Air Arabia achieves breakeven in its first year

Air Arabia, the UAE's first no-frills national airline, has announced that it achieved break-even in its first year of operations.

This achievement was unexpected even among airline officials. "We have cleared any doubts in the minds of people in the airline industry who thought that low-cost airlines like ours will be a mistake in the region," said CEO Adil Ali.

The airline earned revenues of Dh216 million, roughly equal to its expenditures.

"There is a very little profit as well but we don't want to mention that," said an official.

Ali added the airline is set to earn a profit during its second year.

"We anticipated a loss in year one, break-even during year two and a marginal profit in the third.

"The results so far are beyond our expectations: airline profitability is a long-term goal and is never achieved during the first year of launching such an operation."

Shaikh Abdullah Bin Mohammad Al Thani, chairman of the board, said: "Air Arabia is the first airline in the Middle East region to post a break-even result in its first year of operations.

"We have exceeded our own targets for 2004. We have proved that ours is a financially sound organisation and, in the process have created a new business niche in the region."

To a question he said he would be happy if more no-frills airlines entered the market as they would create a competitive business environment.

In its first 12 months of operation, the airline grew from five to 15 destinations, operated 5,398 flights, carried 546,000 passengers and logged 13,386 flying hours.

With the addition of another aircraft the airline now has a fleet of five Airbus A320s.

"We are anxiously waiting to start operations to India," Ali said. Initially the airline will operate on the Sharjah-Mumbai sector before starting flights to at least three more destinations.

"We are trying to start flights to Amman and Pakistan as well."

The official stressed the carrier's success is based on its priorities: safety, reliability and good service combined with low cost - "an unbeatable combination".