Air Arabia Egypt Airline - Egypt Budget Airline

Air Arabia Egypt News

Egpyt, November 2009

The newest budget airline to hit the airways by the end of 2009 is Air Arabia Egypt. The airline is seeking Egyptian Government permission to use the airports at Cairo, Alexandria, Luxor, Hurghada and Sharm el-Sheikh. Flights will be to European, Middle Eastern and North African destinations.

Plans were initially to be submitted to the Egyptian Government by about the end of September. Operations and conditions of operation will be decided upon, contingent on the approval of the plan.

Travco, Egypt's largest tourism company, owns 50 percent of the new airline. Air Arabia is said to own 40 percent and a private Egyptian Investor the remaining 10 percent.

Existing Air Arabia, is convinced their success will be by partnering with the right company. Travco Group brings travel power to the table. Travco Group employs over 24,000 people, operates several hundred hotels and resorts, and owns cruise ships. Their facilities and cruises are available in Europe, Egypt and the Middle East. Travco Group posted consolidated revenues exceeding $800 Million, and over one million customers used their services. Travco plans to offer consolidated travel packages to customers through the newly launched budget airline.

Regular Air Arabia does not currently provide flights to Cairo, but hopes that opportunities will soon take flight with the influence of Travco Group.

Air Arabia Chairman, Sheikh Abdullah Bin Mohammed Al Thani, stated that Air Arabia, along with their new partners and joint ventures, plans to continue to move forward with their expansion strategy, even during this current time of worldwide financial crisis. The partnerships will help to make travel a more affordable luxury during this economically difficult period.

Air Arabia signed a joint venture agreement in Morocco only 6 months ago on another airline deal, and launched Air Arabia just 6 years ago. Their intention in creating this new budget airline is to become a powerful player in the growth of travel and tourism in Egypt, and expand services in Egypt, Europe, Africa and Asia regions.

More details and information will be released on the new joint venture sometime after October 25, 2009. Details will include exact travel destinations, travel packages and discount and regular pricing.

The first and obvious beneficiaries are the millions of expatriate workers in the booming construction industry who find it hard to afford the tickets of premier all-frills airlines. There are around 35 million expatriates in the six Gulf Cooperation Council (GCC) countries and 5.5 million of them are from India alone. In the UAE, the Indians number around 1.4 million.

Experts say this Dubai government initiative would open up the low cost aviation sector in the Middle East as the demand for low cost tickets is huge. The airline will be the third low cost carrier in the UAE and the seventh in the Gulf.

But experts say there is room for more and rival budget carriers need not worry.

"The Middle East is a natural region for low-cost aviation growth," John Strickland, director of London aviation consultancy JLS, told the Gulf News newspaper. "There is going to be enormous traffic flow between the UAE and countries such as India and Pakistan."

Dubai-based Al Ghaith & Al Moosa Travel Agency sells around 50 low cost airlines tickets everyday. Its manager Abdul Karim told City 7 television, "According to me, it (the number of budget airlines in the region) is not enough. Another three-four such airlines and then there will be competition."

Figures prove this.

In February this year, Air Arabia, Middle East's first low cost airline, reported a net profit of 376 million dirhams ($102.4 million) for the financial year ending December 31, 2007 as against a net profit of 101 million dirhams($27.5 million) in 2006, an increase of 272 per cent!

In 2007 alone, the Sharjah-based airline, which flies to 11 Indian destinations, carried 2.7 million passengers in its fleet of 11 aircraft.

Similarly, this month, Kuwait stock exchange-listed Jazeera Airways reported a net profit of 2.29 million Kuwaiti dinars ($8.5 million) on operating revenues of KD34.7 million ($130.2 million) in 2007, an increase of 61.2 percent over operating revenues of KD21.5 million ($80.6 million) the previous year.

The airline flew 1.2 million passengers by the end of the year, doubling the number of passengers from 2006, at a load factor of 74 percent, an increase of 12 percent.

In February last year, Saudi Arabia's first budget carrier Nas Air took to the skies. Within four months, it flew its 100,000th passenger.

'Nas', in Arabic, means 'people'.

Though it currently flies to over 20 destinations within Saudi Arabia, the airlines plans to add 12 international routes by the end of this year to break even. "The key traffic flows will be the UAE, India, Pakistan and Egypt," Nas Air chief executive Edward Winter was quoted as saying.

Welcoming the new Dubai airline, chief executive of Air Arabia Adel Ali said, "We have long believed the low-cost carrier market in the Middle East is set to grow simply because the region is growing so fast and the low-cost carrier market penetration is still small."

And the reasons are obvious.

According to K.V. Shamsudheen, chairman and managing trustee of the Pravasi Bandhu Welfare Trust, given the rising cost of living in the Gulf, the airline would come as a boon to workers here. "Given the rising cost of living here, Indians can now travel more frequently to their home country instead of bringing their families here," Shamsudheen told IANS.

Al Rais Travel managing director Mohammad Al Rais told the Khaleej Times that the airline would be popular to expatriates travelling home.

"We have a lot of expatriates who can travel home only once a year. With a low cost ticket, they can make it home four times a year," he said.

Tourism is another factor.