing 737's in 2008 at the Farnborough Airshow - there are warning signs that the low cost air travel sector is experiencing some turbulence. Air Arabia, established in 2003, has seen two straight quarters of declining profits this year hit largely by fuel prices which have risen by almost 17 per cent in the last year. Does this worry flydubai, which is aiming to achieve profitability in its third year?
"No", says Al Ghaith, but he admits "it is something that you definitely have to analyse".
He also sees that there are barriers to the regional budget sector achieving that aim of double digit market share: "The biggest problem is also having 'open skies' - we have the most regulated market in this region... And of course more players, the addition of more airlines in this sector will definitely help grow the market. It has to be opening up."
It is very likely that more routes will come online in the coming months from Dubai's budget baby and that 2008 Boeing order is going to keep the fleet growing until 2016. And Al Ghaith is open-minded about the future development of his company, not ruling out the possibility of opening up a second hub, tying down agreements with other airlines or even shifting some of its fleet to the newly opened Al Maktoum International Airport in Jebel Ali.
"[Al Maktoum International] is very important for us and it means that potential to grow is always there.
Our focus is on Dubai International but in the future there will always be opportunities that will attract business to Dubai and if there are opportunities attracting us to Jebel Ali in the future - the train is not stopping," he said.
The head of Dubai's first low cost carrier, welcomed the news that Abu Dhabi-based airline Etihad is the latest to throw its hat in the regional budget ring with economy-only flights as a clear sign of the potential of the sector and underlining the decision to set up flydubai.
"This is an endorsement of this model of business and we do really hope that they do well and yes there is room for everyone, it's just down to how hard that you want to work," said Ghaith Al Ghaith, (pictured) CEO of flydubai which celebrated its first birthday in June. The International Air Transport Association (IATA) credits low cost carriers in the Middle East with up to seven per cent of the regional aviation market share, a number Al Ghaith is certain will rise, even as the recovery sets in and people might consider more upmarket travel.
"I hope it will go into double digits, because we are in single digits now, anywhere between three to seven per cent," he said.
Al Ghaith points out that much of the potential in the sector does not necessarily come from wrestling with competitors, such as Sharjah's Air Arabia, but from expanding into new markets and opening up routes that are yet to be served from the UAE. It is an assertion that the airline has aggress-ively backed up with no less than 23 destin-ations initiated in its first year of operations, served by nine aircraft, a strategy which has earned it the adage of being the world's fastest growing start-up airline.
Despite the rapid route and fleet expansion - kicked off when Al Ghaith signed a $4 billion deal for 54 Boeing 737's in 2008 at the Farnborough Airshow - there are warning signs that the low cost air travel sector is experiencing some turbulence. Air Arabia, established in 2003, has seen two straight quarters of declining profits this year hit largely by fuel prices which have risen by almost 17 per cent in the last year. Does this worry flydubai, which is aiming to achieve profitability in its third year?
"No", says Al Ghaith, but he admits "it is something that you definitely have to analyse".
He also sees that there are barriers to the regional budget sector achieving that aim of double digit market share: "The biggest problem is also having 'open skies' - we have the most regulated market in this region... And of course more players, the addition of more airlines in this sector will definitely help grow the market. It has to be opening up."
It is very likely that more routes will come online in the coming months from Dubai's budget baby and that 2008 Boeing order is going to keep the fleet growing until 2016. And Al Ghaith is open-minded about the future development of his company, not ruling out the possibility of opening up a second hub, tying down agreements with other airlines or even shifting some of its fleet to the newly opened Al Maktoum International Airport in Jebel Ali.
"[Al Maktoum International] is very important for us and it means that potential to grow is always there.
Our focus is on Dubai International but in the future there will always be opportunities that will attract business to Dubai and if there are opportunities attracting us to Jebel Ali in the future - the train is not stopping," he said.
© 7Days 2010
