Is Air Arabia ready for takeoff? (page 1 of 2)

Many more people in the Arab world will get the chance to savor air travel following the launch of the region's first low-cost airline.

That's the idea behind Air Arabia, based in Sharjah in the UAE, which began operations at the end of last month with two leased Airbus A320s. These two used aircraft will be replaced by two new ones when they become available in February. In mid-2004 they will be joined by two more new A320s, with a further two arriving in 2005. Over a five-year period, if the airline is successful, the fleet will be expanded to 14 A320s.

Air Arabia, owned by the Sharjah government (60 percent by the Airport Authority and 40 percent by the Civil Aviation Authority), will be the UAE's fourth airline (after Emirates; Gulf Air, in which Abu Dhabi has a one-third stake; and the new carrier owned by the Abu Dhabi government, Etihad Airways). And this is before you take into account regional competitors like Oman Air, Qatar Airways, Saudia and Kuwait Airways.

"Everyone knows there are too many airlines in the Gulf," says Air Arabia CEO Adel Ali, a straight-talking former executive with British Airways who was brought in by the Sharjah authorities to set up the new airline.

"But we are not in competition with the others because we are aiming for a different market - to cater for the 85 percent of people in the region who cannot afford to fly because it's too expensive. We will be an airline without razzmatazz, a new concept for this part of the world. Most of the airlines in the region take themselves and the airports where they are based too seriously. We believe that flying should be fun and affordable - without all the unnecessary frills."

All of Air Arabia's A320s will be configured for 150 economy seats only - with a view to providing as much legroom as possible - and with refreshments for sale on board rather than provided free.

Ali says it is too soon to say exactly the extent to which Air Arabia will undercut other Gulf carriers' fares, but adds that the savings "will be significant, otherwise it will be no good. And the earlier you book, the cheaper the fare will be."

One of the key guidelines that the Sharjah authorities laid out when they hired Ali to form Air Arabia was that the airline should, as he puts it, "run on its own strength and be a commercial entity. We aim to provide high quality at low cost. For example, we are making the most of IT, with Internet bookings to cut down on reservations staff."

In short, the vision for Air Arabia is based on the European and American business model. And that may be exactly where the Sharjah-based carrier will encounter turbulence.

Take the issue of Internet bookings. In the West, this works since most everyone has access to the Web, either at home or at work. In the Arab world, this is hardly the case - even in Gulf states like the UAE that have relatively high Internet penetration rates.

Compounding matters for Air Arabia is the fact that its core customers will likely be foreign laborers seeking the cheapest ticket home to the Indian subcontinent or other regional destinations.

These generally low-skilled laborers don't have access to the Internet and, anyway, they don't own a credit card to make payment online. The airline's core customers will have to purchase tickets the old-fashioned way. So much for bold new ideas.

Air Arabia will begin by serving Arab destinations where there are open skies: Muscat, Doha, Bahrain, Kuwait, Tehran and Beirut.