• Home
• /
• Local business

Dubai Launches Own Low-cost Carrier

Arriving in the Lebanese capital, the Boeing 737-800 with orange and blue livery and a full complement of 189 passengers ushered in a new phase of airline competition in the Middle East, where demand for air travel is growing faster than anywhere else.

At least four other budget carriers already operate from home cities in the Gulf, but analysts say the market for low-cost flights in the region has ample room to grow. Budget airlines account for 1.5 per cent of the air travel market in the Middle East compared to 18 per cent in Europe and 25 per cent in the US, said Kareem Murad, a transportation analyst in Dubai with financial services firm Shuaa Capital.

But few if any of flydubai’s rivals, including Air Arabia, its next-door neighbor in Sharjah, has comparable resources. Owned by the government of Dubai, flydubai shares its chairman, Sheikh Ahmed Saeed Al Maktoum, with long-haul heavyweight Emirates Airline. Both operate from Dubai International Airport, the region’s busiest, and analysts suggest that flydubai and Emirates would, over time, work increasingly in tandem throughout the region.

Flydubai currently operates just two aircraft but has ordered an additional 48, all of them fuel-efficient “Next Generation” 737-800s. From its home at Terminal 2, the carrier plans within the next two weeks to start service also to Amman, Damascus and Alexandria, Egypt. It aims to serve at least 14 destinations by the end of this year.

”They could be a game-changer in the Middle East,” said Kapil Kaul, an analyst in New Delhi with an Australian consulting firm called the Centre for Asia Pacific Aviation.

Flydubai flight number FZ-157 landed in Beirut after a three and a half-hour flight. One of the last passengers to check-in for the 10.30am flight back in Dubai was Lebanese expatriate Hamid Halwani, who said the carrier would help serve the needs of his country’s large 
overseas population.

“Definitely there is a demand – there are so many Lebanese here,” he said. “It can be difficult to get flights home and there needs to be a choice.”

Halwani acknowledged that travelling with a low-cost carrier would require passengers to book ahead to take advantage of cheaper fares. “We will have to pre-plan. It’s a bit difficult—We like booking last minute,” he said with a laugh as he moved towards flydubai’s check-in counter.

Elsewhere at the airport, 36-year-old Mohammed Bassem was rushing to catch an Emirates flight to Damascus, where flydubai plans to start flying next week.

“I will try new carrier next time,” he said, before disappearing inside the terminal.

Passenger demand in the Middle East grew faster last month than in any other region of the world, surging by 11.2 per cent on average from the same month in 2008, according to the International Air Transport Association. The region’s monthly demand growth stood in sharp contrast to the 3.1 per cent decline in average global demand.

Seat capacity for Middle Eastern airlines increased by 12.3 per cent in April, outstripping the monthly increase in demand, IATA said.

“That is one worry that arises today,” said Murad of Shuaa Capital. “There is excess capacity, but you’re probably looking at conventional airlines more than at low-cost airlines.”

Air Arabia spokesman Housam Raydan said his company looks at flydubai less as a threat and more as a partner in helping to enlarge the regional market for low-cost travel.

Flydubai might not compete head to head with Air Arabia at the outset. Over time, however, flydubai and Emirates together represent “a lethal combination,” said Kaul of the Centre for Asia Pacific Aviation.

“At the present moment, these are two different companies, but their aim is one: global domination.”


—bruce@khaleejtimes.com, 
zoe@khaleejtimes.com
abdulbasit@khaleejtimes.com