Dec 05, 2008
Amidst global economic crisis, credit crunch and demand softening, Air Arabia, the leading low-cost carrier in the Middle East and North Africa posted record third quarter net profit of 214 million AED (United Arab Emirates Dirhams) ($58 million), with a net profit growth of 30% , compared to 165 AED million ($45 million) in the same period last year. Housam Raydan, Corporate Communications Manager at Air Arabia PJSC, speaks to ACEXC.
“Despite the current global economic challenges, both the Middle East and India remain two of the world’s highest growth markets, and we will continue to ensure that we provide class-leading service to the greatest number of destinations on the subcontinent.” Housam Raydan, Corporate Communications Manager, Air Arabia PJSC
ACEXC: What has been Air Arabia's vision and guiding principles since its inception in October 2003?
Housam Raydan: Air Arabia was launched with a vision of providing safe, efficient and affordable travel solutions for passengers traveling in the wider Middle East and North Africa region, now stretching to Eastern Europe and across South Asia. The airline is modeled after leading low-cost carriers from the West but has been adapted to meet the unique needs of travelers from this region. Over the past five years, we have grown with the region – and contributed to the ongoing economic expansion and diversification of the markets we serve. We will continue to do this going forward.
ACEXC: Air Arabia achieved break-even in its 1st year of operation. What have been Air Arabia's success factors that have led to be a profitable airline ?
Housam Raydan: The factors behind the company’s success is myriad, including class-leading aircraft utilisation, sustained high seat-load factors, ongoing technological innovation and a commitment to customer service that is second to none. As an airline, we have also changed enormously over the years – we now offer a pioneering 44 destinations across the Middle East, Europe, the Indian Subcontinent and Africa. To better serve all our customers’ needs, we offer services previously akin to legacy carriers, such as a seat selection service and early check-in procedure. Opening new hubs and expanding our service and destination offerings, Air Arabia is proud, five years on, to be the leading low-cost carrier in the Middle East and North Africa and one of the world’s fastest-growing airlines.
ACEXC: With global economic crisis, credit crunch and demand softening, how do you expect to ensure cost-efficiency and be profitable?
Housam Raydan: Like businesses everywhere on earth, Air Arabia will be impacted by the global financial crisis. So, yes, we do need to continue to look hard at operational efficiencies and ensure that the business is run as tightly as possible. That said, the airline continues to experience sustained growth, which is reflected in our overall profitability. Just as important, it is worth keeping in mind that LCC segment is especially resilient even during economic downturns. For those reasons and others, we are confident that we will weather the current storm and emerge stronger than ever.
ACEXC: Who according to you is your competition? And what is your differentiator?
Housam Raydan: Our peer group includes every other airline that serves the markets we reach, including both low-cost and conventional carriers. It is important to understand the business model and customer promise of Air Arabia: we offer both a destination network and quality of service that is truly second to none. We keep costs low but do not compromise anywhere else. In terms of differentiation, cost is obviously a key factor but it is not the only one. Our rapid organic growth really sets us apart, and our commitment to growing our destination network and range of services is also unique. That is all part of the Air Arabia commitment to excellence, which was proven every day.
ACEXC: You currently fly to 12 Indian destinations. What are your future plans for India?
Housam Raydan: India is clearly an enormously important market for Air Arabia, and we will continue to identify growth opportunities there. Despite the current global economic challenges, both the Middle East and India remain two of the world’s highest growth markets, and we will continue to ensure that we provide class-leading service to the greatest number of destinations on the subcontinent.
Air Arabia commenced operations in October 2003 and currently operates a fleet of 16 new Airbus A320 aircraft, serving 44 destinations across the Middle East, North Africa, South Asia and Central Asia through its main hub in Sharjah, United Arab Emirates.
Air Arabia is modeled after leading American and European low-cost airlines, and its business model is customised to accommodate local preferences. Its main focus is to make air travel more convenient through Internet bookings and offering the lowest fares in the market along with the highest levels of safety and service standards.
For the third quarter of 2008, the company posted a turnover of AED 625 million, up 69 per cent compared to AED 369 million during the third quarter of last year. During the third quarter of 2008, the airline served 978,794 passengers, an increase of 34 per cent compared to 729,745 passengers during the same period in 2007. For the third quarter, Air Arabia’s average seat load factor – or passengers carried as a percentage of available seats – remained at 87 per cent.
October 28, 2008, marked Air Arabia’s fifth anniversary.
