The contrast between Flydubai's unpreposessing home next to Dubai International's Terminal 2 and Emirates' palatial headquarters on the "business" side of the airport – all plate-glass windows, vast atrium and upmarket retail mall – says all you need to know about the sibling airlines' relationship. Both buildings make a statement: Emirates' logo-emblazoned landmark proclaims the confidence of a global brand-leader; Flydubai's functional two-storey building – with its low ceilings and narrow corridors – that it is truly a low-cost carrier with a wary eye on the bottom line.
The two airlines may share a chairman and mentor – Sheikh Ahmed bin Saeed Al Maktoum – and an owner in the Dubai government, but there the links more or less stop. And that is the way chief executive Ghaith Al Ghaith likes it. Persuaded by Sheikh Ahmed to helm the low-cost start-up in 2008, after a 22-year Emirates career, Al Ghaith has built a consistently profitable business with its own management team and staff, a distinct brand identity and a fleet of 50 Boeing 737-800s – the last of which arrived in recent weeks to complete an order placed at the 2008 Farnborough air show.
The Emirati national recalls: "When His Highness approached me to say they were thinking about a low-cost carrier and was I interested, I asked: 'Will it be Emirates-lite?' He replied: 'It will be nothing to do with Emirates, it will be a separate company. You will have the support you need, but once you are set up, you are on your own.'" Sheikh Ahmed was also determined that the new baby would have its own character and not simply copy other low-cost carriers. "He was asked what airline Flydubai would be most like," remembers Al Ghaith. "His answer was: 'It will be most like Flydubai.'"
Flydubai's growth has been rapid. The airline flies to 94 cities – 59 of which did not previously have a direct link to Dubai. It introduced 27 routes in 2014 and will bring on another 19 this year. Its biggest markets are Saudi Arabia, with 14 destinations, and Africa, where Flydubai serves 12 points. Also popular are Russia – Novosibirsk and Nizhniy Novgorod becoming its ninth and 10th routes there this month – as well as eastern Europe and the Indian subcontinent. "Our philosophy is that we fly to places that aren't properly served, linking the region to Dubai," notes Al Ghaith.
Fleet growth certainly has not stopped with the arrival of the 50th aircraft. At the Dubai air show in 2013, Flydubai announced a follow-on commitment for up to 100 737 Max 8s and a further 11 -800s, with the first of the current-generation models arriving in May next year, and the Max deliveries running from 2017 to 2023 – many to replace existing aircraft. Like Emirates, Flydubai has been open about its finances, declaring its third consecutive net profit of Dhs250 million ($68 million) in 2014 on revenue of Dhs4.4 billion. It transported 7.25 million passengers.
Further evidence of Flydubai's autonomy comes in its network planning. Against expectation, perhaps, there is no "Dubai plc" masterplan with Flydubai executives and their Emirates counterparts jointly evaluating if cities would be best served with an Emirates widebody or Flydubai 737 or both. "Our route strategy is totally independent," Al Ghaith insists. "We don't sit down with them and plan our routes." Despite this, some 36 cities served by Flydubai also have an Emirates connection (Flightglobal took a Flydubai flight to Muscat that touched down just ahead of an Emirates Airbus A330).
Although Flydubai does interline with Emirates and other airlines, the location of its Terminal 2 base on the northern side of Dubai International (DXB) often does not make that terribly practical. However, around a quarter of Flydubai's passengers do transit through the airport, mostly on other Flydubai services (our return flight from Muscat, for instance, was packed with pilgrims on their way to the Hajj in Saudi Arabia). Flydubai occupies about half of the one-storey low-cost terminal, which – although smart and recently expanded – is functional: there are remote stands rather than airbridges.
From late October, Flydubai was due to introduce 70 flights a week – to seven destinations in the Middle East and north Asia – from Dubai's second airport, Dubai World Central (DWC), also known as Al Maktoum International. All the routes are already served from DXB, and will continue to be. However, this has led to speculation that the carrier is preparing to relocate its entire operation from the crowded but relentlessly expanding DXB to the new airport – earmarked to become the world's busiest hub by the 2030s but currently still home to only a handful of passenger airlines.
Al Ghaith insists that this is still very much to be decided, although he is clear that Flydubai's footprint at the new airport can only get larger. He adds: "DWC is the airport for greater capacity, while capacity here [at DXB] is becoming restricted. We will grow at DWC as quickly as the business requires, but we won't commit to timescales. We are constantly reviewing the situation. DXB is always going to be a challenge with just the two runways. DWC is the new frontier. That is where the new opportunities will be and that’s where we will grow."
Dubai Airports – the government-owned body that runs DXB and DWC – has said that persuading some DXB tenants to move to the new airport could be one solution to the congestion problems at DXB as Emirates continues to pile on capacity. Cargo operations, an increasing proportion of business aviation traffic and a few airlines have so far shifted to DWC. With a wholescale move by Emirates to DWC unlikely until at least 2025, a relocation by Flydubai – along with some secondary carriers – would do much to relieve pressure on what has become the world's busiest international airport.
