Fly­dubai is the world’s fastest grow­ing air­line

The Pak Banker - - BUSINESS -

DUBAI: While an­nounc­ing its fourth con­sec­u­tive year of prof­itabil­ity in Fe­bru­ary 2016, fly­dubai has man­aged to weather many an eco­nomic storm - es­pe­cially when you con­sider re­gional GCC is­sues in places such as Iraq, Egypt, Syria, Le­banon and Libya among oth­ers. The air­line has moved leaps and bounds since its in­au­gu­ral flight to Beirut in 2009 and as it rapidly ap­proaches its first decade of op­er­a­tion, fly­dubai has trans­formed it­self from a new small-time en­tity to a full blown GCC pow­er­house in its own right. But enough of the past - let us look a bit more of what the fu­ture holds for fly­dubai. Fly­dubai en­coun­tered a chal­leng­ing en­vi­ron­ment in 2015 and hav­ing re­couped losses to stay in the black to the tune of $27 mil­lion/Dh100 mil­lion, some of the ill-in­formed Press world seemed fix­ated on the fact that the air­line's profit was 60 per cent lower than the pre­vi­ous year.

So what? It could have been 99 per cent lower but fly­dubai would still have been in the black. And therein lies the depth and strength of what it is that fly­dubai rep­re­sents. Even neigh­bour­ing ri­val Air Ara­bia's prof­itabil­ity fell six per cent in 2015 - but then, fly­dubai hasn't be­come the UAE's and GCC's largest low cost (hy­brid) air­line with­out sub­stance. Fly­dubai man­aged to rake in rev­enue of al­most Dh1 bil­lion more than Air Ara­bia to Dh4.9 bil­lion, while car­ry­ing over nine mil­lion pas­sen­gers com­pared to the 7.6 mil­lion flown by its Shar­jah-based ri­val. That's thanks in part to the fact that fly­dubai now op­er­ates a fleet of 50-strong Boe­ing 737-800s ver­sus Air Ara­bia's fleet of 44 Air­bus A320s. From May 2016, fly­dubai will start tak­ing de­liv­er­ies of 11 more 737-800s which will be fol­lowed by the first five of its new fuel-ef­fi­cient 737 MAX 8 fleet, for which the air­line is one of the first few cus­tomers. This will pro­vide the air­line a sig­nif­i­cant strate­gic and com­pet­i­tive edge over ev­ery sin­gle one of its GCC ri­vals - none of whom have in­vested in such re­place­ment mod­els that de­liver dou­ble-digit fuel sav­ings, among other ben­e­fits.

And let's not for­get the lu­cra­tive busi­ness mar­ket that fly­dubai dom­i­nates with its two-class 737 fleet - even with this ca­pac­ity, fly­dubai's 737s still carry more fare-pay­ing pas­sen­gers than its com­peti­tors that fly the A320. This ad­van­tage also ex­tends to the 737 MAX 8 ver­sus the A320­neo, which lacks the range and pas­sen­ger ca­pac­ity to al­low it to be a proper 737 MAX 8 al­ter­na­tive. That's be­fore you fac­tor in the lower cost of op­er­a­tion and higher resid­ual value that the 737 MAX 8 brings to its suite of ar­moury in this com­bat­ive land­scape. It is well re­garded in the global air­line in­dus­try that specif­i­cally within the genre of low-cost air­lines, heavy­weight op­er­a­tor Ryanair, an­other ex­clu­sive 737 op­er­a­tor, sports the low­est costs in the busi­ness, thus help­ing it forge the mas­sive mar­ket dom­i­nance it has in Europe to­day.

Fly­dubai is not that far be­hind, es­pe­cially when you con­sider just how young this air­line is. Start­ing op­er­a­tions at Dubai World Cen­tral last year has not just given fly­dubai an­other base from which it can push on with its or­ganic ex­pan­sion, it also pro­vides more ac­cess for cus­tomers to routes at lower prices. The ab­sence of any true low-cost air­line from neigh­bour­ing Abu Dhabi is in­ter­est­ing, be­cause in this void, fly­dubai can lev­er­age the strength of the prox­im­ity of Dubai World Cen­tral and fur­ther de­velop its own net­work. Dubai World Cen­tral too will have to get its skates on. De­vel­op­ment of the air­port has been slower than I had hoped for - but in the longer term, I see the air­port ben­e­fit­ting from de­vel­op­ment and ex­pan­sion through its in­vest­ment, but that has to be matched with the mil­i­tary airspace re­lin­quish­ing some of that pre­cious ca­pac­ity so that it can be as­signed for com­mer­cial us­age. This alone will act as a mas­sive cat­a­lyst for fly­dubai to un­lock its po­tency as the world's fastest grow­ing air­line. Dubai World Cen­tral will al­low fly­dubai to cher­ryp­ick slots of its choos­ing.

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