Sky high

Despite the abundance of budget carriers in the region, the UAE's newest addition already seems set for success.

Dubai has long been considered one of the most popular destinations in the Middle East, its sandy shores attracting some 30 million visitors a year.

Given the huge amount of air traffic the city generates, it was no surprise to hear the emirate would be launching FlyDubai, a new low cost, short-haul airline.

Set to coincide with the opening of the world's biggest airport, Dubai World Central, FlyDubai's launch will be supported by the city's established carrier, Emirates.

"The actual airline is owned by the government of Dubai," the company's charismatic CEO, Ghaith al Ghaith explains. "Emirates is just helping us start up. They'll be helping with negations, financing and marketing. We're now working on recruiting staff so hopefully we'll be hiring very soon."

He adds that although the carrier hopes to be running as a separate entity by the end of this year, they will still employ certain services from Emirates.

"We'll continue to operate some functions through the bigger airline, for example engineering. We might not have the facilities to have our own department so maintenance can still be provided by them."

After an impressive debut at July's Farnborough International Airshow, expectations for the budget carrier are high. And with 54 aircraft on order, a potential market of two billion people and an eye-catching logo, Ghaith, is confident the airline will be successful.

The local Emirati has spent 21 years working with Emirates airline; the last 14 as executive vice president of commercial operations. Ghaith began his education in Michigan but quickly moved west to escape the bitter North American winters.

After graduating with a business degree from Arizona University in 1986, he moved back to the UAE. A big fan of desert sands and sunny skies, the budget carrier's CEO is pleased with the company's new logo and believes "it's an excellent reflection of the emirate".

Blue and orange swirls will decorate FlyDubai's aircraft, which are designed to depict the city's ever changing coastline. In addition Emirates' marketing team has launched a colourful advertising campaign, promoting the new airline against a backdrop of the iconic Burj Al Arab.

"Dubai is a city with a huge coastline," says Ghaith. "It's growing all the time; developing with new additions and groundbreaking projects like the World and the Palm. That's why we've chosen those shapes and colours. We wanted a sky blue, a sea blue and orange to represent the sands."

Starting operations in the second quarter of 2009, the airline expects to serve some 12 destinations within a year of its launch.

"We've not decided exactly where the launch flight will go. But generally we'll be focusing on the GCC area, India, Pakistan, Iran and the former Soviet Union countries," explains Ghaith.

The carrier announced a US$4 billion order for 54 fuel-efficient Boeing 737s at the airshow but only five of these will be delivered within the first year.

"We'll be flying a combination of routes in order to fully utilise the time. Certain trips will have to be made in the morning and certain trips in the afternoon. We'll use the planes and time as efficiently as possible."The choice of aircraft was tough, with Boeing and Airbus both offering high quality, eco-efficient short-haul planes. In the end Ghaith admits the 737-800s had the edge on ‘efficiency' and were slightly cheaper to run.

"The main competitor is the Airbus A320 and they're both great aircraft. If you picked any of these two aircraft you wouldn't go wrong, it just so happened that the 737s did slightly better in our evaluations based on routes and cost."

In addition to purchasing 54 environmentally friendly aircraft, the carrier placed orders for engines and winglets totalling $750 million. In the first part of the deal FlyDubai signed a contract with CFM international for 50 CFM56-7B engines to power its new aircraft.

Shortly afterwards the airline signed a $50 million deal with Aviation Partners Boeing (APB) for blended winglets, which add an extra 1.4 metres to the wingspan and help combat excessive fuel consumption and noise pollution.

"The combination of engines and winglets means we'll be operating aircraft that are as kind to the environment as possible," says Ghaith.

"With the winglets our 737s will be operating with a lower fuel burn and a reduction in NOx emissions of almost 5%. The winglets also provide a 6.5% reduction in the noise affected area on take off. When you put that together with the reductions in CO2 emissions that we'll have from the engines, our 737s will be among the most environmentally friendly aircraft flying today."

At present the airline plans to run only one type of aircraft but Ghaith admits this could change in the future. "For the time being we're not running long-haul flights," he says. "We are building a new model of business and and if that's successful we may start flying beyond the region of 4.5 hours."

Despite the fact there are several budget carriers already in operation across the Middle East, Ghaith believes FlyDubai will be a success. "I don't think it's right to say you're not at all concerned, but it's also not the way we think," he says.

"I think Dubai is a huge market and we always wanted to have another airline here- it was just a question of time and space. We don't worry about the competition too much; we just worry about doing our job."

The price of crude oil, which at its highest reached $148 per barrel, has caused the closure of several airlines and made life difficult for many more. But Ghaith is confident the start-up airline will be able to weather this storm.

"We're obviously concerned that fuel prices are going up, but we don't believe that makes our business model invalid. On the contrary, with the rising costs there'll always be a requirement for a low cost carrier."

And although fuel prices remain high at present, Ghaith believes they will eventually drop. "We do think this crisis will be over at a certain time, and then there will be lots of prosperity."

To keep costs low, FlyDubai will run as cheaply as possible. "We are not going to add costs because we have to have certain things. We'll operate a very simple, no frills service. There won't be a fancy entertainment system like the ICE programme on Emirates flights. There will be meals service but you'll have to pay extra."

But most importantly the airline is brand new and will therefore incur no extra costs from previous debt. "We'll be starting fresh which is great," says Ghaith. "It's a good way to keep our costs low because it means we won't have cost layers to deal with."

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