LCCs in the Gulf: the coming wave

One thing that fascinates me about commercial aviation in the Gulf region is that, no matter, how much capacity there seems to be, airline planners always find room for some more…

Although the 3 largest regional players (the so called “MEB3s”: Emirates, Qatar Airways and Etihad) get a considerable share of the attention, it is worth remembering how a sizable budget aviation segment has also developed in the region, with the likes of flyDubai (that despite the “budget” label has a remarkable premium product!) and Air Arabia, to name just the two that are based in the UAE.

Although limited to operating narrow-body fleets only, these two UAE-based low cost airline are by no means small.

Both carriers are of a respectable size: 55 aircraft (plus 119 on order) for Air Arabia and 54 (although 14 of them are grounded Boeing 737 MAX) plus 236 orders (all of them Boeing MAXes) for flyDubai.

But things are about to get even more interesting in this segment with the arrival of three new low cost airlines to the UAE.

The availability of more efficient narrow body aircraft such as the A320neo family and the, now grounded, Boeing 737 MAX is emboldening low cost carriers to try ever longer range routes. If based in the Gulf, the possibility of covering an area that ranges from Japan to Western Europe with the operational economics of single aisle airliners, opens up quite a few interesting possibilities.

Air Arabia Abu Dhabi

Perhaps is this complementarity between wide-body/narrow-body and full-service and hybrid/budget products that up to a point has worked so well for Emirates and flyDubai (the two airlines have the same shareholders and their strategies are quite aligned, with the latter complementing the network of the former), that Etihad had in mind when it joined forces with Air Arabia to create Air Arabia Abu Dhabi.

Etihad has been slogging a bit lately (particularly after its strategy of buying stakes in ailing airlines in different countries hasn’t really worked out), so it looks like it is going to try a different approach to stake its claim to being a major air hub.

A couple of questions come up, though:

First, is this airline going to put extra pressure on Etihad and make it harder for it to get out of the red? One way to look at it, is that the new carrier’s network will hardly overlap Etihad’s. At least this seems to be the case with the first prospective routes, as highlighted in this article on Onemileatatime. And getting more visitors to Abu Dhabi may end up benefiting Etihad, either directly, as some of these will end up flying the full service carrier at some point, or indirectly, by raising the profile of an emirate that is somehow overshadowed by its glittering neighbour, Dubai.

And second, how this new carrier is going to compete with the original Air Arabia, based at Sharjah, which is barely 100 miles from of Abu Dhabi. Air Arabia operates branded subsidiaries under in a number of Middle Eastern and North African countries, but this is the first such venture so close to its home base.

Wizz Air Abu Dhabi

But things got extra interesting when it was known that Wizz Air, the Eastern European ultra low cost airline (check out our flight report to see how is is like to fly Wizz Air), is preparing the launch a local Abu Dhabi-based subsidiary.

And this airline is expected to be rather large: Wizz Air’s CEO, Jozef Varady suggested it may operate up to 50 A321neos and carry 20 million passengers per year.

Are these two airlines going to compete with each other and with Etihad? They are all, one way or another, partly owned by entities linked to the government of Abu Dhabi. Air Arabia Abu Dhabi will be under the umbrella of the Etihad Aviation Group, while Wizz Air Abu Dhabi will have as partner the Abu Dhabi Developmental Holding Company (ADDH).

SpiceJet in Sharjah

In any case, these two carriers will be competing for budget conscious travellers with another fierce competitor. Indian low cost carrier SpiceJet is planning to launch a base in the emirate of Ras Al Khaima (RAK), at the northern tip of the UAE, but not that far away after all, some 150 miles from Abu Dhabi.

SpiceJet has learned the ropes in the ultra-competitive Indian air travel market and it now plans to export its model to the RAK. Although its plans are more modest than those of its AbuDhabi peers. It will start by basing five to six Boeing 737NG aircraft (to be switched to MAXes as soon as the type’s grounding is lifted) at Ras Al-Khaima, form where it will fly to destinations in India, but also to other destinations further West, potentially as far as Europe. The Indian airline has found the support of the local government, that this way expects to double the number of visitors, from the current one million for year, to over two million.

Is there room for all?