Saturday, November 27, 2010

LCCs Redefining the Travel Market - GCC and MENA

Air Arabia aptly celebrated its 7th anniversary by taking delivery of the first A320 of its 44 aircraft order having finished 28 profitable quarters. YouGov Siraj latest survey revealed that LCCs have changed the travel habits of UAE residents (click here for full story) and I am sure it did the same in the GCC and MENA.

The LCCs reshaped the market by making air travel more affordable and as a result expanded the market by introducing a segment of the population that traveled by land or sea to air travel and most importantly enabled middle class professionals to travel more often on holiday and business.

Seven years ago when Air Arabia started flying, legacy airlines did not pay attention, for them this was a fad and if you ignore it, probably, it will go away.

Well it did not go away, on the contrary the concept flourished and today there are about 7 or 8 airlines operating. The major ones being Air Arabia, Flydubai, NAS Air, Jazeera Airways and Nouvelair. Air Arabia has 2 operating Startups in Egypt and Morocco with the one in Jordan under set up. Jordan has 2 startups Royal Falcon and Petra Airlines and with Air Arabia Jordan coming up this market should prove to be interesting. Etihad has opted for an all economy operation using the A320 which is its version of a quasi low cost operation.

It is true that this year saw the bankruptcy of SAMA Airways in Saudi Arabia and the exit of Bahrain Air from the market to operate as a legacy type airline.  The market is getting crowded and it will eventually determine who is there to stay (at this time, other than Air Arabia all others are not profitable).

The segment faces many problems that range from

  • subsidies to Flag Carriers in Saudi Arabia and Kuwait.;
  • crowded markets in the UAE and Kuwait;
  • competitive pressures from legacy airlines of the region
  • competitive pressures from foreign low cost carriers operating into the region 
  • relatively small markets;
  • lack of secondary airports;
  • governments that will not award traffic authorities in order to protect their airlines 

Having said that, the LCC's market share will increase over the coming few years to beyond the existing 6 to 8 percent as it expands the local markets by enabling more and more people to experience air travel.

No comments:

Post a Comment

Labels

1 Goal 2010 2012 2013 9/11 AA Abu Dhabi ADAC Air Arabia Air Canada Air India Airberlin aircraft airlines airports ambitions American Airlines Amman aviation AVOD AWST B707-300C B767 B777 B787 BA Bahrain Bahrain Air BangaloreAviation Boeing branding British Airways Business Aviation Cabin Crew Canada change chapter 11 CO Commercials communication community compliance contingency continuity Continuous Improvement cost effective creativity Culture curricula Customer Service Delta Detroit Metro DFW Doha DTW Dubai Dubai Air Show DWC efficiency emergency Emergency Response Emirates employees environment ET409 Etihad ETS EU FA FAA family Flight Attendants flight(s) Flightglobal flydubai GACA Galaxy Tablet GAMCO GCC globalisation GOL Greece Green Gulf Air Hala Hamburg happy health home Hopenhagen Human Resources IFE India Iran Iraq Iraqi Airways Jaffa Jazeera Airways Jet Airways Jordan Just Culture Kuwait Airways LA LCC leadership low cost maintenance management manpower MEA MEBAA MENA Michigan motivation MRO MROAM Oneworld Palestine passengers passion people Philadelphia planet earth Privatization professional QAIA Qantas Qatar Qatar Airways Quality Quick Service Restaurant Radio Repair Stations Risk road roots ROTANAJET Royal Jordanian Safety Sanctions. Sao Jose Dos campos SAT Saudi Arabia Saudi Arabian Airlines Security Sharjah Airport SimliFlying Simplicity SKYTEAM SMS social media Southern California Southwest Airlines Star Alliance Sudan Airways support target teachers Technology terrorism tolerance Toulouse tourism traffic Training transition travel TSA Turkey Twitter UA UAE UBM US Airways VIA Rail Violin Vision volcanic ash Wataniya Airways
 
Top Blogs
Powered By Invesp