Now flying to Sana’aAir Arabia and low-cost travel [Archives:2004/789/Business & Economy]

November 11 2004

By Peter Willems
Yemen Times Staff

Air Arabia, an airline based in Sharjah, United Arab Emirates (UAE), entered the Yemeni market this week when its first flight arrived at Sana'a International Airport.
The airline, which has been in operation for a little over a year, is the first low-cost airline in the Middle East and the North Africa region offering the lowest prices combined with good quality service.
Its first flight to Sana'a arrived last Tuesday.
“Our low-cost airline fares are typically 30% lower than other airlines in the market and are sometimes even lower if you book a flight well in advance,” said Rohit Ramachandran, Commercial and Business Development Analyst at Air Arabia. “With the lower prices for passengers, we are the ones making money these days.”
Air Arabia, which has teamed up with local Yemeni business Ghaydan Trading Co. – the General Sales Agent of Air Arabia – uses innovative tactics to offer low prices while competing with full-service airlines.
To keep costs down, Air Arabia operates with one standard aircraft, Airbus A320. This strategy reduces the expenses of spare parts, maintenance and training of flight crews.
“That's the cornerstone of a low-cost model,” said Ramachandran. “The more different airplane types you have, your inventory costs go up.”
Air Arabia currently has four aircraft flying in the region, but in January 2005 it will add another Airbus A320 to its fleet.
The low-cost airline has also made a unique change in giving out tickets. Customers dealing with Air Arabia no longer have to acquire or carry tickets made out of paper. The airline uses only electronic tickets, as a passenger only needs his or her reservation number to board the plane.
According to Air Arabia, the use of electronic tickets is a significant cost-cutting strategy. The average cost of processing traditional paper tickets is $8 per ticket. If an airline handles one million passengers without paper tickets, the airline saves $8 million.
Air Arabia also saves money by simplifying the sales process. “Traditional airlines distribute their products through global distribution systems,” said Ramachandran. “Passengers or travel agents make bookings through the systems in which the airlines have to pay the global distribution company. We have an internet based booking system, so a customer or a travel agent can log on to our website and make a booking. We don't have to pay a penny for all the bookings that come because it's our system.”
The airline has focused on keeping labor costs low. Up to now, Air Arabia has been running with just over 200 employees. “From management to pilots, cabin crews, sales, marketing, engineers, and so forth, we have around 210 employees. A full-service airline would probably start with seven to eight times as many employees,” said Ramachandran.
Air Arabia has been able to save money by not creating its own catering infrastructure. Instead, the airline has outsourced the job and offers meals on the planes that the customers pay for. The idea is that since flights are within the region, a meal may not be necessary, and the customers will have the choice of paying around $3.50 for a meal while paying much less for the ticket.
Customers wanting to save more on a ticket can use Air Arabia's program based on supply and demand. The price of tickets are cheaper the earliest one reserves a seat, and the prices gradually increase as it gets closer to the day of departure and the plane is filling up.
“We have a very good opportunity of succeeding in the Yemeni market,” said Arhab Al-Sarhi, General Manager of General Sales Agent of Air Arabia. “I believe that a low-cost airline can be very profitable in this region. And Air Arabia has paid close attention to the Yemeni people and expatriates living in the country to focus on taking care of their needs. They will now be provided with a low-cost form of travel.”
Air Arabia uses its innovative business strategies to reach out to customers as well. In July, the airline started selling tickets in 50 post offices across the UAE to make it more convenient for customers. The airline is developing a program that will allow customers to buy tickets using an ATM. The company expects this advanced point of sale program to be up and running next year.
To make sure customers get more for their money, Air Arabia has designed the seating arrangements in the planes to provide plenty of space. Ramachandran said that the average space between seats among most airlines is 29 to 31 inches. Air Arabia has arranged its seats to give its passengers 34 inches of leg room.
And to save money for the airline and time for passengers, Air Arabia has reduced its turnaround time (the time between landing and take off) at airports to 45 minutes, while many of its competitors average one hour and twenty minutes.
Air Arabia's current destinations include Alexandria and Assiut (Egypt); Bahrain; Beirut (Lebanon); Colombo (Sri Lanka); Aleppo and Damascus (Syria); Doha (Qatar); Riyadh, Jeddah and Damman (Saudi Arabia); Kuwait; Muscat (Oman) and Khartoum (Sudan). It has plans to fly to Pakistan and India in the near future.
The airline began its operations in October 2003 under Dr. Sheikh Sultan Bin Mohamed Al-Qassimi, the Ruler of Sharjah and Member of the Supreme Council of the UAE. The philosophy of the company has been based on following the strategies of low-cost airlines in the United States and Europe, which have proven to be very profitable over the last few years, while customizing its services to the market in the Middle East.
“Since we started our operations we have seen that the customers have been the winners,” said Ramachandran. “Airlines in this region have been charging fairly high prices, and passengers have been looking at traveling by air as a sort of luxury for a long, long time. Now we have people who are able to travel more often at more affordable prices.”