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Thursday, December 16, 2010

Flydubai Growth Plans On Track

Low-cost carrier Flydubai is continuing its ambitious growth plans as the first operator of the Boeing 737-800 Next Generation aircraft with Sky Interior.

The Middle Eastern airline has already taken delivery of three new 737-800 Sky Interiors, and is expecting a fourth within the next few days. These four aircraft have been fitted with a new fiber-to-the-screen inflight entertainment system from industry newcomer Lumexis, for which Flydubai was the launch customer.

The airline expects to receive another ten aircraft in 2011, taking its total fleet to 23 by the end of 2011. It announced an order of 54 Boeing 737-800 NGs at the Farnborough Airshow earlier this year.

All new aircraft will be fitted with the Lumexis IFE, but airline Chief Operating Officer Capt. Kenneth Gile, told Aviation Week that he is not entertaining the idea of retrofitting the existing fleet of 737-800 NGs that were delivered earlier this year. “Those will be used on shorter haul routes on our network,” he said.

Flydubai now connects to 28 destinations from its base in Dubai, many of which are also served by Air Arabia, Etihad and Emirates. However, the airline’s CEO, Ghaith Al Ghaith, does not believe that Flydubai’s dominance of the Middle Eastern low-cost market through fast fleet and route growth will impede other carriers from succeeding in the region.

“We do not have many low-cost carriers in the Middle East,” says Ghaith. “The national airlines are huge, but the low-cost model has not been explored as much as it should in the Middle East.”

“We believe there’s a fruitful road of growth ahead for low-cost carriers, and this is the beginning of the growth, but there’s still a lot to be done.”

Talking about growth in key markets, such as India, where Flydubai struggled to finally launch Lucknow last year, Ghaith said, “Access to certain markets depends on the understanding between two governments. It’s a reflection that there are not enough rights into those markets but that’s the nature of the area that we operate in. We continue to work with our government and others” [to introduce new routes].

Despite other carriers in the region struggling to make a profit, Ghaith is confident that Flydubai will continue with its rapid growth strategy. He says the aim has always been to be profitable by the end of 2012, and he confirms the airline is still on track to meet that target. Flydubai launched during the financial crisis, he says, and this is reflected in its business model.

“Our strategy is to get to a size that allows us more success. When we have 20 plus aircraft in operation, we will have reached critical mass,” he says. The airline currently has 13 aircraft in service and is expecting Boeing to deliver a further ten in 2011. “We have a good relationship with Boeing and our expansion plans are still on track.”

As a state-owned airline, Flydubai has been able to expand much faster than its low-cost competitors in the region. It has the support of the Dubai government and of its big brother airline, Emirates. The airlines share catering, information technology infrastructure and they interline on some routes. But that’s where the synergies end, says Ghaith. Despite competing on many of the same routes, he doesn’t believe that Flydubai’s market penetration has affected Emirates’ traffic on those routes. “The product offering is different. Flydubai’s success on these routes is determined by passenger preference,” he says, “and those same passengers would not pay a premium to fly with full-service Emirates.”

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