Flydubai was not the first low-cost airline in the Gulf. That honour belongs to Air Arabia, its near-neighbour in the next-door emirate of Sharjah, and founded some six years earlier. Sharjah airport is less than 30min of a drive from DXB and the two carriers' networks overlap extensively – although both serve several exclusive routes. The airlines have similarities, including a highly utilised, modern, one-type fleet (Airbus A320s in the case of Air Arabia) and an onboard food and beverage retail service. Many customers clearly do a head-to-head comparison when booking.
However, shortly after launch Flydubai began adding more frills than its more conventionally low-cost carrier rival – including a business-class cabin and seat-back entertainment, which all but seven of its oldest aircraft now offer. There is also a business class lounge at DXB's Terminal 2. So has Flydubai evolved into more of a hybrid? It is not a suggestion Al Ghaith denies. "We had to react and change," he says. Citing Russian leisure travellers as an example, he adds: "It is not a case of one product fitting all. Our customers require segmentation, and there is nothing wrong with that."
The 8.9in seat-back entertainment screens, with an extensive menu of free and paid-for programmes, were introduced in 2010. Three years later, Flydubai brought in its business-class product via a retrofit programme on its existing aircraft, with three rows of four 42in-pitch, 21in-wide seats (its economy seats come with a 29in pitch) and 12in touchscreens. A ticket includes complimentary food service and IFE. A loyalty programme is being looked at, possibly for 2016. However, Al Ghaith insists it will only be introduced if "it doesn't add a cost burden".
Although the launch team on Flydubai was largely seconded from Emirates, the vast majority of its roughly 3,000 current staff – including some 600 pilots – have joined since launch. Recruiting and training employees quickly has been critical, but Dubai's lure has helped. "It is one of our great advantages," says Al Ghaith. "We can always persuade people that this is a great place to live and work or to bring up children. It's a massive enabler for us." Flydubai cabin crews offer "the highest level of customer service", he adds, "because it is part of our brand and part of the brand of Dubai".
One of the biggest challenges for Flydubai remains traffic rights. Because of the UAE's unique federal set-up, with two rival "flag carriers" – Emirates and Etihad Airways – and two competing low-cost airlines, countries tend to ration flights into certain airports as part of bilateral agreements with the national government. "In this part of the world, markets are not always open," says Al Ghaith, citing the examples of India and Pakistan, as well as some Middle Eastern nations, as examples of where Flydubai would be happy to increase its route frequencies.
Al Ghaith is clear about what removing these political obstacles would mean for Flydubai. "Tomorrow, if the dynamics of the bilaterals become more clear, we could double in size," he says. "We now have our 50th aircraft and our next milestone is 75 aircraft by 2020, or maybe before. Then a fleet of 100 is not too far away, but we may reach a point – maybe around 75 – where we would need a break in the bilateral regime. Our only constraint is traffic rights. If we had the rights we could reach a fleet of 100 easily."
The subcontinent – with its service-sector workers commuting to the Gulf and entrepreneurs keen to trade – represents an opportunity not yet fully tapped. Neighbouring Iran also represents "huge potential" as it emerges from international isolation and opens its economy to the West, maintains Al Ghaith. In terms of tourism, business development and guest-worker traffic, Africa is a major market too, he says. However, regional conflict has taken its toll on Flydubai's network, with three routes to Syria recently withdrawn, as well as two destinations in troubled eastern Ukraine.
The 737 Max could offer Flydubai a chance to stretch its route network. The airline's current farthest routes are to Prague in the Czech Republic and Chittagong in Bangladesh, with about a 5h duration. However, Al Ghaith insists "it is not our objective to go after longer routes". Instead, the main benefit from the new-generation Boeings will be to "give us a huge plus on operational cost. The fuel price may be more digestible, but the Max gives us a 15% saving." With a policy of keeping its 737s for around eight years, the new aircraft will also "keep the fleet young", says Al Ghaith.
Like Western low-cost airlines, Flydubai has a simple, all-in-one website on which flights and additional services can be purchased. Al Ghaith would like to migrate more ticket transactions online – currently more than half of flights are sold through travel agents, mainly because of low internet use in some of the key markets the carrier serves. "We want to get to a position where the majority of sales are done on flydubai.com, but in reality, we still need that diversification of channels," he admits.
As Flydubai continues its ascent, and more than six years into the job, Al Ghaith remains passionate about running Dubai's second airline. "It's very exciting – the most exciting thing anybody could do," he enthuses. Being part of the Emirates experience for over two decades and seeing it transformed from fledgling to one of the world's blue-chip aviation brands cannot have been without its highlights too? "My time with Emirates was my rock," Al Ghaith says. "Everything I know, I learned at Emirates." But these days, his focus is very much on its fast-growing sibling.
Source: Airline Business
