Low cost carriers

by ArabianBusiness.com staff writer on Thursday, 01 March 2007

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Jazeera Airways.

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Atlas Blue.

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National Air Service.

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Air Arabia

Air Arabia was established in February 2003, under an Emiri Decree by Sheikh Sultan Bin Mohamed Al Qassimi, ruler of Sharjah.

Based in Sharjah International Airport, the airline is modelled after leading American and European low cost carriers, with a focus on offering affordable fares without sacrificing on service and safety standards.

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Air Arabia has experienced considerable growth since its launch. It recently posted turnover of US$204 million in 2006, up 82% compared to $112 million in 2005. Net profit also increased by 222% during the same period, from $8.5 million in 2005 to $27.7 million in 2006.

The company has applied to the UAE Ministry of Economy and relevant regulatory authorities for approval to launch an Initial Public Offering (IPO) in the first quarter of this year, making it the first airline in the Gulf region to go public, subject to approval of its application.

Sheikh Abdullah Bin Mohammad Al Thani, chairman of Air Arabia, called the airline's performance "sterling".

"Apart from the robustness witnessed in revenues and profits, what outshines is the passenger average load factor at 81.2%. This is a manifestation of Air Arabia's stated mission to revolutionise air travel in the region through an innovative business approach, offering superb value for money and a safe, reliable operation," he says.

"In just over three years since launch, Air Arabia has established itself as one of the region's great success stories. Born in Sharjah and serving a region that stretches across the Middle East, North Africa, Indian subcontinent and Central Asia, Air Arabia has set its sights on reaching even greater heights in the future," he adds.

Air Arabia is planning to expand its operating fleet over the next five years from nine Airbus A320s to a total of 34 aircraft.

Current destinations offered by Air Arabia include Amman (Jordan), Colombo (Sri Lanka), Damman (Saudi Arabia), Doha (Qatar), Mumbai (India) and Alexandria (Egypt).

Website: www.airarabia.com

Jazeera Airways

Jazeera Airways has achieved considerable success by targeting the region's emerging low-cost market.

The Kuwait-based airline, which was inaugurated in October 2005, became the first private airline in the Middle East, raising an impressive US$34 million through shareholders.

"Day by day, month by month, whatever we promised was delivered," says Marwan Boodai, CEO, Jazeera Airways. "Of course, expanding the existing routes and being competitive is important, but the priority was making life easier for passengers by simplifying the travel process - and that's exactly what we've done. We've also boosted the local economies and expanded our operations at the same time."

Jazeera Airways carried 500,000 passengers during its first year of operations, transporting them to various countries, such as Bahrain, Egypt, Jordan, Syria and India.

As part of its expansion, the airline has established an additional hub, located in Dubai, making it the only low-fare airline operating out of the emirate's international airport. Flights from Dubai started last month, with direct routes between Dubai and Bahrain three times a week, while additional routes will be added by the end of March 2007.

The airline is also increasing its fleet and recently accepted delivery of a new Airbus A320 aircraft, which was the fifth of ten aircraft being delivered over the next three years. It has an additional six aircraft on option from Airbus. "The new aircraft will reinforce our existing network as well as help us grow our Middle East reach in 2007," says Boodai.

Jazeera Airways remains the only operating Middle Eastern carrier that is neither owned nor subsidised by any government. It plans to list its shares in the Kuwait Stock Exchange in the first half of 2007.

Website: www.jazeeraairways.com

Onur Air

Onur Air is a low cost carrier (LCC) based in Istanbul, Turkey. With headquarters in the popular Atatürk International Airport (IST), the airline operates flights between Turkey and various western Europe countries, including Austria, France, Germany, Spain, Switzerland and the UK.

It also provides a range of no-frills domestic services between Istanbul and 12 other Turkish cities, providing strong competition to Turkish Airlines. Its domestic routes are based on a flat-fare structure and cover cities such as Bodrum-Milas, Dalaman, Konya, Mardin and Trabzon.

Onur Air began operations in May 1992 with two leased Airbus A320 aircraft. The numbers have increased rapidly over the past 15 years, although the airline remains loyal to Airbus, with the fleet now including the A300, A320 and A321, in addition to the McDonnell Douglas MD80/90 aircraft.

In total, the airline carries approximately 1.4 million passengers a year.

Website: www.onurair.com.tr

RAK Airways

RAK Airways was established early last year, under an Emiri Decree by Sheikh Saqr bin Muhammad, ruler of Ras Al Khaimah.

The airline, which is expected to begin operations by the end of April 2007, is a testament to Ras Al Khaimah's ambitious plans to develop its economy and compete with neighbours such as Dubai and Abu Dhabi for a larger share of the tourism market.

Following the launch of operations, RAK Airways will provide both chartered and scheduled services. It is also planning to join an alliance with other international airlines within the next three to four years, in order to strengthen its position in the industry and widen travel options for passengers.

Initially the airline's fleet will consist of two aircraft, including a 16-year old Boeing 737-300 (purchased for US$8 million) and a six-year old Boeing 757-200 (a $33 million plane leased from Spanish carrier Iberia).

It plans to increase its fleet by approximately one or two aircraft each year.

"We have taken delivery of our 757, the pilots are undertaking their final training schedules, the reservation system is almost complete, and we are hoping to launch by the end of next month," says Jack Romero, chief executive officer, RAK Airways.

"Regionally, we are expecting a significant increase in demand for additional capacity as incumbent carriers such as Emirates and Etihad expand their range of services. RAK Airways will take advantage of the rising demand and examine whether it is feasible to operate out of other airports in the UAE or other parts of the region. We are currently looking at Kuwait and Oman as serious possibilities," he adds.

