(MENAFN- Arab Times) Ghaith Al Ghaith, Chief Executive Officer of flydubai relayed the airline's successful turnover, its latest innovations and future plans to a delegation of journalists at the Arabian Travel Market.
Al Ghaith informed that the ATM did not just promote the interests of the UAE but strived to boost the region's industry and particularly that of the GCC by putting on display its many travel products. The Arab customer, he remarked, has become immensely vital to the travel industry. Dubai's first low cost airline, flydubai began operations in June 2009. Since then, it has experienced exemplary growth, doubling the number of destinations it flies to, from 25 to 52 destinations in 31 countries, a rate of more than one new destination per month. It has also increased its weekly flights to over 1,000.
Added
Since its launch, flydubai has carried 10.4 million passengers, 5.1 million added to the number in 2012, marking a growth of 63 per cent in the GCC network. It has become the second largest carrier, by passenger numbers, operating out of Dubai International. "When we launched in 2009, our objective was to make air travel more accessible and offer real value for passengers. "We quickly identified and capitalised on opportunities offered by our proximity to the world's centres of population in Europe, the Middle East, North Africa and Asia, facilitating trade and tourism with the opening of new and underserved routes. We also challenged the conventional low-cost carrier approach, offering our passengers added-value services at affordable prices", Al Ghaith remarked.
Even though the airline began its activities in the eye of the global economic recession, financing partners believed in flydubai's growth potential by gauging the needs of the market. The market's ongoing confidence in flydubai's credit story is reflected in the AED 4.5 billion ($1.2 billion) competitive financing raised from the market to fund the acquisition of its aircraft fleet to-date, enabling the airline to order 50 aircraft before its first flight. Of the remaining aircraft deliveries, flydubai has recently mandated nine deliveries for sale and leaseback financing, which attracted strong interest with bids received for more than five times the requirement.
Evident
"The success of our sustainable business model is evident in our financial and operating performance," commented Al Ghaith, noting that in spite of an operating environment characterised by economic uncertainty and consistently high fuel prices, total revenue for flydubai in 2012 was AED 2,778 million i.e. $756 million. Net profit for the year was AED 151.9 million ($41.4 million) and flydubai saw a steady upward trend in EBITDAR, reaching 24 per cent of revenue for 2012. "We are just in our fourth year and we are proud of the achievements we have made in this short period. We are continuing to grow in the same scale and expected to achieve a double growth this year even as our product becomes more diversified," shared Al Ghaith.
The airline, Al Ghaith divulged followed a model of optimum cost efficiency. "At flydubai we like to manage our business with a low cost mentality", he said, sharing his view that business models of airlines have changed tremendously in the past few years. "Previously, you would add costs as a legacy and it piles up. "I have been in the business for 20 years so I know that in doing so it is very difficult to put your finger and know how much each thing costs and what is the income. But we cannot work like that any longer." But being a low cost carrier doesn't imply concession in quality for Al Ghaith. "As far as the customer is concerned, we cannot be less than what he or she expects from us especially since we are an airline of Dubai and we carry the name. Our services have to reflect the standard of our country."
To start with, the airline needs to excel at customer service while providing innovations in its service.
Al Ghaith draws attention to the in-flight entertainment programme onboard the aircrafts that could be considered to be one of the best in the world with its use of fibre optics and HD screens and a wide selection of entertainment. flydubai is also in the process of developing more diversified food items which can be ordered at the time of reservation. "The passenger will be able to decide what to eat, how to eat and what time to eat and he will take decision before the travel for his flight. "The new menu will be as good as any other airline. The only difference is that you get to choose what you want to pay for", Al Ghaith said.
Volatile fuel prices have led to a large focus on reducing costs. "At FlyDubai we are as cost driven and cost efficient as we can be. So everything we do has to make sense. "Even when we ordered our aircrafts at the Farnborough Air Show in 2008, we ordered 50 and got a good price. The maintenance costs are low and very cost efficient." He continued, "For example, for accessing the entertainment system priced at a mere 30 dhs for as many movies, the price is made up of the cost of the movies as well as the fuel we burn carry one extra tonne. So our target is to cover that cost plus the cost of the movie itself."
