Dubai: Air Arabia’s latest airline ventures - Fly Arna and Fly Jinnah - will be operational by late June, according to the CEO Adel Al Ali.
Ali, who was speaking at the Arabian Travel Market, noted that both Pakistan and Armenia have significant diasporas, suggesting that traffic on the routes will be supported by strong VFR (visiting friends and relatives) traffic. “We have been flying to Armenia from Sharjah and Egypt for the last 15 years and while it’s not a very big market, there’s a big Armenian population outside,” said Ali. “Pakistan, on the other hand, has a population of 200 million plus – we think there’s an opportunity.”
To meet demand on these routes, Air Arabia will need a much bigger fleet. The airline, which currently has six Airbus A321neos, plans to lease more of the fuel-efficient aircraft before summer. “The market has come back much faster (than expected), and we need to grow the business in Abu Dhabi and the two new airlines,” said Ali.
Air Arabia’s total fleet could grow to 160-200 aircraft by 2030 compared to the current 58, said Ali. In 2019, the low-cost carrier placed an order for 120 A320 aircraft and delivery is scheduled to start in 2024. Ali said Air Arabia is ‘open’ to bringing in new aircraft such as the Airbus A220 and the Embraer E2 if there’s a requirement. “The size (of the fleet) does not matter to Air Arabia, profitability does.”
Etihad turns profitable
Amid a recovery in air traffic demand, Abu Dhabi-based Etihad Airways reported an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $272.2 million. “We have never made money before in 18 years and the ball is now making a mark in the back of the net,” said Tony Douglas, CEO of the airline. “This is still a work in progress, but what we have seen is a market that’s come back like a fire hydrant going off – yield is still good in terms of ticket pricing.”
When asked about the Airbus-Qatar Airways dispute over the A350 aircraft, Douglas said that Etihad has worked ‘constructively’ with Boeing on the 787s whenever a paint issue has come up. In February, Etihad signed a letter of intent for seven Airbus A350 freighter jets to meet the soaring cargo demand.
Douglas said demand for Etihad’s premium cabins is already higher than pre-Covid levels. “The load factor is higher because the people are quite keen to trade up to more space if they have the means to do so – there’s probably a correlation with some element of disposable income as a result of the pandemic.”
Ramping up
After the pandemic, the global aviation industry has struggled to ramp up hiring to meet the pent-up travel demand. Airports in the UK and US saw long queues and last-minute flight cancellations in the last few months due to severe staff shortages, but the situation seems to be easing up now. Gulf airlines and airports, which were among the first in the industry to announce recruitment plans, were not hit as hard.
“It has been a challenge,” said Air Arabia’s Ali. “A lot of people who were close to the retirement age decided not to come back – when it comes to the manpower challenge, the cost will go up a little, but I think it will look better every month”
Oil price - a boon?
The ongoing Russia-Ukraine conflict has taken oil past $100 a barrel, worrying airline heads who are looking to control costs after the pandemic. According to Ali, the rise in oil prices is not all bad, particularly for airlines belonging to the Gulf region. “A good fuel price is good for the region because the economy will be good and that’s when people will have more disposable income to travel.”
Ali is ‘optimistic’ about Air Arabia’s financial standing in 2022. “Because of the two years of no or limited travel, we think the market will remain strong in 2022 and 2023.”
