CHALLENGING THE HEIGHTS

UAE, Dubai 2013 | TRANSPORT & LOGISTICS | B2B: BUDGET CARRIERS

A realistic approach to business is on the table for both of Dubai's budget airlines, as forecasts continue to predict huge growth.

Adel Abdullah Ali
ADEL ABDULLAH ALI
Group CEO
Air Arabia
Ghaith al Ghaith
GHAITH AL GHAITH
CEO
flydubai

How do you manage demand to prevent the market from being overwhelmed?

ADEL ABDULLAH ALI Everyone has to be realistic in life. I think this is one of the challenges of being publicly listed, because you have to tell people what are you doing, and how much are you are making. In a private business, you do not have to report such things, as you can just bank it. It is great as a company to have been able to announce positive results since we started this business 10 years ago. Every single year has seen a profit, though some years are better than others. For 2012, we are still waiting to announce the final result, although the third quarter was fantastic for us. This was achieved through a combination of factors. We had a much higher seat factor, our yield per passenger was improved, our fuel hedging hit at the right time, and we increased our ancillary revenue by almost 60% by introducing many new opportunities. We must strive to improve the business—that is our job, and the basis of the trust that our shareholders have placed in us. We are all committed to that. However, one also recognizes that this business has its ups and downs. So far, it has been going up, and we want to keep it going in that direction, and yet, being realistic, we acknowledge that this is not always going to be the case. So long as we are profitable, we will remain competitive.

Which regions offer the greatest opportunity for flydubai?

GHAITH AL GHAITH All destinations within our aircraft flying radius present us with opportunities. The GCC has always been an important market for us for both business and leisure travel, and, as a result, we have developed one of the most comprehensive networks in the region. The rest of the Middle East is also attractive, and equally important for the UAE are Russia, Ukraine, and Central Asia, because these are untapped markets. Not only are they untapped since there are no regular flights, but they are also emerging markets with excellent prospects. These countries are maturing in their approach to business, and emerging stronger economically as they increase their wealth. They are seeking to expand, especially to Dubai, which is a short flying distance from many of these markets. I would argue that we are blessed by being in Dubai, because the infrastructure is so well developed. Our passengers, who have responded well to our products and on board experience, appreciate the convenience that Terminal 2 affords.

What is your forecast for the airline industry in the UAE going into 2014?

AA Fuel is a major factor. Fuel volatility is now part of any transport-related business, and by now we have all gotten used to this. We should expect sudden fuel price fluctuations in either direction, and we have to be flexible enough to manage that. The Arab Spring has had, so far, a surprisingly positive impact because people continue to travel. I think that this could be because the Middle East has never been a boring place. Therefore, we are perhaps immune to the problem. It is unfortunate that there are some areas we cannot fly to, like Syria, for example. Syria is a very good market that we are not operating in. Egypt in 2012 saw a drop due to the election and political developments. One hopes that the current turmoil in that country can be overcome and replaced by a greater period of stability. This, of course, is very difficult to predict. Overall, however, as an airline, we are delighted that for us it has been a fantastic decade of growth.

GG It has been an exciting year so far. In 2012, we achieved our first full year of profitability. In 2013, we are building on our achievements of the past four years. In the first seven months of this year, we launched 15 new routes, and have taken delivery of two new aircraft, with four more to be received during the remainder of the year. We are continuing to grow, and we are expanding our product offering to ensure that we meet passenger demands, which has led to the decision to introduce Business Class on selected routes. We are an innovative, agile airline, and I believe this represents huge opportunities. I have no doubt that the future will be even better.