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Ghaith Al Ghaith: Flydubai was always going to do things a little bit different.

Flydubai took an unexpected turn in June when it unveiled a new business class product. Chief executive Ghaith Al Ghaith tells Martin Rivers why the low-cost carrier is going down the premium path.

Flydubai adds a touch of class

he first Flydubai service offering business class took off for the Ukrainian capital Kiev on October 8, sporting 12 premium seats finished in Italian leather and with a generous seat pitch of 42 inches. By the end of 2013, the number of destinations benefiting from the two-cabin configuration will have risen to 27. Several of the routes earmarked for an upgrade notably the Kyrgyz capital Bishkek, Donetsk in Ukraine, and Juba in South Sudan are not currently served by a business class operator. Although premium cabins may seem anathema to the low-cost model, chief executive Ghaith Al Ghaith said unique rules apply to the UAE. Dubai is a business capital not just for the UAE, but for the world, he explained. Out of the 66

destinations that we have already launched, or announced for this year, about 44 are not properly served by airlines with business class products. So we felt that there was a big gap. Since beginning operations in June 2009, Flydubai has rapidly expanded to become the Gulfs most recognisable low-cost carrier. Its fleet of 31 Boeing 737-800s is comparable in size to Sharjahbased rival Air Arabia. Two smaller operators Kuwaits Jazeera Airways and Saudi Arabias Nas Air have also adopted the low-cost model in a region still dominated by full-service airlines. Flydubai was always going to do things a little bit different, in Al Ghaiths words. It was Continued set up by the Dubai Government with on Page 42 the aim of complementing sister

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returns, Al Ghaith said, noting yield disparities between markets. For phase-one of this project, not all of our aircraft will be retro-fitted; some will remain all-economy. As we experiment and look at our returns, then we will take the decision to introduce it across more aircraft. Pushed to estimate how many aircraft he believes will ultimately feature two cabins, Al Ghaith added: It is too early to say, but 20-plus would be a good target. However, maybe once we have 10 aircraft with business class we will decide to stop. Its very fluid. While the availability of business class has yet to be fully determined, Al Ghaith is already making plans for the next wave of potential aircraft deliveries beyond 2015. Flydubais existing 50-unit 737-800 order will be fulfilled within the next two years, creating a need for growth aircraft as well as replacement units. Al Ghaith had previously told Reuters that another 50-unit order could be on the cards. Without repeating that figure, he confirmed that talks about a new deal have advanced. We are looking seriously at making some commitments in the near future for new aircraft, he said. We are looking at both Airbus and Boeing as a solution for our immediate and longterm requirements after 2015. Al Ghaith rejected any presumption that Boeing is the front-runner, insisting that both the A320neo and 737 MAX are contenders. Lowcost carriers typically restrict themselves to a single fleet type in pursuit of lower maintenance costs, but synergies with sister carrier Emirates which operates a mixed fleet could ease this constraint for Flydubai. The fact that we initiated discussions with both [manufacturers] shows that we are open minded about whatever will be best for the company, Al Ghaith added. We will evaluate that, and we will go for the best option. Whichever aircraft type Flydubai selects, there is no doubt that it will continue expanding capacity. The airline carried 5.1 million customers last year almost half of its footfall to date. Passenger numbers rose by 63% in the Gulf Cooperation Council (GCC) alone, compared with average growth of 21% between all operators. Saudi Arabia, Qatar and Kuwait remain the largest markets in Flydubais network, accounting for four out of every 10 seats. But passenger numbers for the Commonwealth of Independent States (CIS) also rocketed by 72% last year, outpacing the 28% average for all airlines. When measured by available seat kilometres (ASK), Russia and Ukraine now rank among Flydubais top five destinations. There are still tremendous opportunities in the geographical area that we cover, Al Ghaith concluded. When you consider how fast we have been able to grow in the short time that we have existed, you know that there is more to come. And the more popular Dubai and the UAE become, the more demand there will be.

carrier Emirates Airline, which has an all widebody fleet. The newcomers narrow-bodies are put to work across the Middle East, Asia, Africa and eastern Europe, serving markets that require neither the capacity nor the premium layout of Emirates larger jets. But its role as a feeder carrier for Dubai is untypical of the low-cost model, which favours point-to-point flying over hub connectivity. There is also the risk of product inconsistency between Dubais short-haul and long-haul segments. In many ways, then, incorporating business class should not come as a surprise. The strategy would raise eyebrows in the boardrooms of a European or American low-cost carrier, but Al Ghaith is convinced of its suitability to the Dubai market. Weve been working on this project for the last two years, he emphasised. Until now the businesspeople that fly with us have travelled in economy, so there was real demand that we were missing out on. Flydubais latest in-flight surveys, conducted between March and August 2013, found that 19% of its customers were travelling on business. That compared with 26% for leisure and 17% for visiting friends and relatives (VFR). Al Ghaith predicted that all categories of travellers would appreciate the added choice of premium cabins. We also serve many points on the network beyond the Middle East where there is real demand for tourism; for example out of Russia and Ukraine, he noted. We know that based on the profile of customers who come to Dubai, there is demand for business class, or first class even. So, again, we were missing out on that opportunity. Al Ghaith accepted that there is a trade-off when targeting higher yields. Per-capita costs inevitably rise, coming under pressure from reduced capacity 174 seats, down from 189 as well as ancillary freebies. But Flydubai is mitigating that risk through a staggered uptake of business class across the fleet. Although all of its near-term aircraft deliveries will have a two-cabin layout, no final decision has been taken about the tail-end of the 19 units arriving by 2015. The schedule for retro-fitting existing jets is also still under review. When you are managing a fleet, you have to be very careful to put aircraft where you can maximise

On-going experimentation

His caution reflects on-going experimentation with the low-cost model across the Middle East. Air Arabia sticks fairly rigidly to the no-frills ethos, charging for meals and removing checked luggage allowances on some routes. Nas Air opts for a three-tier fare structure with varying degrees of flexibility and in-flight service. Jazeera has the most generous perks for economy passengers, as well as featuring a European-style business class with vacant middle seats. For Al Ghaith, however, any venture into premium was destined to involve a new cabin.

The middle-seat option was not something that appealed to us, he said. To be seen as a product of Dubai, we must do things properly. Other perks offered in the new business class include complementary lounge access, a 12.1inch back-seat HD TV, priority check-in and up to 40kg of checked luggage. Economy passengers, meanwhile, must pay for food, checked baggage and access to the in-flight entertainment system. Asked whether Flydubai still considers itself a low-cost carrier, Al Ghaith gave a characteristically enigmatic response. We are Flydubai, he said with a smile. What differentiates us is that we are Dubai-centric. Dubai is the centre of our gravity. That gives us the ability to serve different markets, and so we try to offer more products.

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