Flying cheap: time to buckle up for low cost flights in the Middle East
Low-cost carriers (LCC) operating in the United Arab Emirates could be poised to increase market share despite dominance by state-owned full service airlines.
“The region’s LCCs sector continue to expand at a faster pace than the more traditional airline sectors in the region,” Simon Elsegood, Senior Analyst (Middle East & Africa) at Capa – Centre for Aviation, said in an email.
Last year the LCCs in the Middle East grew to 13.5 per cent, a modest 1.8 per cent increase on the previous year according to travel and tourism IT solutions company Amadeus. The increase was the second-highest globally after the Asian market.
The low-cost model has only existed in the Middle East for a little over a decade and has yet to reach the heights of the European, North American and Oceania markets, where low-cost carriers take more than 30 per cent of the market share.
But the LCC model has witnessed very strong growth in the region although from a very small base.
“LCC growth rates in the region have typically been well above those of the rest of the world,” Elsegood said.
The Middle East market has several low-cost players such as UAE-based flydubai and Air Arabia, Kuwaiti budget airline Jazeera Airways and Saudi-based nasair. India’s SpiceJet and Indigo also fly into the region and Hungarian-based Wizz Air will enter the UAE market next week when it begins flights from Dubai’s newest airport, Al Maktoum International.
John Strickland, director at UK-based aviation firm JLS Consulting, said in an email that Wizz Air will focus on a “ultra-low-cost price message”. Similarly, he said the Indian low-cost carriers had to cater to a price-sensitive market. The UAE carriers and flydubai and Air Arabia address the local market.
Strickland said there is more room for the low-cost carriers to grow.
“Customers want the product,” he said. “Only government regulation is holding back progress in some countries.”
Addison Schonland, Founder and Partner at aviation consultancy AirInsight, said in an email that low-cost carriers need to be wary of “competing with national champions”.
Government-owned Etihad, Emirates and Qatar Airways, operating out of their hubs in Abu Dhabi, Dubai and Doha, have dominated the aviation industry in recent years as each airline continues to expand its network, fleet and partnerships.
“In Dubai it is unlikely that any LCC will be allowed to take on Emirates,” Schonland said. “We might see that an LCC could offer cheaper fares, using small planes, to smaller markets where Emirates has no interest.”
The low-cost carriers are highly disruptive to full service airlines as they cut out basic costs and reduce baggage size for passengers. The airlines look to make ancillary cost through add-ons such as purchased meals and early boarding while still maintaining low-cost fares.
Schonland said low-cost carriers need open access to markets to maintain their disruptive influence.
There have been no significant steps towards an open-skies policy among Gulf Cooperation Council countries despite it being largely debated among regional governments.
In Europe and North America, where there are open-sky policies, low-cost carriers have more than 30 per cent of the market.
As competition heats up in the global market, low-cost and full-service carriers continue to search for new measures to raise revenue and attract new customers.
Low-cost carriers are expanding their operations and taking on multiple aircraft types to capture new market segments.
“We’re seeing LCCs become more mature and complex, moving up the cost/value matrix in effort to capture higher yielding travellers, particularly valuable premium customers,” Elsegood said.
- Calculating the true cost of regional strife
- Just BS? Why Israel's anti-BDS law can't really stop BDS internationally
- Malnourished economy: global hunger leading to $2 trillion loss in world GDP
- Going green: UAE looks to save Dh6.98b a year by 2030 with renewable energy
- Diversify and dump the slump in the GCC
- Thought Al-Jazeera airways was one of those 'cheap' airlines? Well, think again, because it's building its own terminal
- flydubai launches four-times weekly flights to Sana’a
- flydubai to fly double daily to Sri Lanka this summer
- KEC falls to 19-month low as global financial system buckles and demand outlook deteriorates…