flydubai was set up by Dubai government in the year 2009. It ordered 50 aircrafts even before selling a single ticket. flydubai up the total tally of UAE based airlines to “Four” sharing a pool of around 8 million UAE populations. The four airlines are
- Emirates Airlines ( Dubai) – 1985
- Etihad ( Abu Dhabi) – 2003
- Air Arabia ( LCC – Sharjah) – 2003
- Fly Dubai Airlines ( LCC – Dubai) – 2008
Airlines industry is already mired by rising fuel cost, cut throat competition and rivalry among the regional airlines. So what was the motivation behind flydubai when Emirates Airlines was operating from the next door Terminal # 3 ? Furthermore is it practical for four airlines from United Arab Emirates make profit and stay profitable? Fortunately the current trends foretells strong growth and profitability for the four airlines. Let’s explore what would have prompted Dubai to set up 2nd Airline – fludubai.
- Dubai Government Investment: Dubai is investing high in aviation infrastructure, expanding on Dubai International airport and simultaneously setting up 2nd airport (Dubai World Central – Al Maktoum International Airport – June 20, 2010) closer to Jebel Ali to address traffic originating from Expo 2020 momentum.
- Two Airports in Dubai: During Dubai International Airport run-way maintenance this year – fludubai moved its operation to the New Airport. Technically it foretells that each of the two airlines (Emirates & flydubai) has one airport each to operate from.
- Passenger footfall: Dubai Airport passenger traffic was around 60 million in 2013 and its capacity to handle will improve to 90 Million by 2018 whereas Dubai passenger traffic has increased by 15.5% year on year. Al Maktoum airport is built to handle 120 Million passengers on full capacity.
- Emirates Airlines is in the luxury aviation sector competing with Etihad and Qatar Airways in the region.
- LCC Future: CEO of flydubai Al Ghaith believes that the LOW-COST CAREER model has a big future in the region. “The Middle East’s LCCs (Low Cost Career) currently account for only seven percent of the total passenger traffic, compared to 35 percent in Europe, so there is great potential for growth.”
- Strategy: flydubai Unique STRATEGY:
- To offer low cost alternative to popular destinations such as Beirut.
- Plan routes to under served destinations. Having said that when RAK Airways closed down – Fly Dubai should have taken up the space. But much later Air Arabia from Sharjah took over that space.
- Provide flights to destination that did not earlier have international flights such as Abha, Gassim and Yanbu in Saudi Arabia.
- flydubai is an independent airlines but works under the leadership of Dubai and its Chairman Ahmed bin Saeed Al Maktoum who also chairs Emirates Group.
- Big Brother: Although flydubai is not part of The Emirates Group, Emirates supported flydubai during the initial establishing phase. Hence flydubai tries not to compete directly with Emirates and advertises in location outside Dubai. This avoids advertising clutter in Dubai demographics.
- Flexible Strategy: flydubai began with low cost structure and subsequently included few seats for Business class reflecting demand on the operational sector. This change in strategy loses the insignia LCC. But on the flip side strategies are to make best use of the prevailing environment.
- Real Competition: The real competition to flydubai in peoples mind is Air Arabia wherein flydubai competes on fare, baggage allowance, in flight meal/services and most importantly convenience of check in. Both Airlines operates to around 80 destinations.
The biggest threat shared among Emirates Airlines and flydubai is the business strategy wherein the two airlines must ensure two distinct business strategies so as not to dilute revenue streams.