The Dubai government's latest airline venture aims to be region's largest low-cost carrier
New low-cost carrier FlyDubai has unveiled an ambitious business plan which should make it the Middle East's largest low-cost carrier by 2015.
FlyDubai chief executive Ghaith al Ghaith says the carrier, created in March by the Dubai government, will launch in May and fly five 189-seat Boeing 737-800s by the end of its first year. It plans to have a fleet of 13 to 14 737s by the end of its second year and will take the last of 50 aircraft ordered at July's Farnborough air show in 2015. FlyDubai has also agreed to lease four 737-800s from Babcock & Brown and Ghaith says "if we get the right deal we may lease some more".
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A fleet of 54 aircraft would already exceed the planned fleet of rival Air Arabia, which in 2003 became the region's first low-cost carrier and now operates 14 A320s with another 39 on order. Air Arabia is based in Sharjah, the emirate adjacent to Dubai which has positioned its airport as a low-cost hub. FlyDubai will be based at Dubai's new airport at Jebel Ali, which is slated to open its first of six runways and a low-cost terminal just in time for the carrier's launch. "The runway is nearly complete now and we expect it to be in operation by the middle of next year," says FlyDubai and Dubai Airports chairman Sheikh Ahmed bin Saeed Al-Maktoum.
Ghaith says the terminal will be basic and "simple to use". Pricing for Jebel Ali has not yet been established by Dubai's airport authority but Ghaith expects the charges will be lower than the basic Terminal 1 at Dubai International. FlyDubai is planning a 24-hour operation and will likely follow Air Arabia's model of flying within the Gulf during the day and to the Indian subcontinent overnight.
Ghaith says FlyDubai will target a mix of business and leisure destinations within a 4.5-hour range of Dubai, which gives it access to two billion people. While restrictive bilaterals are still common in the Middle East, Ghaith expects gradual liberalisation and FlyDubai will have access to Iran, North Africa, the CIS countries, all the Gulf states and the Indian subcontinent.
He acknowledges securing rights to India's major cities will be difficult but FlyDubai is happy to leave those destinations to Emirates given their congestion. "We will go to places that have easy access," Ghaith says. "Any airport in India will work for us."
The Dubai government has enlisted the help of Emirates for FlyDubai's launch phase. But Ghaith says "by January we should be totally standalone".
FlyDubai plans to follow a pure low-cost model, charging for food and checked bags. No connectivity is planned initially, but Emirates vice-chairman Maurice Flanagan says the two carriers could interline or codeshare at some point. He sees the two carriers as potentially having complementary networks, and explains: "They can fly to places we don't and to places we go to that are marginal."
One complication to any co-operation between Dubai's two carriers, however, is Flanagan expects the new airport will not be ready for Emirates until 2020.
Besides Air Arabia, FlyDubai will compete against Jazeera, which is based in Kuwait but has a mini-hub at Dubai. Jazeera now only operates six A320s but has another 34 on order. Over the last 18 months, two low-cost carriers have also launched in Saudi Arabia and one in Bahrain. But FlyDubai is easily the most ambitious and could spark other governments in the region, such as Abu Dhabi and Qatar, to launch their own low-cost carriers.
Etihad Airways chief executive James Hogan says he is now focused on growing Etihad but "we always consider options and alternatives". Qatar Airways chief executive Akbar Al Baker says he has registered a low-cost brand which can be launched quickly if necessary. "As soon as we feel the pain of the low-cost carrier into our market and our market share, then we will launch a low-cost within 90 days," he says.
For more on the Middle East's emerging low-cost market, see our video interviews with FlyDubai's Ghaith and Qatar's Al Baker at: flightglobal.com/videos
Source: Airline Business