A range of flights will be offered to customers following the launch of operations, including potential destinations in India, Pakistan, Bangladesh, Sri Lanka, Iran, Egypt and Lebanon.

Website: www.rakairways.com

Atlas Blue

Atlas Blue was incorporated in May 2004 as a fully-owned subsidiary of Royal Air Marc (RAM). The airline aims to foster the development of open skies in Morocco by offering competitive fares between the cities of Marrakech and Agadir to different European countries, including France, Italy, Belgium, Germany and the UK.

With plans to broaden the number of routes over the next five years, Atlas Blue favours the direct sales approach. Instead of relying on travel agents, it offers tickets online and through call centres adapted to each geographical area.

The airline operates from Menara International Airport in Marrakech, with a relatively young fleet or aircraft, consisting of six Boeing 727-400s. This number is expected to increase by approximately two aircraft every year, with a predicted total of 14 aircraft in 2008-2009 and 24 aircraft by 2012.

Website: www.atlas-blue.com

Jet4You

As the budget travel industry continues to grow in Morocco, Jet4You is the latest entrant in the market, commencing flights in February last year.

The airline currently connects a limited number of airports in Morocco, France and Belgium. However, with ambitious growth plans, it intends to widen the network by introducing additional European locations to its network and reaching 1.5 million passengers by 2010.

Jet4You started operations with two Boeing 737-400 aircraft and a workforce consisting of 100 personnel. As part of the expansion strategy, this is expected to reach ten aircraft and 400 employees by 2010. A potential rebranding has also been reported, as the airline's owners, TUI Group, want to change the name from Jet4You to TUIfly by 2008.

Website: www.jet4you.com

Sama

The General Authority of Civil Aviation (GACA) recently awarded Sama a national air carrier licence to operate domestic scheduled flights across Saudi Arabia.

"We are delighted with the confidence GACA has shown in us by awarding Sama the Dammam base licence," says Hatim Mouminah, SAMA board member.

"We look forward to bringing lower fares and making the flying experience to Saudi Arabia simpler. We believe our services will further boost national tourism and create new job opportunities for Saudis," he adds.

Sama, which is scheduled to commence flights during the first quarter of 2007, is a short haul carrier serving destinations within the Kingdom. Although it does not currently plan to offer longhaul destinations, the airline will eventually expand to other destinations across the Middle East.

The airline, which was founded by Investment Enterprises, received initial investment from 30 major private and institutional investors from the Kingdom, including Olayan Financial, Saudi Industrial Services and Sara Development Company.

Sama operates a fleet of Boeing 737-300 aircraft, which are leased from major worldwide lessors and maintained by SR Technics.

It hopes to have eight aircraft by the end of 2007, although the figure should increase rapidly over the next five years, reaching a projected figure of 35.

"Sama has passed several stages in its start-up process, the first being the arrival of two Boeing aircraft in the Kingdom, which are fully kitted out with our livery and seats," explains Mouminah.

"A further two aircraft will be arriving soon. Our priority is to serve as many cities in Saudi Arabia as we can with up to thirty-five aircraft over the next few years. We look forward to announcing details of Sama destinations, flight times and fares shortly," he adds.

Website: www.flysama.com

Nas Air

Nas Air was awarded a licence by the Saudi Arabian government in December to become the country's first low-cost carrier.

The airline, which started domestic flights in February 2007, currently offers daily flights between Riyadh and Jeddah. Initial fares for the route started at 99 riyals and tickets can be purchased through the company's website or call centre, in addition to a network of travel agents.

"Nas Air will be the first budget airline to fly in the Kingdom. We are very proud of this achievement, which is testament to the soul of the airline," says Peter Griffiths, chief executive officer, Nas Air. "We are a no-nonsense airline embodying a true Saudi spirit, which we hope will make us the people's choice."

Nas Air's initial fleet of three A320s will increase to eight by the end of 2007, as new routes are launched. By the end of this month, the carrier will be introducing daily flights to Madina, Jizan and Rafha.

"Everyone is welcome on Nas Air," adds Griffiths. "We believe it is everybody's right in the Kingdom to have access to affordable, safe airline travel."

The airline's services are similar to other budget carriers around the world, with no tickets issued. Passengers can reserve seats with a reservation number available through any of the three distribution channels. There is no meal service, but light refreshments are available for purchase on the flights.

Website: www.flynas.com

Ease On Air

Ease On Air marks Iran's entry into the budget travel market. Established by a group of aviation executives, the airline is 100% privately owned and has received its initial permits from the authorities to begin operations later this year.

Currently in the preparation stage, the airline will initially operate two Boeing 737 aircraft, although this will be increased to five aircraft within the first year of business and 14 aircraft by the fifth year of business.

The vast majority of flights - reportedly 90% - will be domestics, while the remaining amount will be regional.

Website: www.easeonair.com

Airblue

Airblue is Pakistan's fastest growing private airline, based in Karachi's popular Jinnah International Airport.

It started operations in June 2004 using a fleet of three leased Airbus A320s serving the Karachi-Lahore and Karachi-Islamabad routes. However, growth over the past few years has resulted in additional aircraft being added on a regular basis.

The airline mainly flies on domestic routes, although it provides a popular service to Dubai International Airport, which was launched in December 2005.

Further international expansion is currently being planned, with permission to start flights to Manchester (UK) awaiting clearance.

Other destinations featured in Airblue's future plans include cities in the UK, USA, India, Jordan and Saudi Arabia.

Website: www.airblue.com

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