Interview: Adel Abdullah Ali, Group CEO, Air Arabia
What are the growth projections for low-cost airlines in the region, and what are the main factors that are driving this trend?
ADEL ABDULLAH ALI: Prospects remain strong for the aviation industry in the MENA region, especially for the low-cost segment. The aviation sector is a critical pillar in strengthening the region’s competitiveness. The Middle East is among the fastest-growing aviation markets in the world, with the regional fleet set to expand by 5.1% a year between 2023 and 2033, according to a report published in March 2023 by global consultancy Oliver Wyman. We are likewise seeking to grow our footprint by leveraging new aircraft and enhanced on-board experiences.
To what extent are sustainability trends changing preferences and demands in the local and regional air travel industry?
ALI: The industry remains committed to sustainable aviation and continues to take serious measures to support these ends. What is needed is more clarity on the regulatory framework beyond environmental taxation. Efficiency will drive sustainability in the long run, and airlines need to start adopting measures that enhance their operational efficiency.
Which measures could low-cost airlines implement to gain a competitive advantage amid growing competition from other carriers?
ALI: A few factors play a crucial role in airlines gaining a competitive edge. One is a rigid cost-control strategy that focuses on lowering costs and maximising operational efficiencies, and eventually allows the airline to offer value-added products and services at affordable prices. It is imperative to ensure that customers receive the best value for their money to sustain an advantage in the current market.
Low-cost carriers are committed to the mission of making air travel more accessible to everyone, which is why they must continuously introduce new routes and penetrate new markets to cater to customers’ demands. To that end, Air Arabia launched 24 new routes across the region in 2022.
Where do you identify opportunities to expand route networks and increase passenger traffic between Sharjah, the MENA region and beyond?
ALI: A comprehensive network of connections between Sharjah and other MENA destinations has been established, as well as a wide range of routes to international destinations. Our multi-hub airline serves more than 200 international and domestic routes from seven strategic locations in Sharjah, Abu Dhabi and Ras Al Khaimah in the UAE; Morocco; Egypt; Armenia; and Pakistan.
From Sharjah, the carrier continues to penetrate new markets and launches new destinations in the Middle East, North Africa, Europe, South Asia and Central Asia. Some of these include Bangkok, Kuala Lumpur, Milan and Phuket.
How might low-cost airlines mitigate the impact of escalating fuel costs on their operations and increase profitability amid volatility in oil prices?
ALI: Fuel is often the largest cost for an airline. We actively monitor global oil prices, and take proactive steps to mitigate their impact on our operations and increase profitability. One example of such a move is our fuel-hedging programme, whereby we purchase fuel at a fixed price for delivery later, helping to keep our ticket prices down.
In addition, it is important for airlines to focus on operational excellence and efficiency to ensure that their aircraft are used as effectively as possible to maximise fleet utilisation, in addition to reducing the weight of the aircraft. Low-cost carriers must decrease the operational cost to pass on the savings to passengers without compromising on quality.
Read More from OBG
