Friday, Jul 25, 2008

Gulf News

Dubai: The government of Dubai announced in March that it will set up a low-cost carrier. The move is aimed at capitalising on the region's growing budget travel segment and serving a huge expatriate population.

FlyDubai plans to serve destinations in the Gulf, South Asia and neighbouring regions. It is being assisted by EmiratesEmirates in its formation.

The airline this month ordered 50 Boeing 737-800 aircraft in a deal worth about $3.74 billion. It is also acquiring four planes on lease. It plans to begin operations before the second half of 2009.

If Dubai had not taken the initiative, someone else would have launched such an airline, chief executive officer Gaith Al Gaith tells Gulf News in an exclusive interview. The airline is not part of Emirates Group.

Al Gaith worked for EmiratesEmirates for 21 years before taking up his current position. He was appointed executive vice-president for commercial operations at EmiratesEmirates in 1995.

Born in 1963, he holds a Bachelor of Science degree in business administration from University of Arizona in the US.

Gulf News: What progress has FlyDubai made so far and when exactly would you launch it?

Al Gaith: We do not have a date for the launch yet because we would not know the date of first aircraft deliveries until three months before their actual delivery.

We are currently working on the nitty-gritty of training our crew. We are still confident that we would be in operation before the second half of 2009 as originally announced.

The aircraft order is a major achievement. We had to evaluate two different aircraft and negotiate. We did that in an efficient time and achieved satisfactory results. We have formalised a team from EmiratesEmirates that will oversee the start of the airline.

We are now at a stage where we can recruit people. That means we already have an organisational structure, and salaries and packages have been worked out. We have analysed what our business model is going to be, we are sourcing the right IT system that will allow us to be successful and achieve our mission.

We are working on our product offers. We want to create something simple and acceptable that the customer will find different from what other airlines are offering.

How many people from EmiratesEmirates have joined you and what are your staff requirements?

We have not recruited people yet. We are in the process of finalising one or two contracts for senior positions, but none of them is from EmiratesEmirates. We have not taken anybody from EmiratesEmirates. That does not mean in a bad way because the work that has been done so far has been done by various EmiratesEmirates people who are helping us in developing the airline.

We are open-minded if people from EmiratesEmirates want to join this carrier and if there is a match between our expectations.

I think we would need 200 to 250 people to start with. But that number would be ramped up as we move along.

What about further plane acquisitions? Are you in talks with any manufacturer for new orders?

I would not say yes or no. We have just finished a deal and our feeling is that once we have a better understanding of how the product would be received by people, then we can go back to the market and have more orders.

We do not have a timescale for that. We feel that the 54 aircraft we have ordered represent a significant commitment that we are here to stay. The first deliveries are expected in the second quarter of 2009.

You have identified 12 destinations initially. Can you name them?

We will fly to 12 destinations, depending on the combination of destinations. We think there is enough business to fly to up to 70 destinations eventually.

The point here is what combination you start with and what becomes available within a timeframe. Once we sit down and know when we are going to start, what are the best combinations, we can tell the destinations. I cannot commit to a destination today, because tomorrow I could be wrong.

Once the airline begins operating, what kind of relationship would it have with EmiratesEmirates?

Let us put it this way: if EmiratesEmirates is helping us, it is almost like our parent. When it comes to business, everyone in this environment is innovative in every aspect. People understand it is business so they have to do their best to succeed.

I do not think this business that we are getting into could be damaging for EmiratesEmirates. EmiratesEmirates is an airline of global significance. We are a small player trying to create added advantage for people to fly from point to point.

So you are creating a new kind of combination with EmiratesEmirates in Dubai? What does it mean for other airlines?

There is prosperity and challenges, and we all learn how to exist in this environment. If we do not do it, someone else will come and do it anyway. The way people are brought up in the UAE is that you give people choices and let them decide.

Maybe Qatar AirwaysQatar Airways feels a little bit threatened. They have talked about their own budget carrier, how will that affect you?

Qatar AirwaysQatar Airways is now an established airline in this region. They have been successful in putting Qatar on the (aviation) map. I am sure they do not feel threatened by the start of a budget airline or any other carrier.

They themselves are a product of the same environment that produced EmiratesEmirates, Etihad, Al Arabia, Jazeera Airways. We are the products of the same environment.

If one day they create another airline, I do not think they will create it because they feel threatened. They will do it as a commercial measure not as a defensive measure.

Could you give me an idea how cheap FlyDubai is going to be compared with other airlines?

It is difficult to make a comparison. (By doing this) you would be committing yourselves to a certain price and that is not the way to look at a business model.

What we want to say is that we will be giving our customers a choice to travel in a more affordable way to more places and more often. That would create more demand for our services.

What needs to be done do achieve is something that we have to wait and see. I do not think it is a matter of price. [Lower] price is just one element that people expect. It is good to offer people options, flexibility and choices so that they can tailor-made their trips.

Accordingly, we will be clear to the customer why and what he is paying for. That is what we try to envision.

What is your outlook on the budget travel sector within the region?

It is evolving. The low-cost industry in this part of the world does not represent a big market like the US and Europe. The environment does not offer any premium to low-cost airlines.

We still have so many restriction, we do not have open skies in the region. The movement of people is still restricted by things like visas, and when you look at other geographic locations like Europe there is more flexibility there. So there is a lot of growth potential.

Things are changing. Earlier it was the UAE that had open skies, now other countries have opened up. Allowing free competition, will allow the whole travel industry to grow.

© Gulf News 2008. All rights reserved.

 

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