Dubai to launch low-cost airline

LOW COST: Dubai plans to launch a budget airline that will be part of the Emirates Group.

Dubai plans to start a low-cost carrier within a year to tap travel demand in the Gulf, and is looking to equip its fleet with single-aisle aircraft.

The carrier, which as yet has no name, will be part of state-owned Emirates Group and will fly to destinations within four and a half hours of the Gulf Arab state, Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum told newswire Reuters on Tuesday.

Emirates Group also owns Emirates airline, is the largest Arab carrier and the fastest growing in the world.

The fleet will be equipped either with Boeing 737 aircraft or Airbus A320s, Sheikh Ahmed said, after state news agency Wam reported a decree from the ruler of Dubai announcing the carrier's creation.

"There is a need for it in the region," Sheikh Ahmed said. "We are looking at the market, and we will either buy or lease, depending on the price, and other things."

In November, Emirates ordered $23.4 billion of aircraft from Airbus and Boeing, with options for 50 more, valuing the total potential order at almost $35 billion.

The new carrier will be the sixth in the region that is low-cost and will compete with Sharjah-based Air Arabia, the Middle East's largest low cost airline. Air Arabia was also the first in the region to be privately owned.

"The market is sufficiently big for all of us and it will complement us," Air Arabia Chief Executive Adel Ali told Reuters by telephone. "I am pleased such an airline has seen our business model as a success and decided to do the same."

Air Arabia in November ordered 34 planes from Airbus worth $3.5 billion.

Emirates, the largest customer for Airbus's A380 aircraft, plans to take delivery of 246 planes worth more than $60 billion during the next few years. It does not operate any single-aisle planes.

Kuwait's Jazeera Airways is the only other listed airline in the Gulf and uses Dubai as a hub.

Wam said on Tuesday Dubai ruler Sheikh Mohammed bin Rashid Al-Maktoum decreed the low-cost carrier should price its services based on "the economic and living conditions to suit their incomes".

Ghaith Al-Ghaith, executive vice president for commercial operations at Emirates, will be the new carrier's CEO, Sheikh Ahmed said.

About 35 million people live in the Gulf of which about a quarter are foreigners, with many of those unskilled workers from South and East Asia.

Dubai airport, the Middle East's busiest, handled 34.34 million passengers last year, up 19% over 2006, according to its website.

The emirate is building another airport capable of handling 120 million people. (Reuters)

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READERS' COMMENTS

Low Cost - Cheap Thrills, No Frills Business
Posted by Prof Philbert, Salmiya/ Kuwait on Wednesday 19 March 2008 at 19:07 UAE time

It is good news that Emirates has at last responded to the demand in the region for low cost travel that will benefit many in the region.

It increases competition in low fares market that is governed by robust economic models working on marginal cost basis. It will be customer service philsophy with profit.

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