FlyDubai to focus initially on flights within GCC

Gulf News Report

Dubai: Dubai’s aviation landscape will receive a strong boost next year when the new budget airline FlyDubai takes off, as Emirates is becoming expensive for many budget passengers who have been shying away from full service airlines and gradually shifting to Sharjah-based Air Arabia.

It will also help strengthen competition out of Dubai which is being served by Kuwait-based Jazeera Airways and Air India Express. Jazeera uses Dubai as its second hub.

By then, a second airport, Al Maktoum International airport, will become operational 40 km from Dubai International, in Jebel Ali. FlyDubai will initially focus on regional flights within the Gulf Co-operation Council (GCC) and surrounding countries. Its operations will be entirely separate from Emirates airline and group.

FlyDubai’s operations will potentially cover an area of some two billion inhabitants. It will support Dubai’s commercial and tourism sectors by serving a new set of travellers, and providing them with affordable air links to popular, high-demand destinations. A lot of groundwork has been done thus far, and I’m pleased to note that FlyDubai is on track to launch its first flights by mid-2009,” said Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation, Chairman and Chief Executive of Emirates Group, who is also chairman of FlyDubai.

Resources

Earlier, the Dubai government announced the new low-cost airline, FlyDubai – the second budget carrier of the UAE after Air Arabia.

Gaith Al Gaith, Chief Executive of FlyDubai, said, “We are recruiting for key positions, evaluating aircraft options and routes, working out our pricing and distribution strategy, and putting in place the structure and operational resources for the business.”

FlyDubai plans rapid growth

The Dubai government’s latest airline venture aims to be region’s largest low-cost carrier – FlyDubai

New low-cost carrier FlyDubai has unveiled an ambitious business plan which should make it the Middle East’s largest low-cost carrier by 2015.

FlyDubai chief executive Ghaith al Ghaith says the carrier, created in March by the Dubai government, will launch in May and fly five 189-seat Boeing 737-800s by the end of its first year. It plans to have a fleet of 13 to 14 737s by the end of its second year and will take the last of 50 aircraft ordered at July’s Farnborough air show in 2015. FlyDubai has also agreed to lease four 737-800s from Babcock & Brown and Ghaith says “if we get the right deal we may lease some more”.

A fleet of 54 aircraft would already exceed the planned fleet of rival Air Arabia, which in 2003 became the region’s first low-cost carrier and now operates 14 A320s with another 39 on order. Air Arabia is based in Sharjah, the emirate adjacent to Dubai which has positioned its airport as a low-cost hub. FlyDubai will be based at Dubai’s new airport at Jebel Ali, which is slated to open its first of six runways and a low-cost terminal just in time for the carrier’s launch. “The runway is nearly complete now and we expect it to be in operation by the middle of next year,” says FlyDubai and Dubai Airports chairman Sheikh Ahmed bin Saeed Al-Maktoum.

Ghaith says the terminal will be basic and “simple to use”. Pricing for Jebel Ali has not yet been established by Dubai’s airport authority but Ghaith expects the charges will be lower than the basic Terminal 1 at Dubai International. FlyDubai is planning a 24-hour operation and will likely follow Air Arabia’s model of ­flying within the Gulf during the day and to the Indian subcontinent overnight.

Ghaith says FlyDubai will target a mix of business and leisure destinations within a 4.5-hour range of Dubai, which gives it access to two billion people. While restrictive bilaterals are still common in the Middle East, Ghaith expects gradual liberalisation and FlyDubai will have access to Iran, North Africa, the CIS countries, all the Gulf states and the Indian subcontinent.

He acknowledges securing rights to India’s major cities will be difficult but FlyDubai is happy to leave those destinations to Emirates given their congestion. “We will go to places that have easy access,” Ghaith says. “Any airport in India will work for us.”

The Dubai government has enlisted the help of Emirates for FlyDubai’s launch phase. But Ghaith says “by January we should be totally standalone”.

FlyDubai plans to follow a pure low-cost model, charging for food and checked bags. No connectivity is planned initially, but Emirates vice-chairman Maurice Flanagan says the two carriers could interline or codeshare at some point. He sees the two carriers as potentially having complementary networks, and explains: “They can fly to places we don’t and to places we go to that are marginal.”

One complication to any co-operation between Dubai’s two carriers, however, is Flanagan expects the new airport will not be ready for Emirates until 2020.

