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“In our business, you need a lot of patience and tolerance. So, we have realistic, long-term targets in mind and it’s understood that some breakevens will occur faster than others,” maintains Ali. “With last year’s route launches, our initial objectives have successfully been achieved. None of the new services are burning cash, which is good, and obviously they will further develop over time, eventually moving into breakeven and then profitability.”
Moscow, in particular, has been a star performer for Air Arabia ever since flights were inaugurated in October 2011. As a result, the carrier’s frequency to the Russian capital was increased earlier this year to five flights a week, an extra two flights in comparison to the initial schedule. In fact, says Ali, the development of existing services in response to strong passenger demand will be a common occurrence over the coming months, with Kuwait next in line for greater frequency. “We operate flights to 75 different destinations from our three regional hubs and when you get 85 percent seat factor on a route, you know demand is sufficient for added frequency. So, we will keep an eye on our top performing routes for future opportunities,” he explains.
“Of course, there’s always some fluctuation in terms of which services are our most popular. Last year, our central Asia routes performed very well, together with the Indian subcontinent and Saudi Arabia, while Turkey was also reasonably good,” he adds.“Other destinations, such as Egypt, Yemen and Syria, were impacted by political unrest and therefore failed to meet expectations. But even then, given the circumstances, traffic was surprising good and our seat factor was still around 75 to 78 percent, with the exception of perhaps Yemen. We actually suspended operations to the country as a temporary measure last year, not because of security concerns, but due to weak demand. If a route is not performing well and losses money in the long-term, we will come out of them. Having said that, since our operations were launched eight years ago, we have only dropped two routes on a permanent basis. The first was Sharm El Sheikh in Egypt, which is a great destination if you live in a European country without sea, such as Germany. But in this country, it’s easier to visit Fujairah for the weekend. Second, we terminated our service to Yerevan in Armenia because the business was insufficient with limited growth prospects, so it became stagnant.”
With such ambitious projections for route launches and service enhancements, Ali remains somewhat concerned about ‘red tape’ in parts of the Arab world, which limits access to Air Arabia and other airlines. For several years now, he has been a vocal advocate of implementing an open skies policy in the region to create a level playing field.
“There’s no doubt the Middle East would benefit from a very liberal open skies policy, because its been proven that the more people travel, the better the economy, as that’s something we need in the Arab world. Look at what happened in 2011; perhaps the regional unrest could have been avoided with improved job prospects and security? There have been some encouraging signs in the last five years. Take Saudi Arabia for example, we previously offered flights to three airports in the kingdom, but as the market became more liberal, that number doubled to six airports. Kuwait is another example, since embracing the open skies approach, traffic has increased at the airport, they are building a new terminal, standards have improved and more Kuwaitis are working there. Having said that, has enough progress been made? No. I think a lot more has to be done.”
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