Middle East low cost boom faces ‘challenges’

By Kevin Rozario |

The Middle East’s fast-growing low cost carrier sector has shown “dramatic” growth over the past decade according to aviation intelligence group OAG, but a lack of second-tier airports could hamper future development.
Duty free and travel retailers such as Dubai Duty Free and Abu Dhabi Duty Free have benefited from a boom in LCC routes; growth from these carriers has averaged +52% annually in the past decade (see charts for route networks in 2003 [below] and 2012 [right] based on OAG Analyser data) compared with traditional carriers growing at an average rate of +7% annually.

According to an OAG market analysis report – distributed at this month’s 18th World Route Development Forum in Abu Dhabi which closes today – LCCs in the Middle East have delivered consistently higher growth than LCCs in any other region globally in the last 10 years. They now account for 20% of all flights within the region.
While OAG believes that the sector will growing apace, developing both a strong intra-regional market and expanding services to and from the Middle East, the region still does not have secondary airports which would offer a lower cost base for LCCs, a key to expansion for this segment in Europe. While some progress is being made towards a more liberal approach to open skies agreements and travel visa restrictions, there is still a long way to go says OAG.
Rob Shaw (right), Director of Analytics at OAG, comments: “The region still faces many challenges going forward. There are several big airport expansion projects underway and the region needs to work towards matching infrastructure development to the pace of network development and aircraft delivery. Although the region’s airspace is not yet crowded, large areas of airspace are still under military control, so capacity does need to be monitored.”
Three main LCCs – Air Arabia, Jazeera Airways and Flydubai – dominate the Middle East, serving multiple market segments. Together they serve 79 destinations and operate nearly 1,000 weekly departures.
In 2003, there were LCC services to just six destinations, all operated by Air Arabia. Established in 2004, Jazeera Airways was the first non-government owned airline in the Middle East. Flydubai launched in 2009 and by redefining the low-cost model through the product segmentation that has evolved in Europe and North America, it is now the largest LCC in the Middle East.


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