Besides Air Arabia, FlyDubai will compete against Jazeera, which is based in Kuwait but has a mini-hub at Dubai. Jazeera now only operates six A320s but has another 34 on order. Over the last 18 months, two low-cost carriers have also launched in Saudi Arabia and one in Bahrain. But FlyDubai is easily the most ambitious and could spark other governments in the region, such as Abu Dhabi and Qatar, to launch their own low-cost carriers.

Etihad Airways chief executive James Hogan says he is now focused on growing Etihad but “we always consider options and alternatives”. Qatar Airways chief executive Akbar Al Baker says he has registered a low-cost brand which can be launched quickly if necessary. “As soon as we feel the pain of the low-cost carrier into our market and our market share, then we will launch a low-cost within 90 days,” he says.

Flydubai plans to use fuel hedging to maintain low fares

New low-cost airline Flydubai plans to use a fuel hedging strategy to maintain the lowest fares in the industry, recently appointed COO Kenneth Gile has said.

Plans for the Dubai-based carrier’s launch in mid-2009 are being finalised at a time when budget operators are struggling to stay “budget”.

Volatile fuel prices are putting pressure on them to raise fares and surcharges.

Gile spent 25 years with US-based Southwest Airlines, one of the world’s most profitable carriers which is acclaimed for its successful fuel hedging strategy.

And he said the US budget company’s model could be applied to Flydubai.

Southwest’s aggressive hedging programme has saved it an estimated $3.5 billion (Dh12.8bn) since 1999.

“We are focusing on implementing a successful hedging plan and Southwest Airline’s hedging strategy is something we could look at,” Gile told Emirates Business.

“We are considering it and have already started some preliminary processes. We are developing a hedging plan right now. Fuel is one of the biggest expenses for any airline so we have to look at ways to control it in order to be able to offer the lowest fares in the region.”

Flydubai is aiming to heavily leverage technology to bring down its costs.

“We will be heavy on the IT side of things,” added Gile. “This means that we will do whatever we can to deliver low weight paper, implement electronic bookings, use IT in the back office systems and so on. And we will leverage that to the maximum dollar.”

Other cost-saving measures are likely to include using efficient engines that cut fuel consumption to the minimum, fitting lightweight seats and having efficient ground operations.

“By keeping the fuel burn to the minimum and having successful fuel hedging you can keep the price as low as possible – and we want to focus on being the lowest cost carrier.”

Flydubai is examining the markets it needs to serve as it formulates an aggressive marketing strategy.

The carrier, which is being assisted by Emirates, will offer services to Dubai from the whole Middle East region, North and East Africa, Southeast Europe and the Subcontinent.

“More than two billion people live less than a five-hour flight from Dubai and we plan to offer more customers more opportunities to travel home,” said Gile.

Flydubai, which has start-up capital of Dh250 million, will begin operations at the new Al Maktoum International Airport in Jebel Ali with two planes initially. The carrier placed a $4bn order at last month’s Farnborough International Airshow for 54 Boeing 737-800 aircraft.

It will own 50 and will lease the other four from Babcock and Brown Aircraft Management. It plans to increase its current 25-strong staff to 600 by 2010 and has already begun the process of appointing pilots.

“We will not be using Emirates’ pilots, we will recruit our own,” said Gile.

“Emirates is assisting us but eventually we will be a separate entity. We are working on getting launched and being independent.

“Flying low-cost to major markets, non-stop, with new jets is the core strategy we are working on,” said Gile.

The numbers

$3.5bn: Has been saved by Southwest due to its aggressive hedging programme

Dh250m: Is the start-up capital of Flydubai and it will initially fly two planes

$4bn: Order placed by the airline at Farnborough for 54 Boeing 737-800

Flydubai Finishes First Farnborough With $750m Flourish

FlyDubai rounded off its first trip to the Farnborough Air Show with a package of orders that shows the airline’s commitment to the environment, with orders totalling $750 million US for engines and winglets.

In the first part of the deal, FlyDubai signed with CFM International, a 50/50 JV between Snecma and GE, for 50 CFM56-7B engines to power the 50 Boeing 737-800/900s ordered on the first day of the air show.

The engines, valued at $700m US at list prices, are the Tech Insertion configuration, which provide operators with lower fuel consumption, lower emissions and lower maintenance costs. The engine’s 1% improvement in fuel consumption lowers CO2 emissions, ensuring a reduction of 200 tonnes per aircraft per year.

