Flydubai is the world’s fastest growing airline
It has grown by leaps and bounds since first flight in 2009
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 car- rying 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.
New growth base
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. With only six other permanent passenger airlines operating out of the facility, flydubai is in a ripe position to expand much faster than it can at the airport in downtown Dubai.
Flydubai was always designed, in my mind at least, to become the lynchpin of how its growth story would mirror that of Dubai World Central. That’s why there’s no particular rush on the part of Emirates to up sticks and move there in the short to medium term.
Space is at a premium, but the increased investment at Dubai World Central will start to become more prevalent in the coming years, especially as flydubai’s own fleet expansion gathers pace from 2018 onwards with the arrival of more 737 MAX 8s.
Flydubai’s heavy utilisation of the 737-800 with almost 14 hours a day usage backed with a dispatch reliability rate of 99.77 per cent gives you some idea as to how well-oiled this machine is.
The promise of trouble-free engine reliability brought by the superiority of CFM International’s LEAP1B engine that exclusively powers the new 737 MAX family will allow flydubai to continue operations seamlessly, despite inducting one of the world’s newest and most popular airplanes — safe in the knowledge that the 737 MAX 8 will be equally as robust as its current fleet of 737800s. Retiring seven early build 737-800s will further aid flydubai’s bottom line, while the sukuk which was oversubscribed allows capital markets to hone in on the value of the brand and the assets it uses to make the airline tick.
Flydubai’s future looks as robust as it did when it launched operations in 2009. While the environment around it has altered, flydubai has been quick and receptive to changing market needs while continuing its expansion strategy.