Anil Bhoyrul lauds the achievements of Air Arabia chief but suggests the best is yet to come
By every measure, every definition and every analysis, Adel Ali should be a failure. It is ten years since he first launched his low-cost carrier Air Arabia, a project that had failure written all over it. As he says himself in this week’s issue, “Every guy I spoke to in the airline industry said it was impossible to start an airline from scratch in six months,” the group CEO of the airline says. “Everyone said low-cost carriers wouldn’t work in the Middle East. ‘You need to have open skies for this to work in the region, and you don’t have that’ they said. Those times were probably my worst times — the lowest point that I reached. Because I hadn’t started the business yet, there was no income and we were burning through the money.”
Ten years on, Ali has a huge grin on his face and rightly so. Today Air Arabia is worth a staggering $1.9bn on the stock market. It has become one of the Gulf’s biggest private-sector success stories. It is the first Middle Eastern low-cost carrier and the region’s only publicly listed airline. It has reported nine consecutive years of profit, flies to over 80 destinations and has set up two other hubs in Egypt and Morocco. Its stock is beloved of local investors, rising by over 120 percent in the last year.
The latest figures for the second quarter show a 15 percent rise in profits to $20.7m, with three million passengers having flown the airline in the first half of this year, a 16 percent jump on last year. Yet during this time, Adel Ali’s many competitors have come and gone. Remember Bahrain Air? Remember Wataniya? Remember SAMA? The rest of them pretty much all followed the script, which is that in this part of the world you would be absolutely crazy to take on the established big players backed by governments with deep pockets.
Yet Adel Ali is still here. Still smiling, still winning, still growing. Air Arabia kicked off its operations with just two aircraft flying to five destinations — the only destinations, in fact, for which the carrier was able to secure rights to serve. Today it is the biggest operator into both Saudi Arabia and India.
How has he managed it? I have met Ali several times over the past decade, and he isn’t what you would expect from a man running a near $2bn operation. He is relatively quiet and not one to give thumping orders and make ludicrous demands on his staff.
As he says in this week’s interview with Ed Attwood: “I always use this terminology — if you can’t paste, don’t copy. What I mean by that is that in business you have to have a belief and a very clear purpose about the results you want — whether it’s an airline or something else. Your objective also has to be that you want a return on your investment, and if those two things are clear, then you will succeed. What I think has happened is that people go into the airline business without realising it’s a risky business and also a very expensive one. You can’t just run a business purely by relying on a generic business plan dreamt up by someone sitting 5,000 miles away. Just because it was successful somewhere else doesn’t mean it will work here.”
But I believe the real story of Air Arabia is only just beginning. Nobody for a moment believed he could create a $2bn company in ten years — now there is good reason to believe his operation will be worth $10bn over the next decade. The airline is expanding faster than ever, and any city within a six-hour radius is on the radar.
China is a particularly interesting proposition. The carrier recently announced that it would be testing the waters of the world’s most populous country, although the range of its aircraft means that access points will be relatively limited to Chinese provinces like Xinjiang, Tibet and possibly Yunnan.
Though considered “smaller” cities, many of these have populations bigger than key destinations in the GCC. Crack China, and the game has really changed.
Anil Bhoyrul is the Editorial Director of Arabian Business.