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Low Cost airlines are making noise. Turbulence in the air?

Low cost carriers are flaunting their muscle and beating their wings despite headwinds

Air Arabia on Monday signed a firm order for 120 single aisle Airbus aircraft comprising 73 A320neos, 27 A321neos and 20 A321XLRs on October 16, Abu Dhabi based Etihad Airways inked a deal to set up its own low-cost carrier, in partnership with Air Arabia Emirates Airline president said that the grounding of the Boeing 737 MAX is “compromising” the growth of flydubai

Low cost travelers should rejoice at the idea that there will be a new low-cost airline in the Gulf, and more competition means better prices.

And perhaps that explains some aircraft orders.

What it doesn’t explain is how flydubai will deal with its 737 MAX quick sand, a situation it fell a victim to with the grounding of these Boeings.

Read: Air Arabia posts record Q3 net profit of $220 million, up 57%

Low cost carriers making moves

Air Arabia on Monday November 18 signed a firm order for 120 single aisle Airbus aircraft comprising 73 A320neos, 27 A321neos and 20 A321XLRs (Extra Long Range) .  

Air Arabia is an all Airbus operator with a total fleet of 54 A320 Family aircraft including the A321LR.  

The A321XLR is the next evolutionary step from the A321LR  with 15% more distance reach and 30% lower fuel burn per seat.

Air Arabia uses European cities for stopovers to bypass the difficulties posed by the range of the Airbus A320, particularly in bridging the distance between Sharjah, its main hub, and Casablanca, Morocco, its second-largest. 

However, the longer-range A321LR and XLR variants, will put the airline’s two hubs within easy reach of each other if it decides to go for them.

Several other airlines, such as Oman’s Salam Air, Kuwait’s Jazeera Airways, and Saudi Arabia’s Flynas are busy making a name for themselves.

Salam Air said in October it expects to carry 1.3 million passengers in 2019 and to more than double this figure to 3 million next year, with its fleet of seven Airbus A320s, which are generating load factors of 85%. Jazeera Airways launched flights to London Gatwick on October 27.

Saudi Arabia’s Flynas announced in September that it had taken delivery of a fourth A320neo from its SAR32 billion ($8.5 billion) deal with Airbus to purchase 120 A320neo aircraft by 2026. Flynas operates a fleet of 30 Airbus A320s, with more than1,100 flights weekly to 17 domestic and 53 international destinations. 

“Since its launch [in 2007], Flynas has successfully carried more than 38 million passengers from its bases of Riyadh, Jeddah, Dammam, and Abha,” the airline said.

Jeddah-based low-cost carrier flyadeal committed to an all-Airbus A320 fleet when it scrapped orders for 30 Boeing 737 Maxes in July. The deal was part of an increased Saudi Arabian Airlines order for 100 aircraft signed at the Paris Air Show in June.   

Read: Want to travel at the speed of light? Hyperloop is here to make you do that!  

A new UAE based low cost carrier

Announced on October 16, Abu Dhabi based Etihad Airways inked a deal to set up its own low-cost carrier, in partnership with Air Arabia.

Etihad and Air Arabia will enter a joint venture partnership to establish a new low-cost airline based out of the UAE capital. The new airline will be named Air Arabia Abu Dhabi. 

Etihad CEO Tony Douglas said then, “This exciting partnership supports our transformation program and will offer our guests a new option for low-cost travel to and from Abu Dhabi.”

The new airline will be the fifth in the UAE, and the first low-cost carrier in Abu Dhabi.  

Read: UAE passenger traffic growth to be served by larger international fleet

A new direction for Etihad

With a population of around 10 million, Emirates and Etihad have largely survived on their ability to provide a hub connection between markets in Europe and Asia.

However, things have not been going so well for Etihad of late. The carrier posted a third consecutive year of losses, racking up a deficit of almost $5bn in the process. 

Etihad’s global expansion plan has recently evolved into a major cost-cutting plan. 

Perhaps the move was in response to rival Emirates developing closer ties to hybrid airline flydubai, which started operating on Emirates routes last year.  

Over 5.27 million passengers have benefitted from seamless connectivity on the Emirates and flydubai network since both Dubai-based airlines begun their partnership in October 2017.

In addition, some 800,000 Emirates Skywards members have earned over 1.5 billion Skywards Miles on Emirates and flydubai codeshare itineraries in the last 12 months.

 Today, Emirates passengers can connect to 94 destinations on the flydubai network via Dubai International airport, and flydubai passengers can access 143 Emirates destinations. 

In October, flights to seven more destinations relocated from flydubai’s current operating base of Terminal 2 to Terminal 3 at Dubai International airport (DXB), offering travelers more seamless connections between the Emirates and flydubai networks with smooth and quick transit times. 

With the five year turnaround plan well underway, Etihad’s Chief Operating Officer, Robin Kamark confidently pronounced that the airline would be profitable by 2023.  

Flydubai and the MAX

After two 737 MAX crashes last year that killed 346 people in less than six months, flydubai along with every other airline was forced to take their 737 MAXs out of service.

Dubai based Emirates Airline president Sir Tim Clark has come out and said that the grounding of the Boeing 737 MAX is “compromising” the growth of flydubai

He told media: “ What is happening, flydubai has 14 Max grounded, but….we’ve got 140 on order and that is compromising its growth.”

flydubai is Boeing’s second-largest customer when it comes to the 737 MAX with 14 MAXs in service and a further 237 on order.

While Boeing is trying to get the aircraft recertified all the airlines that have been affected by the grounding will be looking to Boeing for compensation.

US aviation giant Boeing is working with flydubai to ensure that its grounded fleet of 737 Max aircraft is “preserved well” ahead of its return to the skies, according to Stan Deal, president and CEO of Boeing Commercial Airplanes.

The UAE carrier reported a half-year loss of $53.6 million, a 38% reduction compared to H1 2018.

Sir Tim thinks that the MAX will be back in service by next by April 2020 at the latest.