Muhammad Al-Lamadani, CFMI Senior Executive – Regional sales for the Middle East, Eastern Europe and CIS, said: “We are delighted to provide the very reliable CFM56-7B engines to FlyDubai for its 50 737 aircraft. The high reliability and low operating costs of the CFM56-7B powered 737s will be critical to help this new airline get off the ground. In addition, we will bring the full force of our world-class customer and product support organization to bear to help ensure the airline has a very smooth start-up.”

In a separate deal, FlyDubai also signed an agreement worth $50million US for blended winglets from Aviation Partners Boeing (APB). The blended winglets, which are for the 737-800s, add an extra 1.4m to the wingspan of the aircraft and offer a range of environmental benefits, including reduced fuel consumption and lower noise emissions.

Christopher Stafford, Director of Sales, Aviation Partners Boeing, said: “Blended Winglets will save FlyDubai up to 4% of the total fuel burn on their new fleet of Next Generation 737s. This improvement usually equates to an annual fuel saving of between 75,000 – 125,000 gallons per aircraft per year. While the payback period typically varies between 1 – 3 years, depending upon aircraft utilization, stage lengths and fuel costs, the dramatic fuel savings benefits of Blended Winglet Technology are with you for the life of the aircraft!”

Ghaith Al Ghaith, Chief Executive of FlyDubai, said: “This combination of engines and winglets means we will be operating aircraft that are as kind to the environment as possible. With the winglets our 737s will be operating with a lower fuel burn and a reduction in NOX emissions of almost 5%. The winglets also provide a 6.5% reduction in the noise affected area on take off. When you put that together with the reductions in CO2 emissions that we will have from the engines, our 737s we will be among the most environmentally friendly aircraft flying today.”

“We may be a low cost airline, but I am committed to providing some little extra touches that will make all the difference and distinguish us from our competitors.”

“The Farnborough Air Show has been an important milestone in the development of FlyDubai. We now have our fleet in place and can move forward to making decisions on our route network and key staff appointments. We have a lot of work to do before we begin commercial operations next summer, and we will be making announcements on new developments in the coming months.”

“It is a very exciting time for FlyDubai and I am delighted that our success at Farnborough has helped us to get off to such a great start.”

FlyDubai is the new low cost carrier that was started by the government of Dubai in March of this year. FlyDubai kicked off the Farnborough Air Show with an historic order for 54 Boeing 737-800/900s worth $4bn US at list prices. This is the biggest order the aircraft manufacturer has ever received from a gulf-based low cost carrier for the 737.

FlyDubai on track for launch of first flights mid-2009

26th June, 2008 – Dubai’s new low cost airline has been named “FlyDubai“. The brand identity and livery for FlyDubai will be unveiled in the coming months. HH Sheikh Mohammed bin Rashid Al-Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, has approved the name FlyDubai from a shortlist presented by HH Sheikh Ahmed bin Saeed Al-Maktoum, Chairman of the new low-cost airline. Sheikh Ahmed said: “FlyDubai is a simple, yet powerful call to action. It makes an immediate link to our core business, which is providing no-frills flights to bring people to and from Dubai. The name also carries a strong association with the city of Dubai, itself a brand synonymous with excellence, reliability and an international, pro-business approach.

FlyDubai’s operations will potentially cover an area of some two billion inhabitants. It will support Dubai’s commercial and tourism sectors by serving a new set of travelers, and providing them with affordable air links to popular, high-demand destinations. A lot of ground work has been done thus far, and I’m pleased to note that FlyDubai is on track to launch its first flights by mid-2009.”

FlyDubai will initially focus on regional flights within the GCC area and surrounding countries. Its operations will be entirely separate from Emirates Airline and Group.

Ghaith al Ghaith, Chief Executive, FlyDubai said: “Since the government announced the formation of Dubai’s new low cost airline in March, it has been all systems go. We are recruiting for key positions, evaluating aircraft options and routes, working out our pricing and distribution strategy, and putting in place the structure and operational resources for the business.

“Efficiency is the pillar of our business model. In terms of our customer proposition, we will focus on keeping things simple and flexible. We want to make it easy for our customers to interact with us, and to have more control in how they book, purchase and select value-added services to their basic flight experience.

“It has been a busy time, but everything is going to plan. The selection of a name for the airline is only the first of many milestones to come, and we look forward to announcing more details over the coming months.”