Revenues
The carrier's ancillary revenues accounted for 16.5 per cent of total revenues in 2012. Officials have noted that ancillary revenues will continue to be a significant component of total revenues in line with the growing popularity of flydubai's added-value services. These include in-flight entertainment, seat preferences, checked baggage allowances, car rental, travel insurance, cargo and visa facilitation services. flydubai has one of the youngest fleets in the world. It chose the Boeing 737-800 for its suitability to high frequency traffic within its geographic reach; the aircraft is quiet, reliable, has a strong safety record, and fuel efficiency.
While the aviation sector cannot go green entirely, lighter aircraft, more fuel efficient and less emissions go a long way. "We have the newest aircrafts which are very fuel efficient. "In all of our aircrafts, we have put winglets which is an extra investment that helps us burn less fuel. Even with the in-flight entertainment system, we chose a system that accounts for 1/3rd the weight of a normal system." Competition, Al Ghaith is what keeps the airline energized to innovate and provide better services, "It is our motivation to develop better performance. "We always consider that the nation is always better than the individual so we do consider the consumer is more valuable than us. The more the competition, the more beneficial it is to the consumer in the gulf region."
He further stated, "I do praise Marwan Boodai and Jazeera airways. I have known him for a long time and what he has achieved with Jazeera is something that we are proud of as Gulf people." Al Ghaith also highlighted the vision and support of the Government of Dubai, recognising its investment in infrastructure and tourism as well as its commitment to developing Dubai's aviation sector, which is expected to contribute approximately $45 billion in revenues to the emirate's GDP by 2020 according to the Oxford Business Group, Dubai Report 2013. "When we look back, we will discover that right now we are experiencing a boom in the aviation sector. This is the time for us to impact history. So far, Dubai has attracted millions of passengers to visit our city", he said.
Flydubai aimed to connect regions within the GCC extensively, Al Ghaith disclosed, "For us it is not just a matter of profit or market share but it is a duty for us that we take part in connecting the gulf region." Flydubai initially started with two trips to Kuwait that has expanded to eight flights per day which is an achievement he is proud of, "I do appreciate the efforts of the Kuwaiti civil aviation authourity for their support to us."
He opined that aviation has a big role to play in development of Kuwait and that it is important to have more aviation companies. "Kuwait Airways is capable of much more. "There is a lot of space for more companies. If you look at UAE which is smaller than Kuwait, we have Etihad, Emirates and flydubai." While the Kuwaiti airport did not lag far behind from others, he shared that flydubai was optimistic about the government's decision to expand the airport, "what distinguishes us as a region from the rest of the world is that our governments are in the front when building infrastructure. "In the UK it takes them 20 years to build an airport, here we blink and an airport is done."
Demand
When asked if the Arab Spring had affected the airline, Al Ghaith remarked, "Emotionally, yes definitely we are highly impacted but when it comes to operations and business, the good thing in the aviation industry is that we are flexible and mobile." During a decrease in demand, the airline is able to move trips from one country to another route. Each week more than 1,000 flydubai flights reach destinations across the Middle East, Africa, the Indian Subcontinent, Asia, CIS and Central & Eastern Europe.
The airline has increased accessibility to and from Dubai, launching 31 routes that either did not previously have direct links with Dubai or were not served by an UAE national carrier from Dubai. Among the nine new destinations launched in 2012 were Baghdad, Bucharest, Sana'a and Taif.
While flydubai travels to Ahmedabad, Hyderabad and Lucknow, the big metros of India like Mumbai and Delhi have not be reached.
He commented, "As far as traffic rights or access is concerned, it is not something that we control, it is between governments. We will fly wherever governments will allow us. Mainly, not our government because we are open sky, it is the other side. We would like to fly there but this won't happen in the near future because we don't have the necessary permissions yet."
Six new aircraft will be delivered in 2013 to meet demand on busy routes and enable the airline to reach new destinations. Since the beginning of the year two new routes: Malé in the Maldives and Ha'il in Saudi Arabia have joined flydubai's network with Multan and Sialkot in Pakistan commencing in March.
With projections for strong GDP growth in the UAE, Dubai's position as the centre for aviation, trade and tourism in the Middle East and the Government's continued investment in the quality of Dubai's airports and airlines; Al Ghaith remains confident that the outlook is promising for 2013 and beyond.
By Cinatra Fernandes
Arab Times Staff
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