Budget boom

The Middle East's low-cost airlines sector is flying high and allows travel agents to package flights with lucrative value adds, explains Dominic Ellis.

When Air Arabia took off from Sharjah in October 2003, the region's travel industry was sceptical about the low-cost airline's chances of succeeding in a market renowned for frills and luxury.

But five years on, the airline continues to post altitude-defying figures - last year it flew 2.7 million passengers - thoroughly vindicating its launch - while in the past few years, a host of new low-cost operators have joined the fray.

 

Despite the region-wide boom in executive jet travel and a buoyant scheduled airline scene, the Middle East has proved it is no different to any other region globally in that there is a cost-conscious travel segment that needs servicing.

And this market is only going to prosper further. FlyDubai, which put in a cool US $750 million order for engines and winglets at the Farnborough Air Show in July to power its 50 Boeing 737s, is due to take to the skies next year.

It will join Kuwait's Jazeera Airways - whose second quarter revenues were up 47% - Bahrain Air, and two recent entrants in the Saudi Arabian market, NAS Air and Sama, which together with Air Arabia, mean a GCC-wide network is now rapidly taking shape.

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Such is low cost's emerging stature that it now has its own conference - Low Cost Airlines World MENA - which will be held in Al Ain between November 3-5 and is expected to draw around 200 industry names.

Symon Rubens, managing director of Terrapinn Middle East, the conference organiser, claims low-cost airlines will continue to play a key role in the region's aviation growth.

"Away from the glitz and glamour of massive airplane orders and designer aircrafts, the low-cost aviation industry has shown solid performance and expansion and has been working under the radar to fill in the gaps left by the large downsizing carriers, bringing a lot of benefit to the industry as a whole," he said.

Fuelling the growth has been the combination of a large expatriate population, airport expansion, geographic position, large pools of liquidity and regional liberalisation of the skies, he said.

"Low-cost carriers are expanding and connecting the dots in their route network through strategic partnerships, coping with the challenges of low-cost operations," Rubens added.

"Regional carriers are looking to expand as quickly as they can in the hope of taking up the slack left by downsizing rivals and positioning the region as a global aviation crossroads."

Middle East carriers have certainly had a good run in recent years, posting 18.8% growth in passenger numbers, more than double the global average growth rate of 7.5%.

In addition, around $54 billion is to be invested in airport expansion, while the aircraft leasing market is expected to increase to $1bn by 2010.