Flydubai to double route network by 2011

Low-cost carrier flydubai is looking to double its route network by the end of its second year of operations, said the airline's Chief Executive Ghaith Al Ghaith.

The airline, which celebrates its first anniversary today, has also confirmed its ancillary services, such as holiday packages and travel insurance, would be launched by the year-end.

Speaking to Emirates Business, Ghaith said: "Our first year of operations has been fantastic. We set forward on the right growth plan, knowing that anything lesser would not allow us to reach our one-year targets."

While the carrier has yet to break even, Ghaith reiterated flydubai "will make a profit in two to three years. That has always been the case".

He explained: "If we wanted, we could have launched with just two aircraft and made a profit in the first year alone. But we wanted to grow as far as possible and this is our flightplan for the carrier."

Flydubai plans to take delivery of its 13th aircraft by year-end, with another 37 on the order book, which are scheduled to join the fleet by 2016.

Extensive plans for growth

Asked if the airline was planning to switch operations from Terminal 2 at Dubai Airport to Al Maktoum International Airport in Jebel Ali – which opens for cargo operations from June 27, Ghaith said: "Currently, we are focusing on expanding where we are. But who knows what may happen in future."

Flydubai's aggressive growth is arguably the most extensive compared to any other budget carrier in the world. In its first year, the airline added 21 destinations to its route map, nine of which were announced last month alone.

"We are aiming to double that number by the end of the second year of operations," said Ghaith, without revealing any destinations.

Asked if the airline would consider adopting the Sharjah-based Air Arabia model, which opened hubs in Morocco and now in Egypt through joint venture deals, Ghaith said: "There are no plans for a hub now or in the near future. Our focus is on growth in Dubai and this is where we see the potential."

Media reports that the carrier plans to start hedging fuel costs from 2011 have been ongoing, but the CEO has maintained the airline was still not large enough to commence hedging just yet.

Speculation has also been rife that the Indian Subcontinent features prominently on the airline's growth plan. Quiz Ghaith and he doesn't deny this.

"Of course, the region will play a strong role in our expansion plans, but we are also bullish on all the routes that we have targeted on the airline's 4.5 hour flight radius mark," he said.

"Pakistan and India share strong economic ties with the UAE and we have more than 2.5 million people from the region residing in the country. That holds big market potential for us" he said.

The carrier already flies to Nepal, with its India operations launching tomorrow with a flight into Lucknow. Flydubai will also jet into the Pakistani city of Karachi from June 21, followed by the Sri Lankan capital, Colombo from June 23.

Developing India links

Yet, the airline's flight into the region met with turbulence last year when flydubai first announced its India operations to include Lucknow, Coimbatore and Chandigarh, all set for a July 2009 launch. But citing operational issues, those routes never took off and passengers were refunded after bookings had opened.

At that time, Ghaith had stated: "We understand that this is very inconvenient for passengers who have booked flights with us to India and we apologise for the disruption and disappointment caused.

"All passengers who have booked flights to India will be given a full refund, plus a voucher for a free return flight..."

Since then, the media has published several news updates, citing unnamed sources in the Directorate General Civil Aviation of India, with Goa, Jaipur and Pune added to that list. The airline though has dismissed such reports as rumours.

When asked about the potential of adding such destinations to the route network, Ghaith said earlier: "We hope that we will gradually be able to increase the number of cities in India and that we will fly to as many places as we have done with both Egypt and Syria. We are working closely with the Indian authorities to develop our links between Dubai and India."

Similarly, he added: "We anticipate that our Karachi flights will be very successful and hope to be able to gradually increase the number of cities in the country that we operate to over time."

Market for budget carriers

Low-cost carriers in the Middle East provided 8.3 per cent of seat capacity in the region in 2009, up from 2008's 7.4 per cent, according to figures released by aviation market research provider, Centre for Asia-Pacific Aviation, and flight solutions company, OAG.

In terms of international capacity to and from the Middle East, budget carriers held a capacity share of six per cent, up from 2008's 4.8 per cent.

These figures are expected to rise this year, as the domino effect of last year's economic downturn continues to make passengers more price conscious, while new entrants in the budget carrier arena vie for a bigger share of the pie with new joint ventures and air traffic rights.

"But such a percentage is still not good enough," said Ghaith. "The low-cost model in Europe or the Far East accounts for 30 to 50 per cent of the total aviation market share. In comparison, we have a long way to go. But having said that, I do anticipate double-digit growth in the low cost carrier market within a few years."

Expanding network

The regional low-cost airlines segment is relatively a young one. In 2003, Air Arabia became the first regional carrier to take off in this market, followed by Kuwait's Jazeera Airways, flyDubai, Saudi-based Nasair and Sama and Bahrain Air. Air Arabia also launched a joint venture, with a second hub in Morocco and a new subsidiary in Egypt.

Between them, these low- cost carriers operate 66 aircraft, with a further 150 on order, of which 31 are scheduled for delivery over the next two years. Servicing 92 destinations, their route map takes them to 37 places in the Middle East, along with Europe, Africa and India.

IPO in the offing?

Following at its heels could be the newest player in the market – an Abu Dhabi-based budget airline. Arabic daily Al Khaleej reported in December 2009 that an undisclosed Abu Dhabi-based investment company has announced firm plans to launch a new low-cost carrier in 2010, operating short and medium-haul services to regional cities. More details could be forthcoming soon.

When asked about another competitor entering the fray, Ghaith seemed upbeat. "Any form of competition will be positive for this market. The success of one [budget carrier] will see potential for every player here to better themselves."

Still, would the airline go public as did its regional rivals Air Arabia and Jazeera Airways? Ghaith played the diplomat, saying: "It is not my decision, but that of the Government of Dubai and we will accept whatever they have planned for the organisation."

Follow Emirates 24|7 on Google News.