By Richard Agnew
Jazeera Airways may change the industry, but the battle ahead will be tough. After a long wait, the Gulf finally has a second low cost airline to boast about. Last week, Kuwaiti owned Jazeera Airways touched down at Dubai International Airport, on its maiden flight. It was gone again in forty five minutes — part of the concept of quick turnaround, low service and reduced ground handling costs that budget airlines rely upon. But will it succeed? The early signs are good.
Flying into the future|~||~||~|Jazeera Airways may change the industry, but the battle ahead will be tough.
After a long wait, the Gulf finally has a second low cost airline to boast about. Last week, Kuwaiti owned Jazeera Airways touched down at Dubai International Airport, on its maiden flight. It was gone again in forty five minutes — part of the concept of quick turnaround, low service and reduced ground handling costs that budget airlines rely upon. But will it succeed? The early signs are good.
Jazeera Airways founder Marwan Boodai is a proven business star, and he would not purchased US$400 million-worth of aircrafts without being certain he was backing a winner. No doubt, Boodai studied the European example, and the stunning success of low-cost carriers such as Ryanair and Easyjet. In the UK, such carriers accounted for a third of all flights out of the country last year. Seven out eight of the world's most profitable airlines last year were low-cost ventures. The likes of Ryanair offer fares 40% lower than established carriers, and passengers have been voting with their wallets. But Boodai would be equally advised to have studied the Asian example. Unlike Europe, and its open skies, there is no unified regulatory umbrella. Just like the Middle East. As a result, landing rights have to be battled for, and the intense competition coupled with rising fuel prices has sparked off a shake out of the industry.
Singapore-based Jetstar and Valuair have merged, and other low cost airlines have made little impact on the profitability or market share of Cathay Pacific and Singapore Airlines. The danger for Jazeera Airways and Air Arabia, the region's other low-cost carrier, is that they fall into the same trap and are stamped upon by the big boys. It is worth noting that while seven of the world's top eight money makers are low-cost carriers, the eighth — and most profitable — is Emirates Airline.
For now however, passengers should make the most of the cheap ride. Jazeera Airways is fast expanding, its service is of good quality and its fares are falling. Whether that is still the case in a year's time remains to be seen.||**||Strictly correct|~||~||~|The decision by the Dubai Court of First Instance to jail six men charged with bogus share trading is to be applauded. As the city develops a booming financial market, the issue of regulation is paramount.
Dr. Habib Mulla, chairman of the Dubai Financial Services Authority, has worked extremely hard to ensure Dubai's reputation in the internationl financial community remains intact. The share scandal at the Dubai Islamic Bank, which the six men were implicated in, threatened to tarnish that reputation. The court's ruling — fast and strong — has made certain that will not happen.
It has also sent a very strong message to the markets, which is that while Dubai may still be developing its financial centre, it will not settle for second best. Everyone involved, at whatever level, must adhere to the strict rules of conduct. Break them, and you will be severely punished. And rightly so.||**||Racing into success|~||~||~|The critics had gathered long before the launch of the A1 Grand Prix series in September. It could never work. Nobody would watch it. Not enough teams would enter. It wouldn't be glamorous. Well, the sports founder, Sheikh Maktoum Hasher Maktoum Al Hasher has proved them all wrong. As we report this week, he has created a US$2 billion sport from scratch. In every respect, the A1GP has been a staggering success, and Sheikh Maktoum should be applauded for his achievements. The sport is here, and here to stay.
What is less clear is where this leaves Formula One. Bernie Ecclestone is no push over, but he must surely be concerned that the sport which made him a billionaire is now making headlines for all the wrong reasons. Fans are getting bored, races are too predictable, and costs are soaring. The teams cannot even agree on the rules. Well, if they don't like F1, they now have a very good alternative.||**||