Middle East's first budget carrier surpasses expectations and sets sights higher
After a successful first year of operations, Air Arabia - the Middle East's first budget carrier - aims to triple its fleet by the end of the decade to 15 aircraft. Ultimately it does not rule out growth beyond 50 aircraft if it can gain unrestricted access to all markets.
Chief executive Adel Ali says that the Sharjah-based carrier has exceeded its financial and operational targets in its first year of operations. "Our business plan provided for us to operate five routes in the first year. Instead we are serving 15." The company had carried 500,000 passengers and seat occupancy is averaging 75%.
"We embarked on a new business concept for the Middle East," says Ali. "It's an area where skies are not open, and passengers and airports were used to conventional air travel."
Internet reservations were a novelty, but now 20% of the airline's reservations are being made online, he adds.
Air Arabia will unveil its first annual results in January. These will be "much better than our business plan forecast", says Ali, noting that the business plan had forecast a first-year loss, break-even in the second year and a modest profit in the third year.
Air Arabia operates four Airbus A320s, with a fifth aircraft due to arrive in January. Even if the regional regulatory framework remains unchanged or becomes more restrictive, the company expects to acquire 10-15 aircraft in the next five to seven years.
If regional skies were totally open, its fleet could expand to 50-60 aircraft, says Ali.
Arab transport ministers met last February and agreed to work for open skies, but progress has been patchy. "Only Lebanon and the United Arab Emirates have totally open skies," says Ali, but he says that he is "optimistic" because the pressures for deregulation are mounting and open skies are a major topic of discussion among regional aviation authorities.
An immediate priority, meanwhile, is to increase frequencies on existing routes and to expand the network. This month saw the inauguration of services to the Yemeni capital of Sana'a, and talks are under way on setting up possible services to India and Jordan.
ALAN GEORGE / LONDON
Source: Flight International
