UAE: Airfares have peaked, set to stay at high level till summer

Dubai airline chief says it is likely to place an order for new aircraft later this year

Published: Mon 1 May 2023, 10:15 PM

Updated: Tue 2 May 2023, 6:25 AM

By
Waheed Abbas

flydubai CEO Ghaith Al Ghaith. — Photo by Rahul Gajjar

Airfares have reached their peaks and are likely to stay at that level for the next few months, said Ghaith Al Ghaith, CEO, flydubai.

Airfares have increased dramatically in the last year, driven by massive post-pandemic demand and high oil prices in the wake of the Russia-Ukraine crisis.

The UAE airlines have been increasing seating capacity and have announced the addition of a number of new routes.

“Airfares are still very strong as there is a huge increase in fuel prices. They are at their peaks as it is a supply and demand issue. I believe it (airfare) will stay there till summertime,” Ghaith said during an interview on the first day of the four-day Arabian Travel Market 2023, which opened at the Dubai World Trade Centre on Monday.

Flydubai chief said the airline operates Boeing’s 737 MAX aircraft which is 14 per cent more efficient and that helps a lot in terms of offering better pricing to customers.

He added that demand for business class is growing and therefore, it introduced a new business class. Al Ghaith said this will also help make its synergy better with Dubai’s flagship carrier Emirates.

The airline added 12 destinations this year and is likely to add two more and also bring back around nine summer destinations.

“We delayed certain things because the demand on our existing route network is much stronger. So we probably announce one or two more routes in winter.”

50% growth in Q1

Al Ghaith sees demand staying very strong for the rest of the year.

During the interview, he revealed that the Dubai-based carrier recorded 50 per cent more passenger traffic in the first quarter of 2023 compared to the same period last year. “We expect this surge to continue, hence, we will be increasing capacity by around 20 per cent to a record 5 million seats in summer, mainly due to high demand for inbound traffic. I have never seen business as good as last year and this year.”

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He added that the growth of the point-to-point business from Dubai Airport is growing faster than the transit business, reflecting more businesses flocking to the emirate to set up their bases here.

Supply chain

The airline has received delivery of seven aircraft this year and will receive another 17 aircraft.

In terms of supply chain challenges, he said last year was horrible, but this year is manageable and next year is looking better.

US aircraft manufacturer Boeing is facing production quality challenges related to two of several brackets in the fuselage of 737 MAX.

“We think it is a technical issue and Boeing is reviewing all the inventory, delivery and production. One of our aircraft is affected, too. There may be more, but they are still checking,” said Ghaith.

New aircraft order

He said the airline is trying to close some deals to purchase new aircraft by Dubai Airshow, which will be held from November 13-17.

“Aircraft is a seller’s market. So when is the right time for flydubai to place an order, it is not yet certain. I would love to do something by the end of the year.”

While replying to a question about the demand for aircraft, he said a good number of aircraft would be ordered.

“We are coming very close to deciding that we need to make a move for more aircraft. The more orders other airlines place, the availability and prices of aircraft become more challenging. So you have to know when to go and pitch for business.”

He expects flydubai to have 90 aircraft by the end of this year 100-plus by 2024-end.

India – a treasure for tourism

He said India can offer a huge potential if the government agrees to open up its aviation sector and have an open-sky policy in place.

“I think somewhere, somehow business to India is undermined by not having the kind of aggression (that is required). With more airlines coming up and buying new aircraft, hopefully, it will encourage decision-makers to open up the aviation sector.”

To highlight the potential, he said, for example, if Delhi opens up the aviation sector, flydubai alone can fly to 40 destinations in India. “India is a treasure for tourism.”

waheedabbas@khaleejtimes.com

Waheed Abbas

Waheed Abbas is Assistant Editor, covering real estate, aviation and other business stories that directly affect the lives of UAE consumers. He frequently reports human interest stories, too.