Dubai launches budget sister airline to Emirates

Dubai appeared to shrug off a slowdown in global air travel and its own financial crisis, announcing on Monday the launch of its first budget carrier, a sister company to high-flying Emirates airline.

Flydubai will take to the skies in two months, with flights to Beirut on June 1 and to Amman on June 2, company chairman Sheikh Ahmed bin Saeed al-Maktoum told reporters.

The company's website listed Dubai-Beirut-Dubai fares starting from US$170 dollars (A$239), compared to the standard return ticket price of 1800 dirhams (A$692) with Emirates.

"We are committed to bringing a new option to the market and to growing the region's budget air travel business," said Sheikh Ahmed, also chairman of Emirates.

"This will benefit our economy, our people, and tourism business as a whole."

Despite a global economic slowdown whose effects are being felt in the oil-rich Gulf, Sheikh Ahmed said: "There is a lot of potential in this region... and we have a lot to do."

The Gulf emirate first announced the establishment of flydubai in March 2008, with a start-up capital of 250 million dirhams (A$96 million).

"We set the date long time ago. We never really thought of delaying (the launch)... we think that the market is there," Sheikh Ahmed said.

Flydubai will operate two next-generation Boeing 737-800 aircraft on the Beirut and Amman routes, and have four aircraft by the end of the year, he said.

Advertisement

Dubai owns the largest Middle East carrier, Emirates, and has the busiest airport in the region which handled more than 37 million passengers in 2008, a nine per cent increase from 2007.

The new airline will be based at Dubai Airport. It was first expected to use Dubai's al-Maktoum International airport, but the new hub is running behind schedule and is now expected to open in 2010 instead of this year.

It joins an increasing number of budget airlines in the region.

The neighbouring emirate of Sharjah operates Air Arabia, while Kuwait's Jazeera Airways operates from Dubai and Kuwait, Bahrain Air flies from the neighbouring Gulf archipelago, and Nas from oil-rich Saudi Arabia.

Air Arabia is the Middle East's first and largest no-frills carrier, which carried 3.6 million passengers in 2008 and saw annual profit surged 35.6 per cent to US$138.9 million.

"Nobody can stop competition. It will always be there, whether in your home ground and anywhere else," Sheikh Ahmed said.

Dubai's once-booming economy was hard-hit by the global economic crisis, which tightened the noose on finance available for Dubai businesses, especially the massive real estate sector -- once the main engine of growth.

The central bank of the United Arab Emirates came to Dubai's help in February by subscribingh to 10 billion dollars in bonds issued by the emirate to finance a foreign debt burden exceeding 74 billion dollars.

But Middle East air travel appears to be bucking a global slowdown, as the region's carriers saw a rise of 0.4 per cent in international traffic in February, compared to the same period a year earlier, according to the International Air Transport Association (IATA).

IATA reported a sharp decline in air travel in February, as global passenger numbers nosedived 10.1 per cent from the year before while freight traffic fell by 22.1 per cent.

AFP

Comments