x Abu Dhabi, UAEMonday 24 July 2017

Arabia spreads wings to Egypt

The airline expects this year to carry a total of 6 million passengers as it expands, opening more than a dozen routes from hubs in the UAE, Morocco and Egypt.

Air Arabia is ready to forge an Egyptian link as part of its expansion drive, expecting to carry 6 million passengers this year.
Air Arabia is ready to forge an Egyptian link as part of its expansion drive, expecting to carry 6 million passengers this year.

Air Arabia will cement its status as the first pan-Arab airline with a network stretching from the Gulf to North Africa when it adds a service from Egypt late next month. The airline expects this year to carry a total of 6 million passengers as it expands, opening more than a dozen routes from hubs in the UAE, Morocco and Egypt.

It expects to move 4 million passengers to and from Sharjah and a total of 2 million to and from Casablanca and Egypt. The airline's Egyptian gateway has not yet been decided but Alexandria has been listed as a likely candidate. An expected 71 per cent gain in passenger traffic from 2008, the most recent year for which statistics are available, underscores the carrier's progress since its humble beginning in 2003, when the Sharjah Government-backed company became the first budget airline in the Middle East.

Its success has helped spawn five other budget services in the UAE, Kuwait, Bahrain and Saudi Arabia. "Air Arabia figured it out first," said Dheeraj Lakhwani, an investment analyst at Prime Emirates, a brokerage house in Dubai. "The company had it in its mind from the very beginning to be a regional airline, which is why they named it Air Arabia and not Air Sharjah, for example." Adel Ali, the chief executive of Air Arabia, said the carrier planned to roll out eight destinations from Egypt within three months of opening a hub there, using two A320 narrow-body aircraft. The proposed eight routes include Italy, Germany, France, Belgium and the UK, with plans to serve London Heathrow.

Air Arabia will add four aircraft at its Sharjah hub, using them to increase the number of flights to existing destinations as well as reaching further into Central Asia. From Casablanca, Air Arabia Maroc will also begin flying to points in Africa. "It's going to be a busy year," Mr Ali said. The company believes it needs at least three hubs in the Arab world, and it aspires to operate 25 planes from each hub. Currently, the airline has 21 planes, with 44 on order from Airbus.

Other carriers have not been so aggressive. Air Arabia is the only airline in the Middle East with hubs in more than one country, and Mr Lakhwani estimates the carrier spent Dh50 million (US$13.6m) to Dh100m to set up each hub. Jazeera Airways of Kuwait operated a second hub for a time in Dubai but pulled out, citing commercial reasons. One of the factors limiting regional expansion has been national ownership laws, which prevent foreign airlines from opening wholly owned subsidiaries in certain countries. "In Europe or the US or Australia - it is one law, one licence, and one country," Mr Ali said.

But in the Middle East and the wider region, Air Arabia has had to deal with a dizzying array of national regulations. "In India for example, the investment law is not clear," he said. "It's a fantastic law when they want the business, and they change the law as soon as they don't want it. There is still a long way to go." The company is hoping this year will provide more predictable outcomes after a "confusing" last year, when health scares and the struggling economy kept many at home.

"It was a year that you could not have planned," Mr Ali said. "People wanted to travel but were not sure if they should travel. They wanted to spend and again, they were not sure." Analysts expect the airline's profit for last year to dip from 2008, when it made Dh510m and carried 3.6 million passengers. The expected decline in profit is being attributed to increased competition, which sent ticket prices down, and the loss of investment income that provided additional profit in 2008. The results are expected within two weeks.

@Email:igale@thenational.ae