Air Arabia marks six years with plans for more expansion

Dubai: Launched from its base in Sharjah, Air Arabia has reached the shores of Morocco and Greece as it completes six years of operations.

The first low-cost carrier (LLC) of the Middle East and the largest listed carrier by market value, the airline now operates in a market of steadily growing competition, the latest of which comes from within the country.

The airline expanded gradually, leasing the majority of the 20 aircraft it currently operates from Sharjah. However, seeing the growth in the industry, it placed an order for 44 A320s, which it will receive over a minimum period of five years.

As its growth from Sharjah slows, the airline looked to extend its destinations beyond its five-hour flying radius. To accomplish this it had to create a hub closer to its target markets.

In March the airline launched its base in Morocco at Mohammad V International Airport in Casablanca, where it said it would invest $50 million.

"We expect Morocco, Casablanca, to be a very large hub for Air Arabia. We are hoping that in five years we will have anything in the range of 20-25 aeroplanes at the base and to have at least 60 airports to operate from," said Adel Ali, chief executive of Air Arabia. The carrier now flies to 57 destinations in the Middle East, Europe, Africa and Asia.

New carrier

Seeing further potential, Air Arabia announced in September that it would launch a new budget airline in partnership with an Egyptian tourism company, Travco Group.

With a start-up capital of $50 million, Air Arabia holds a 40 per cent stake in the new firm.

The new LLC is expected to launch in the first quarter of 2010, possibly in March.

Ali believes that even with more competition, such as Dubai's new LCC flydubai, Air Arabia will continue to grow.

"If you bring a low-cost airline, it does not mean it will just take passengers from another low-cost airline. If there is a threat from low-cost carriers, it will be to conventional airlines and not to each other," he said.

The approach for the low-cost carriers is to attract passengers away from the economy cabins of the conventional airlines with pricing and value for money.

While it competes with other LCCs in the region, it currently has an advantage over the numerous European airlines that are also strengthening their presence in the Middle East.

The airline has not had to face slackened load factors due to the Arab region's resilience to the financial crisis.

It has also been enjoying steady profits. At the end of the second quarter, Air Arabia made Dh90 million in net profits, a 10 per cent increase from the previous year. Its load factor was 80 per cent.