Dubai: Residents welcomed the announcement of the new Dubai-based low-cost airline as it will encourage price-sensitive customers to travel and offer a suitable alternative for frequent fliers.

"There is room in the market for a low-cost airline despite the competition of other budget airlines from neighbouring countries. If the airline is based in Dubai, it will definitely be able to compete with competitors as it will be catering to price-sensitive customers," said Gassan Yassin.

Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, on Tuesday announced the setting up of a budget airline to be headquartered in Dubai.

Currently, Kuwait-based Jazeera Airways and Air India Express are the two budget airlines serving Dubai, while Air Arabia and Nas Air serves Sharjah airport.

Dubai's new budget carrier will give residents of Dubai and Northern Emirates a better option of travel to neighbouring destinations.

Mohammad Murad, a former director of a low-cost airline, said that it was a positive move as it will ease the burden of rising oil prices off the customers. "This will be a big relief for travellers who end up paying for the rising oil prices. It will be a huge success in the market," he said.

"It will make a good competition and Dubai will be better off because more people will be using the new airline as an alternative to paying high fares. Having the airline in Dubai will save people time from travelling to Sharjah, where a low-cost airline is based now," said Shaikh Abdul Baril.

He added that people will also be encouraged to travel more frequently because they will have easy access to the airport at a fraction of a regular airfare.

Mohammad Ashik, a businessman, said that it was good news for Dubai's booming business as it will be a favourable alternative that will be used by many travellers. "The prices for airline tickets are now very high so it is likely that everybody will favour the cheaper prices offered by the new airline. Dubai International Airport offers a number of facilities and it will also attract people from other emirates to use the airline."