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HomePeopleInconversationHigher operational costs impact the growth of Low Cost Carriers

Higher operational costs impact the growth of Low Cost Carriers

India offers a tremendous growth opportunity for Low Cost Carriers (LCC), says Adel Ali, Group Chief Executive Officer, Air Arabia. Despite the downturn the aviation industry is facing today, Ali reveals that Air Arabia has continued to chart growth in the Indian market, and perceives it as an industry with great potential for a healthy future. Excerpts from an interview:

You recently completed seven years of operations in India. How has the growth been during this period?

The past seven years have been very encouraging for the airline in terms of reach and offerings to its customers. Air Arabia now flies to 13 destinations across India successfully. To ensure that our customers not only view us as a preferred airline for business related travel, we also spread our network to exotic destinations beyond UAE like Alexandria, Almaty, Amman, Istanbul, Kharkiv, Kiev, Moscow and Nairobi at attractive fares. This only goes to show the commitment and emphasis we put into serving the Indian market.

How has the year 2012 been so far for Air Arabia in India in terms of load factor and yields?

2012 has been a very promising year for Air Arabia with an overall load factor in excess of 80 per cent. This is one of the most comprehensive destination networks of any international airline in India. Air Arabia currently offers over 112 weekly flights from its hub in Sharjah to 13 cities in India. These are Ahmedabad, Chennai, Jaipur, Kochi, Mumbai, Nagpur, Coimbatore, Thiruvanathapuram, Hyderabad, Kozhikode, Delhi and Goa.

Air Arabia is one of the most popular airlines among Indian travellers. What is your strategy to further enhance your image in the Indian market?

Our business model is well aligned to the needs of the Indian market. Our strategy has been to tap smaller and larger airports at the same time, with a special focus on under-served routes. We will continue with this strategy moving forward and will increase capacity along the way as the demand for affordable travel increases.

What is the response you received from India in 2012? What is the percentage growth over the corresponding period in 2011 and what is the growth expectation for 2012?

Overall, Air Arabia welcomed 2.5 million passengers on board in the first half of 2012, an increase of 11 per cent compared to the same period last year. Air Arabia’s expansion strategy and efficient operating model continue to be reflected in the airline’s growing passenger figures.

What challenges are you facing in India on the operational front?

Issues such as growing fuel surcharges and airport taxes do impact the pace of growth as far as low cost airlines are concerned. Particularly since the low cost model works on low margins. Having said that, there is still a demand for low cost carriers in India as disposable income is growing, as is the demand for quick travel.

How would you explain the growth opportunity for LCCs on the India-Gulf sectors? What is the short and mid-term expectation of Air Arabia from the Indian market?

Following the current industry sentiment, it is believed that it will be the LCCs which will lead the return to the market, offering attractive fares and helping to maintain tourist flow. India is an important market for Air Arabia and we are optimistic about its growth story. Our outlook for the Indian aviation market is very strong and we do believe there is great potential for affordable air travel. We are closely engaged with Indian aviation authorities to tap the potential and promise that this market offers as low cost models work well during downturn and travellers become more discerning and price conscious while making their travel plans. High frequencies, on-time performance and by far the most affordable fares represent the unique service we offer to our customers. We are keen on continuously providing the best value for money services to this emerging region.


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