Why Sharjah has proved ideal for Air Arabia

To chief executive Adel Ali and his team, however, it was ideal.

“Sharjah has a great catchment area: it’s near Dubai and all traffic from the northern emirates has to drive past the airport to go into Dubai,” he explained. “It’s a beautiful regional airport with a short taxiway – which allows us to trim minutes off every sector – and a long runway. People can get through the airport very quickly. And, when we arrived, it didn’t have a based airline.”

Importantly, it was decided not to ‘fix’ the airline’s position by naming it after Sharjah. ‘Air Arabia’ was designed to appeal to the widest possible audience.

As Arabian Aerospace goes to press, the Middle East’s first and largest low-cost carrier (LCC) should be starting flights from its latest base as Air Arabia Egypt.

In a partnership with local tour operator Travco, Air Arabia is beginning flights from  Alexandria, with the further aim of starting operations from a Red Sea airport later this year. First routes will be to Kuwait, Amman, Beirut and Khartoum

The new Egyptian operation mirrors that in Morocco, from where it began flying last year. There, it came to an agreement with an existing small carrier, Regional Airlines, which was rebranded as Air Arabia Maroc. The Sharjah-based carrier holds 29 per cent of the new company’s shares and manages the Casablanca operation.

“Regional was operating a very small aircraft within Morocco and it wanted to expand that business,” explained Ali. “To do that required different aircraft and skills and it realised a combined effort with us would help all parties.”

There were simple reasons for linking up with existing companies in Egypt and Morocco, rather than setting up new, stand-alone organisations, said Ali. Both nations demand that any companies within their borders are owned by local citizens, so the majority shareholders in both of Air Arabia’s new operations are respectively Moroccan and Egyptian.

With the Moroccan operation based at Casablanca, on the western edge of the Arab world, and the airline’s home base of Sharjah on the east, Alexandria neatly fills the gap between the two.

Both the Moroccan and Egyptian operations will look north to Europe and south to Africa for growth. It has been acknowledged for some time, said Ali, that many African nations are under-served in air transport terms and he predicted growth not only between MENA nations and the rest of the continent, but between East Africa and the Indian sub-continent.

However, he does not foresee expanding into the Indian sub-continent in the way it has expanded in the Middle East any time soon, despite the traffic generated between that region and the Gulf. “We’ve not really looked at it, simply because there are too many airlines in the sub-continent. We just feel it’s too early to expand outside the Arab world.”

In a short history notable for steady growth, one of Air Arabia’s few setbacks occurred in the sub-continent, when it attempted to set up a joint venture with Nepalese carrier Yeti Airlines to start low-cost services from Kathmandu. The enterprise lasted for just three months in early 2008 before services were suspended, then terminated completely later that year.
There were three main issues, explained Ali. There was ongoing political instability and associated industrial disputes. Local airports were incapable of handling expansion. And fuel for the Nepalese market had to come through India and was getting more and more expensive by the day. We looked at it and decided it wasn’t a good story.

Similarly, he is cautious about expanding operations into Russia. Although he accepts there is “huge potential” there and that his airline’s services to Kiev in Ukraine and Almaty in Kazakhstan “do fantastically well for us”, he feels that flights to Russia generally are a little too far beyond Air Arabia’s self-imposed limit of  four hours’ flying time to be comfortable.

Like European low-cost giant Ryanair, Ali is a firm believer in using secondary airports. He decided to launch Air Arabia Egypt from Alexandria’s new Borg El Arab Airport rather than Cairo, which he describes as “still not an open airport that we can fly to and from. It’s still kept for Egyptair”.

He believes several countries in the region are considering trying to distribute traffic away from their main hubs and points to the Egyptian Red Sea airports of Luxor and Sharm-el-Sheikh as examples of good, small regional airports. He is confident that, as traffic grows at the region’s secondary airports, they will attract new investment.

Ali is a passionate advocate of an open skies policy in the Arab world. Those countries that have liberalised their markets have seen the benefits, he said.

“For example, in Syria it used to be very difficult to get three or four flights a week into Damascus. But then the authorities opened all three airports – Damascus, Aleppo and Latakia – to international services and removed most of the limitations on frequencies. As a result we’ve seen fantastic growth.”

Remarkably, Air Arabia has been profitable every year since its inception (despite a downturn early this year due to slipping yields) and operates with load factors of 80 per cent. Its fleet of 25 A320s will rise to more than 60 in the next few years and it expects to increase an initial two Egypt-based Airbus A320s to at least four or six by the end of 2010. Similarly, the Moroccan fleet will grow from three to five this year.

The economic crisis has increased the number of business travellers using his services as companies cut back on travel costs. However, they still probably account for only around 15 per cent of passengers, he said, as many local companies will never move their staff from premium cabins to an LCC. A further 30 per cent of Air Arabia’s passengers are leisure travellers, with the remainder split between students and families.

He is optimistic about prospects. “People continue to want to travel. The business environment is getting better, not worse, and there’s a huge focus in the Middle East on tourism infrastructure that I think has got a long way to go. For the foreseeable future, I’d say it’s a growth story.”