Charting a new course

The region’s airlines have been navigating through some rough air over the last few years but bold strategies are at the heart of recovery plans for success

Flydubai Boeing 737 Max 8

Airlines in the Middle East have faced a challenging period, feeling the effects of geopolitical shocks, increasing competition and rising oil prices before the pandemic grounded flights globally and brought the sector to a virtual standstill. While some shut shop, others embarked on a new course with bold strategies in tow.

The International Air Transport Association (IATA) expects overall traveller numbers to reach four billion in 2024, exceeding pre-COVID-19 levels (103 percent of the 2019 total), which signals that the industry is moving in the right direction. But along the way, lessons are being learnt.

John Strickland, a leading commentator on the airline sector for media worldwide, said: “If not already understood, the importance of having sufficient liquidity has been made crystal clear. The strongest players have ensured that this is the case and indeed have gone out to strengthen reserves.”

While it remains clear that the industry is on its way to recovery, with the world still not out of the grips of the COVID-19 crisis, the impact is still being felt.

“Recovery is going to be lengthy. It could run into years and the structure of many markets will change. Some important sources of traffic, such as business travellers using premium seats, may not fully recover,” he said.

Discussing the prevalent challenges, Strickland explained: “Some airlines are hedged on fuel and have managed to buy forward at prices lower than those prevailing in the market, others are not so fortunate and are currently exposed to rising costs which will be difficult to pass on in prices due to the fragile nature of recovery. Paying back the debt that many airlines have had to take on just to survive will be one of the greatest challenges in the years ahead.”

Shedding light on the key strategies that worked for airlines which managed

to stay afloat in turbulent times, Strickland said: “The ability to react quickly and show agility has been critical. Airlines have had to make numerous changes to their timetables, adding and cancelling flights at extremely short notice, as quarantines and different restrictions were introduced by governments. They have also had to become increasingly agile in moving and mobilising capacity to where opportunities presented themselves.”

A good example remains that of low-cost carriers, many of which have adapted better to the ever-evolving nature of the market. Strickland said: “They have proved the most resilient, already being very efficient and capable of surviving on the basis of low fare traffic. They have maintained good cash reserves and have been very flexible in moving capacity to take advantage of opportunities.”

FLYING HIGH

Since its launch a little over a decade ago, Flydubai has rapidly grown to become one of the region’s largest low-cost carriers, with a growing fleet of the latest Boeing 737-800 and Boeing 737 MAX aircraft flying to more than 100 destinations around the world.

“Despite ongoing challenges related to COVID-19 and its impact on the aviation industry in 2021, we can look back at a successful year at Flydubai. While we continued to meet the ongoing

Low-cost carriers have proved the most resilient in the present climate as they are already very efficient and capable of surviving on low fare traffic

challenges, we were able to report tremendous results, both operationally and financially,” said CEO Ghaith Al Ghaith. “We reported a profit of US$229 million in 2021. Our total annual revenue increased by 86 percent to US$1.4 billion, compared to US$773 million in 2020.

“While travel remains complicated, our passengers have recognised that it is possible, and this is reflected in our growing number of weekly flights and an overall increase in passenger numbers by 76 percent year-on-year, with 5.6 million passengers who travelled with us last year and a seat factor of 69 percent. Also, the total number of flights surpassed pre-pandemic levels. We operated 6,430 flights in December 2021, compared to 5,701 flights in January 2020,” he added.

“We have also seen an increase in demand for connecting traffic with 34 percent of passengers connecting to the Flydubai network or through its codeshare with Emirates. The latter saw more than 8.3 million passengers enjoy seamless connectivity of our joined network since the launch of the codeshare partnership in 2017.”

Flydubai also witnessed an increase in demand for business class seats in 2021 in some of its key markets. “The GCC saw a growth of 42 percent in 2021, up from 35 percent in 2019; Europe saw an increase of 51 percent in 2021 up from 41 percent in 2019, and Africa saw an increase of 42 percent in 2021 up from 35 percent in 2019,” explained Al Ghaith.

GROWING CONNECTIVITY

In 2021, the top 10 busiest routes for scheduled flights across the Flydubai network included Alexandria, Bahrain, Bucharest, Doha, Karachi, Kathmandu, Malé, Tbilisi, Tel Aviv and Zanzibar. And throughout the year, the airline has seen its network grow considerably with the launch of 22 new routes, out of which 13 routes were underserved from Dubai.

Flydubai business class

“Thanks to the efforts of our teams, we now operate flights to more destinations than before the pandemic. As travel restrictions started to be lifted across the network, we increased our flight schedule in the second half of the year to meet the growing demand for travel.

“Over the summer, we launched flights to five seasonal destinations to offer more options for passengers, including Batumi, Bodrum, Mykonos, Santorini and Trabzon. At the peak of this travel period, we were operating flights to 118 destinations and these seasonal routes were very popular with our passengers.”

With its sights set on further growth, 2022 got off to a good start for the airline with the addition of yet another route. “In March 2022, we launched operations to AlUla in Saudi Arabia. As the momentum for travel continues to build, we can look forward to launching more routes this year to provide our passengers with more options to travel and explore the Flydubai network.”

FLEET MANAGEMENT

The year 2021 saw the addition of new aircraft to Flydubai’s growing fleet. “With the Boeing 737 MAX rejoining our fleet in April, we were able to expand our single fleet type to 59 aircraft as of December 31, 2021.”

Things are looking up for the airline as 2022 will see Flydubai take delivery of the largest number of aircraft since the launch of the airline in 2009.

Al Ghaith said: “We started taking delivery of 20 Boeing 737 MAX 8 aircraft in March this year, which has seen our fleet grow to 62 aircraft. The additional MAX 8 aircraft joining our fleet this year will see the further deployment of our bespoke onboard product and also support our airline’s future growth.”

A MODEL OF SUCCESS

With year-on-year growth reported by the airline, it is clear that Flydubai’s business model remains strong. “As demand for travel returned, our strong fundamentals have translated into a significant improvement in our financial and operational performance. This achievement was made possible by the commitment of our employees combined with our business agility,” he said.

And while this success is celebrated, the airline continues to eye new horizons. “Our strategy for the year ahead is to contribute to the rebuilding of the travel sector. With travel restrictions continuing to ease across our network, we can be cautiously optimistic to see demand for travel grow, notwithstanding the geopolitical situation and its potential effect on the pricing of commodities.

“To support this growth trajectory, we will need to recruit the best people in the industry willing to contribute to Flydubai’s continued success story.”