OBG talks to Ghaith Al Ghaith, CEO, flydubai

Interview: Ghaith Al Ghaith

What are the most significant challenges in terms of the low-cost aviation industry’s ability to achieve critical mass in the GCC region?

GHAITH AL GHAITH: Looking at destinations within 5.5 hours of Dubai, many of those across the sub-continent and Commonwealth of Independent States still have limited connectivity, which we see as an untapped opportunity. However, there is a maturing process that needs to take place within the region’s aviation industry before reaching the next level of saturation. One area that requires attention is the lack of a single market in aviation services within the GCC. A regional agreement similar to the European Common Aviation Area, complete with bilateral agreements between various countries, would create more advantages for the consumer. Secondly, open skies as a policy concept within the GCC has been making strides, with each country liberalising their regulations. Despite a challenging short-term adjustment period, a free market environment for the airline industry will better serve airlines and customers in the long term. Last but not least, the Gulf is moving toward the free movement of persons. A committee is in place among GCC member states to explore possibilities of a Schengen-style visa for the region, which would apply to businessmen and tourists; however, this is still in the early stages. Locally, Dubai has taken the lead in visa liberalisations, with the emirate offering visa-on-arrival for citizens of 33 countries. As this number grows, it will have an impact on airline traffic, especially if markets such as Russia are added.

Why are low-cost airlines attractive in a destination better known for luxury and first-class treatment?

AL GHAITH: We are beginning to see a narrowing of the gap between full-service carriers and their low-cost counterparts in terms of the fares charged and the services offered. This is a global trend that is also taking root within the UAE. Many low-cost airlines are looking to redefine the segment by challenging convention, and it looks as though recent changes are just the tip of the iceberg. Many are now offering multiple passenger classes and in-flight entertainment, among other services. Flydubai's fleet of Boeing 737-800s has a flight range of 5500 km, and we estimate 2.5bn passengers are within reach from Dubai, which provides growth opportunities in the region's low-cost segment.

How can the regulatory environment be improved within both the UAE and the broader region to help enhance the aviation sector?

AL GHAITH: Congested airspace in the GCC is an acute issue for commercial airlines in the UAE. While the federal authorities are taking steps to address the problem, the main issue lies with stakeholders across the Gulf in finding common ground in the areas of structure and governance. Commitment to reaching a fair and balanced solution will determine future prosperity of the GCC’s collective commercial aviation sector. Furthermore, developing a unified air traffic control centre for the GCC and its neighbours will be integral to allowing airlines to maintain current rates of growth.

In what way is growing competition in cargo transportation in the GCC affecting business in Dubai?

AL GHAITH: Cargo operations are a by-product of expansion by most commercial airlines in an effort to utilise excess capacity in the hold. However, as Dubai's collective network of direct routes expands, it is becoming a key area within airlines’ expansion plans. Cargo operations have a multiplier effect as efficiencies are achieved in business as a result of more freight traffic. Utilisation of technology such as using electronic documents rather than paper air waybills is proving to be a cost-saving factor, which in turn is increasing the demand for cargo services. Cargo facilities at Dubai International Airport are expected to be continually upgraded and expanded even as the main cargo terminal in Al Maktoum International Airport makes strides in the coming years. Road feeder services between the two airports will make for integration between the two.