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U.A.E. to Set Up Yet Another Airline

A new budget airline based in Abu Dhabi rumored to start in six months.

The skies above the Gulf might get even more crowded next year as plans for a new Abu Dhabi-based low-cost airline get underway.

The new airline to come out of the capital emirate will be the United Arab Emirates’ third budget airline, following in the footsteps of flyDubai based in Dubai and Air Arabian in Sharjah.

“The Middle East is still playing ‘catch up’ with the rest of the world as far as LCCs [Low Cost Carriers] go,” David J Bentley, Joint Managing Director of Big Pond Aviation, told The Media Line. “The rest of the world is moving on with the continuing evolution of the hybrid model that superficially keeps costs and prices low while pandering to the needs of business travelers.”

In parallel with the Gulf’s premium airlines, the low cost segment of the market has seen substantial growth, with six new carriers established over as many years, including Air Arabian in 2003 in Sharjah, Kuwaiti Jazeera Airways and Saudi Arabian Sama Airlines. 

“Abu Dhabi has to compete in the low cost segment because it is already happening in Dubai and Sharjah,” Bentley said. “There are other smaller airports poised to start competing in low cost such as Al-Ain and Fujairah”
While the major airlines focus on business clientele or tourists flying long haul routes to destinations like the United States, China and India, the low cost airlines tend to focus on inter-regional routes.            

Many low cost airlines which started off flying local routes have grown to establish regional network such as Air Arabia’s Maroc, set up in Morocco, and Air Arabia Egypt, set to be operational by March 2010.

“For the low costs, the market is the Arabian states and the connections to India and Pakistan, and maybe North Africa, where all the labor flights go,” Aviation Expert Christian Lambertus, told The Media Line.     

“Low costs have to pay the future oil prices as well,” he warned. “So the question is what will be their margins. The situation that we now have with a lot of low cost airlines will change. Only a few large ones left can apply the economies of scale. There will be cost pressures in the future as the economy starts turning again and oil prices go up.”       

Over the last 10-15 years Gulf based premium airlines such as Etihad from Abu Dhabi, Dubai based Emirates and Qatar Airways, have established themselves as market leaders both in terms of growth and standards. The recent introduction of the Airbus A-380 super jumbo jet to their fleets further boosted their standing.