Thursday, May 13, 2010

Air Arabia vs flydubai.... Interesting Times

For starter's I have to admit I am an alumni of Air Arabia, I have spent four (4) years there witnessing its expansion, so I may be a little biased.

Air Arabia and flydubai are starting to look more like easyJet and Ryan Air. Starting from the equipment they fly to how they structure their fares.

Air Arabia is well established and is without any doubt the major force in establishing the LCC sector in MENA. The market is where it is because of Air Arabia and in the process it had to fight off almost every legacy airline in the region. It has revolutionized air travel by providing people with affordable air travel, not only at the traditional major destinations but at other under served population centers.

On the other hand flydubai enjoys the backing of the extensive network of Emirates who provides a link to connect with flydubai on its website. It also allows interlining, through check in and baggage handling throughout both networks.

As flydubai's fleet increases and it adds more destinations, it goes into head on competition with Air Arabia. Notwithstanding the wealth and buying power of the population, the UAE market is after all a finite market that is around five (5) to six (6) million people. This prompted the Air Arabia strategy of starting new subsidiary LCCs like Air Arabia Maroc and Air Arabia Egypt.

So the battle will have to be fought not only in the UAE but in the development of the markets in every station they both compete in. flydubai may have a slight advantage by capitalizing on Emirates ability to provide feed and visas, whereas Air Arabia has been present in these markets for years and knows them very well.

There is no doubt that the LCC segment in MENA will develop to eventually become 15% to 20% of the market. Air Arabia will probably remain the top airline in the segment for the coming few years with flydubai catching up as its fleet and network increase.

These are interesting times ahead to watch for as LCCs develop in the MENA region.


4 comments:

  1. Oussama

    But what about all the other LCCs in the regions, SAMA, Al Jezera, Bahrainair to name but three? If Air Arabia is the easyJet of the region, who is in their sights for acquisition? Their model with "franchise" operations in the same vein as easyJet in Switzerland is similar. What I have not seen/heard is a Michael O'Leary type comments, perhaps you can provide some!

    LCCs as an off-shoot of a full-service carrier, I think has a limited lifespan, before the parent becomes frustrated with the challenge to its own services, Go-Fly!

    As you say we live in interesting times.

    Malcolm

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  2. So far flydubai did not come out with any O'Leary remarks and I don't think they will ever. However flydubai does charge for bags while Air Arabia is advertising free allowances. This is not meant to detract of the other LCCs in the region. However other than Saudi Arabia and Egypt the other markets are limited either by population or the lack of LCC presence.

    ReplyDelete
  3. Interesting news on Air Arabia's Egyptian subsidiary. Do you think there is any scope for Air Arabia to move north of the Mediterranean and east of the Indian Ocean?
    It can't be too far in future until we are able to travel from Europe to the Far East with one LCC... my money was on Air Arabia? What are my chances for cashing in on that wager do you think?

    ReplyDelete
  4. I think you will lose Paul. Air Arabia subsidiaries are primarily to provide revenue new streams and not necessarily to connect networks.
    The only common station is Istanbul.

    ReplyDelete

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