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However, Al Ghaith did well not to bristle at the suggestion that Air Arabia is the largest LCC in the region with its 70 destinations and 29 A320s in operation. flydubai is fast approaching it on the rails, with its 45 destinations and 20 Boeing 737-200s, and some aviation experts predict Al Ghaith’s carrier will not take long to surpass its Sharjah-based rival – and in less than half the time it took Air Arabia to build up its own impressive fleet and network. Al Ghaith was suitably diplomatic about the neighbouring emirate’s budget carrier. “We are always striving to be the number one airline, you always want to be the best. What Air Arabia has done over the past eight years has been fantastic and they have definitely encouraged other airlines, as have Emirates and Etihad. We actually go forward on each other’s success.” Air Arabia has just posted a 26 per cent dip in its Q3 profits as the Arab spring disruptions and higher oil prices have eaten into its revenues. Does Al Ghaith think an eventual merger of these


Ghaith’s view. “Emirates and Etihad manage to coexist. And like southeast Asia, eastern Europe and India have seen in the past decade or so, there's money to be made catering to the vast population of people whose wealth has advanced to the point where they can afford to fly. Lower fares plus rising wealth equal a lot of new customers.” Al Ghaith also emphasised there is


plenty more growth potential in the Gulf region’s LCC sector, pointing to the fact that budget airlines have cornered up to 50 per cent of the market in the likes of the US and Europe, while in the Gulf market share is less than ten per cent. Peter Grimsditch sees the Arabian


Gulf’s location as a considerable advantage to Air Arabia and flydubai’s prospects. “There is a vast population within four hours flying distance of Dubai and certainly there is plenty of room for these two to expand a lot more yet.” Just as the Arab spring has hit the fortunes of one of the Gulf’s two most dominant LCCs, it has also impacted on the other, and with flydubai having a


“In this part of the world, we look at competition positively and it is an open market, so the more the merrier. the more services and airlines there are, the better it is for the customer.”


any on-going problems you reduce your capacity and that has affected everyone across the board, including flydubai. “But it is easy to take away capacity and put it somewhere else. There is no doubt there has also been a positive effect due to these unfortunate problems and the UAE has directly benefitted because it has been seen as safe.” The regional geo-political tensions and crises have also played their part in keeping oil prices at high levels and Al Ghaith was frank about how airlines need to deal with the issue. “Fuel is the most important cost for


any airline, in fact it makes up about 40 per cent of costs, so any changes, up or down, affect everyone’s bottom line, so you cannot manage it, or escape from it, without taking some drastic action. So if it goes up, you have to raise your prices because if you don’t, you are not respecting your business and you are not being honest with yourself.” Speaking at an earlier roundtable


flydubai is on course to make a profit by the end of 2012.


two budget airlines, which are based just a dozen kilometres or so apart, is likely? “I cannot foresee a consolidation in the


future. I mean in the time there has been an aviation sector in our region how many consolidations have there actually been? So I don’t think so.” John Scholle, a senior economist at IHS Global Insight concurs with Al


total of six routes into Egypt and Syria, Al Ghaith admitted things have not been entirely straightforward. “It has worked both ways. First of all,


we are in the airline business and the safety of our customers, aircraft and staff are our number one priority. So you only operate if that is secure. Secondly, it has to make sense economically, so if there are


event, alongside the Russian Business Council to promote the newly launched routes into Russia, Al Ghaith revealed that flydubai was close to breaking even, less than three years after its launch, and in the context of its aggressive expansion policy and plane acquisitions. Al Ghaith said 2012 would be the year in which the carrier would actually make a profit. With the whole world braced for a potential downturn, Al Ghaith feels Dubai is now better equipped to deal with a recession in the likes of the Eurozone and the US due to the


GULF BUSINESS / 77


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