Flydubai set to dominate sector

Flydubai has achieved a 200 per cent increase in passengers in the two years it has been operating, with experts attributing its success to an effective pricing strategy, among other factors. Speaking to Gulf News, Saj Ahmad, chief analyst at FBE Aerospace, said: "Flydubai is one of the most successful low cost airline launches in over 20 years. Critically, the unbundled fare policy it has, coupled with very low fares, has made it a consumer favourite. "Essentially, customers only pay for what they want or what they need. Where some carriers have hidden charges, flydubai has a policy of laying out in black and white what you get and what you pay for." Its aggressive expansion plan has resulted in a 78 per cent increase in the number of flights, 100 per cent increase in aircraft and 150 per cent increase in routes. Ghaith Al Ghaith, CEO of flydubai, said: "Our strategy was to expand as quickly as possible, adding aircraft and destinations at a rapid pace to ensure we reached a critical mass in the shortest possible time. Today we have 16 aircraft and 36 operational destinations, making us the fastest growing start-up airline ever. Effective strategy "One of the biggest challenges for a new company is dealing with rapid expansion while ensuring the systems, procedures and staff are in place to maintain consistent levels of service." Ahmad said flydubai's strategy enabled it to grow in fleet size without compromising on revenue. "Flydubai's growth has been aggressive, but it has also been judicious. It is taking just five more 737-800s this year (less than one a month) and is focused more on growing frequencies between city pairs to give passengers more choice over when they can fly," he said. "More flight options means lower fares and that in turn means aircraft make more money being in the air than parked on the ground," Ahmad added. This growth now makes it the second largest carrier operating out of Dubai International Airport, according to Paul Griffiths, CEO of Dubai Airports. "By opening up new and previously untapped markets, flydubai is helping to bring in significant volumes of traffic from around the region to Dubai and beyond," he said. The airline's network now covers the GCC, Middle East, North Africa, Indian sub-continent, Asia and some parts of Europe. "A five-hour flight radius from Dubai puts the airline within reach of over two billion people — that is a staggeringly huge market with potential to be widely exploited and that's precisely what flydubai is doing: making the most of the market on its doorstep," said Ahmad. The airline began operations on June 1, 2009, with Beirut as one of its first destinations. The vision for the airline was to provide a low-cost route from Dubai (Air Arabia already flew out of Sharjah) to popular routes such as the Leban-ese capital as well as to open up destinations such as Baku in Azerbaijan. Wide network "When you look at the 40 destinations the airline serves at present, it flies not only to busy hubs like Beirut and Damascus, but also to very under-served cities like Latakiya and Yekaterinburg, where high cost fares put customers off. Flydubai has come along and broken the mould and given passengers a much lower fare alternative," said Ahmad. Between June 2010 to May 2011 flydubai recorded increases of 161 per cent for available seats per kilometre (ASKMs) and 181 per cent for revenue per kilometre (RPKM) over the previous 12 months. RPKM has grown further than ASKM which shows a continued growth in revenue. As part of the airline's growth strategy, it has also invested in technology. Its 737-800s were the first among low-cost airlines to feature the Boeing Sky Interior equipped with the first touch screen HD (high definition) in-flight entertainment system. "Flydubai and Air Arabia will continue to be leaders, but overall they will dominate the market and fringe players may just collapse," Ahmad said. "We've seen RAK Airways bite the dust once before and their bizarre strategy this time around (of not being either a low-cost or full-cost airline) will cost them dearly. They are geographically isolated and demand to fly to Ras Al Khaimah, a niche market, is finite," he added. Ahmad predicts flydubai's growth will not be as aggressive over the next year, but it will continue to dominate the markets it serves.