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Can Saudia’s low-cost challenge be the real deal?

Posted 10 January 2018 · Add Comment

Flyadeal is the latest operator to take advantage of Saudi Arabia’s liberalisation of domestic air services.

The low-cost section of the market in the Gulf is starting to look rather crowded.
Flydubai, Air Arabia, Flynas, Jazeera Airways and Salam Air are already in the arena. They have now been joined by Saudi Arabia’s Flyadeal, which began services on September 23, the country’s National Day.
Flyadeal is the latest operator to take advantage of the kingdom’s liberalisation of domestic air services. The combination of the largest population in the region – around 28 million – and relatively long distances between its major cities gives it the chance to develop a wide-ranging network of domestic services.
“I would estimate the domestic market at 20 million passengers a year and there’s healthy growth,” said Saudia director-general Saleh bin Nasser Al-Jasser. “The market has definitely been liberalised quickly in the last year. However, its total size and potential for growth is huge, so there’s a space for all participants.”
Al-Jasser believes there is still room in the marketplace for another LCC: “I don’t see some of those [existing] brands as being low-cost airlines. I would call most of them hybrid. What that enables us to do is have a lower cost-base than them.” Flyadeal would have a “world-leading” cost-base, he said.
Despite the competition, he believed there was a place for another airline that could provide high standards of service at an affordable price and the aim was to reach financial break-even quickly.
Asked if he thought Flyadeal would cannibalise Saudia’s own traffic, he said the new LCC was aimed at a very specific, price-conscious segment of the market. “Of course there will be some cannibalisation but I think it will be marginal,” he said.
Doubts have been raised by some industry observers as to whether a full-service carrier like Saudia can successfully give birth to a true low-cost carrier; there have been several examples in recent years of mainline carriers attempting to do so, only to fail. Those observers generally take the view that traditional airlines do not have the necessary ‘DNA’ to operate a successful LCC.
“Statistically you’re correct, but it’s not 100% of the cases,” said Flyadeal’s CEO, Con Korfiatis, who noted that he previously worked at two LCCs that successfully emerged from full-service carriers – Jetstar from Qantas in Australia and Citilink from Garuda in Indonesia.
Flyadeal will start services with two Airbus A320ceos, building up to eight of the type by the end of 2018’s second quarter.
Its aircraft will be in a single-class, 186-seat configuration, with predominantly 28in. seat pitch, although several rows at the front of the cabin will have 30in. pitch. They will have Airbus’ latest Spaceflex galley, a more compact unit than its predecessors that will allow an extra row of 30in-pitch seats to be fitted directly in front of it: “The dreaded ‘last row’ will actually be a comfortable row,” said Korfiatis.
Some will look at the 28in seat pitch as being the absolute minimum that an averagely sized man can cope with. However, said Al-Jasser, the latest-technology, ergonomic, slim seats were being fitted that effectively gave an extra one inch of space compared to previous generation rows. They will also have a large slot on the seatback to provide space for a laptop or iPad, together with sockets to allow passengers to recharge their electronic devices on board.
It is also intended to have internet-streaming services on board, but details were not released.
Flyadeal aims to start operating international schedules in the second quarter of 2018. Korfiatis declined to identify possible initial international destinations, but said that “three or four routes” were under study and the airline’s intention was that eventually “a significant proportion” of the carrier’s route network would be international.
Religious tourism and labour traffic from countries such as India were potentially major markets and the inbound market has “enormous strength”, he said.
The A320s’ range allows them to fly well beyond the Gulf, including into eastern and central Europe and down into central Africa.
Korfiatis gave a strong hint that other LCCs will have a fight on their hands when Flyadeal takes to the air. The company was aiming to have their aircraft in the air for 13-14 hours a day, with load factors as high as possible. “We will be pricing to fill the aircraft.”
 

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