E-mail Article

Printer Friendly

Share Article

Low cost, high skies

If you needed evidence that the low cost concept had well and truly staked its claim on the GCC market, then Jazeera Airways' Dubai launch last week would have surely proved vindication enough.

The privately-owned no-frills airline - which, until now, had operated from Kuwait only - announced plans to create a second hub at Dubai International Airport and launched the venture two days later on February 8, offering direct flights to Bahrain and Kuwait.
Five more destinations - Mumbai, Kochi, New Delhi, Muscat and Salalah - will follow on March 27.

Jazeera Airways chairman and CEO, Marwan Boodai, marked the occasion by immediately offering one million seats to all 20 destinations from both hubs at the incredibly low fare of AED 48 (US $13) - a marketing tactic reminiscent of burgeoning European low cost carrier, Ryanair, which is noted for its one-pence - just two US cents - fare promotions (on top of which you usually have to pay airport taxes).

It's a strategy that paid dividends - the queues at the Dnata Holiday Lounge on Sheikh Zayed Road, Dubai, were immense (Dnata is Jazeera Airways' local sales agent). However, demand was so rampant that the airline's web site reportedly experienced some functionality problems; certainly, many ArabianBusiness.com readers have posted comments reporting this.

Nevertheless, the stunt placed Jazeera Airways firmly on the agenda of price-conscious business and leisure travellers region-wide.

It must have dealt a blow to rival carrier, Air Arabia, but until now, the Sharjah-based airline has remained tight-lipped about what impact the new arrival will have on its business.

Air Arabia may fly to 32 destinations and offer bargain holiday packages to en vogue destinations, but if you live in Dubai, why would you travel to Sharjah to take advantage of low cost fares when they are now on your doorstep at Dubai International Airport?

Of course, the landscape could change when most of Dubai's airline operations move to the Jebel Ali International Airport (JXB) in the not-too-distant future, but in the short-term the question is, will Air Arabia suffer?

I suspect there is enough room in the market for both players, bearing in mind that Air Arabia, now in its fourth year, recently reported a net profit increase of 222% to AED 101 million for 2006. The airline carried 1.76 million passengers and the average load factor hit the 81.2% mark.

And expansion is on the cards: the company recently 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.

Jazeera's Boodai, at the launch of the Dubai hub, said there was room for both Air Arabia and Jazeera Airways and emphasised how even in its first year, his airline's operations had helped grow air traffic by high percentages beyond its own contribution in each market where it operated.

This "Jazeera Effect" stimulated the Aleppo market by a staggering 207%, according to Boodai, with other destinations growing their air traffic considerably as a result of Jazeera Airways' operations, including Alexandria (by 194%), Luxor (77%) and even Dubai (by 15%).

Air Arabia and Jazeera Airways won't be the last no-frills airlines to make an entrance. Already, KSA's private aviation company, National Air Services (NAS) has been granted a license to operate a domestic low cost carrier (LCC). So too has Dammam-based Sama Airlines. It's only a matter of time before both spread their wings across the Arabian Peninsula.

And don't forget, by the beginning of next year, three no-frills hotel chains will be rolled out across the UAE and beyond.

The UK's Premier Travel Inns (PTI), InterContinental's Express by Holiday Inn, and the Rotana group's Centro brand, all promise quality, convenience, the latest technology, but at low prices.

As the GCC market starts to mature, we can expect more low cost competitors across a number of travel products and at last, travellers will be given choice and a chance to make their leisure and business trips more frequent.

Comments 1-1 of 1

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.