FlyDubai, Dubai’s low cost air carrier
The world’s aerospace industry gathered last week at the Farnborough Air Show in England to do deals and be deafened by the roar of fighter jets. The aeronautical displays at these events are always impressive but in recent years the real show stoppers have been the press conferences held to announce new mega-orders for commercial aircraft.
The travel boom in the Middle East and Asia has led to a succession of stunning multi-billion dollar aircraft orders at air shows over the past couple of years.
These have typically featured Tim Clark, the managing director of Emirates, but at Farnborough last week the limelight was taken by other aviators from the Gulf.
Etihad, the Abu Dhabi-based airline, bought $20 billion (Dh73.4bn) of aircraft, while FlyDubai, a new low-cost carrier, announced its arrival with a $4bn order for 54 Boeing 737s.
After the FlyDubai press conference I had an opportunity to catch up with Ghaith Al Ghaith, the airline’s Chief Executive, at the Dubai Aerospace chalet. I have been skeptical about the FlyDubai concept since it was announced earlier this year because it initially looked to be only a loss leader for Emirates. Now more than ever, airlines have to have robust strategies to survive high oil prices and wasting money bringing passengers into Dubai just to fill Emirates’ enormous A380s made little sense.
As Ghaith set out his plan last week, it became clear that FlyDubai is not being established as merely a feeder network for Emirates but is rather a serious attempt to connect cities across the Middle East in an affordable way.
“Emirates does not need us,” Ghaith said. “We are focused on building a model that we think will work for us.”
FlyDubai will link cities like Tehran and Cairo as well as countries bordering the region (like the “stans”), enabling tourists and the relatives of Dubai-based workers to visit the city, often for the first time.
In the past, many of these people have not been able to travel because of the excessive cost or inconvenience of doing so.
FlyDubai will also challenge the regional carriers on local routes such as Dubai-Kuwait or Dubai-Doha in a move that will, if international experience is any guide, increase competition, improve service and lower fares.
“Dubai is a melting pot made up of people from different nations in the region,” Ghaith said. “Dubai is building itself as a trading hub and to maintain and develop that people must be able to get there easily.”
However, one the problems for a budget airline in the Middle East is that people have very different views of what “low cost” should mean. To a Qatari it might mean something other than business class, while to most Egyptians, cheap travel is a bicycle.
Creating a service to meet very different expectations would be almost impossible for a carrier that styles itself as low cost so FlyDubai has settled on a model that is very different to the classic budget airlines of Europe but is also different to the local full-service carriers such as Gulf Air.
FlyDubai passengers will be able to select their service level from an online menu when they book their ticket, allowing them to determine whether they want a snack, meal or no food.
They will be to decide what sort of drinks and entertainment they have onboard and even how they will check-in at the airport.
By encouraging passengers to order in advance FlyDubai will have more flexibility to offer, for example, quality meals, unlike budget airlines in the rest of the world where food is an afterthought at best. This is obviously good for passengers but also for the airline as it will make a large proportion of its profits from these ancillary services.
“This is the FlyDubai model, not anybody else’s,” Ghaith said.
While FlyDubai appears to be laying solid foundations I am concerned about how much the airline has to get done if it is to be operational by this time next year – its stated aim.
It only ordered its first aircraft last week, it still does not know where its first destination will be, and it has not hired cabin crew or pilots.
There are some areas where it can take a shortcut, and save money, by partnering with its big brother Emirates.
It can outsource training, catering and fuel purchasing, which will provide economies of scale and may also help eliminate some of the errors that are inevitable when a new airline is launched.
There is a lot to get right in 12 months but if FlyDubai succeeds, we can expect this airline to make more big announcements at air shows in the future.