Flydubai growth more aggressive than any other low-cost carrier

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Flydubai growth more aggressive than any other low-cost carrier

Flydubai has launched a swathe of routes in the last month. Having only commenced operations last June, the low cost, no frills carrier has made the most of its relationship with Emirates and also Dubai International Airport.

By Saj Ahmad

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Published: Sun 23 May 2010, 11:05 PM

Last updated: Mon 6 Apr 2015, 5:08 PM

With Emirates bringing in millions of passengers to Dubai for onward flight connections, flydubai has leveraged its low cot base to offer some of the most competitive fares the GCC region has ever witnessed.

However, no-frills is not just what flydubai is synonymous for — its route network reaches cities the likes of which its principal rivals have elected to avoid thus far.

By far the biggest nugget for flydubai’s success to date has been the rate at which it is adding to its network — airlines only make money when their airplanes fly. In the last four weeks, no less than five new routes have been added to the network.

Flydubai is maximising its fleet utilisation of its Boeing 737-800 fleet, and as more jets are delivered, the expansion of the network will only continue. In doing so, flydubai will certainly become bigger than the Sharjah-based Air Arabia, but critically, the growth in its network will mean the airline pushes to those cities that some traditional, full service airlines operate to.

Given the longer range of the Boeing 737-800 over the competing Airbus A320 operated by Air Arabia, Wataniya Airways, Jazeera Airways, Bahrain Air and others, flydubai has the capability to fly beyond six hours from Dubai, putting it within reach of over 2 billion people. When you look at it from a purely numbers angle, it becomes clear why the airline is expanding so aggressively, even more so than what Emirates did when it was first launched in 1985.

One of the most contentious, if not outright controversial aspects of flydubai’s existence has been its development and backing from the Dubai Government. Where Flydubai may certainly benefit from the huge concessions Emirates has in crew and ground services and even fuel contracts by being based at Dubai International Airport, Flydubai still has to pay the same fees as everyone else at airports outside the UAE.

Fundamentally, state support doesn’t always stifle competition or lead to inefficient operations. A quick glance at Singapore Airlines shows you that state development does yield huge positive results and the same is being enacted with flydubai.

The difference of course is that the low cost business model employed by flydubai is one that traditional GCC low-cost airlines will have a tough, if not torrid time trying to compete against. None have the extensive feeder traffic that Emirates brings into their key hubs nor do they have the political clout to penetrate new markets as quickly and as often as flydubai. Air Arabia has for years dominated the GCC skies with cheap fares, followed by the premium discount carrier from Kuwait Jazeera Airways. They are both now under threat from flydubai which brings both low fares and a fantastic premium product to its customer base.

Air Arabia operates around 20 Airbus A320s configured with 162 seats. Flydubai operates seven Boeing 737-800s with another 46 yet to be delivered and these are configured with 189 seats. Immediately you can see that flydubai is carrying up to 15 per cent more passengers on each flight — simply put, that’s more revenue per flight than Air Arabia.

Within a year, flydubai will race past Air Arabia in terms of fleet numbers. It still has some way to go before it reaches the 40-plus cities served by its neighbourhood rival, however, when you consider the ability for flydubai to carry more customers and still generate better income, Air Arabia will be under pressure to re-evaluate its deliveries of A320s and perhaps expedite them faster than they had previously imaged.

Flydubai has certainly made a huge mark in the GCC and that will only be emphasised as time goes on.

Existing airlines are not a threat to Flydubai — it’s the opposite.

For now, flydubai is still growing — that alone is enough worry for rivals but presents nothing but eclectic opportunity for the customer base that the airline is hoping to tap into.

(The writer is a chief analyst at FBE Aerospace, London.)

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