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Tue 20 Jan 2009 01:33 PM

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Budget airlines tipped to top 2009 performance

Aviation analyst expects the likes of FlyDubai to thrive during global slowdown.

Budget airlines operating in the Middle East could outperform the region’s network carriers this year, an aviation analyst has claimed.

John Strickland from JLS Consulting, which provides industry expertise and advice, believes low-cost carriers offering cheaper fares may entice more passengers than legacy airlines in 2009.

When speaking to Arabian Business on Monday, Strickland said: “There is a certain unique stream of traffic around the Gulf that a company like FlyDubai [new budget airline launching this year] will be able to exploit, particularly in ethnic traffic flows from countries such as Pakistan and India to the Philippines.

“Those are the people who are relied on for the workforce for many areas of the economy in places like Dubai, Abu Dhabi and so on. They want to go and visit their families but they can’t afford to do it terribly frequently with the existing airline pricing, so the market will respond to having low-cost airlines present.”

Strickland added low-cost carriers outside the region have benefited from targeting worker traffic.

“If anything, we will probably see that market grow in size because people will want to go home more frequently,” he said.

“We have the same thing in Europe where Polish workers moved from one country to another on the basis that they can get home fairly frequently at a reasonable price, so not withstanding a recession that is a key factor that will assist those airlines.”

In late 2008, the Centre for Asia Pacific Aviation (CAPA) claimed network carriers in the Middle East would be less successful than budget operators this year.

According to Strickland, CAPA’s forecast may prove accurate. He added the low-cost model gives budget airlines an advantage over legacy carriers.

“A well managed low-cost airline focuses on its cost as well as its pricing and keeps its operational methods as simple and flexible as possible,” he said.

“The key thing to state is every airline is different; there are very good and efficient legacy carriers and others that are not as flexible. But certainly, low-cost carriers in terms of the organisational structure can be in the best place to be flexible.”

Strickland also believes budget airlines travelling long-haul could challenge their network rivals.

He said: “Some of the distances in the Middle East [that budget airlines travel] are not all one hour flights. Some are two, three or four hours when you fly to the Indian Subcontinent for example, so there is a benefit to having low prices side by side with legacy carriers especially for these ethnic and worker markets.

"I think that’s what we will see low-cost airlines taking advantage of.”

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