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Home-grown growth

Posted 24 May 2019 · Add Comment

Saudi low-cost carrier, Flyadeal, is so busy coping with a flood of domestic traffic that it has had to postpone the start of international services, says its CEO. Alan Dron reports.

It’s an indicator of how successful the liberalisation of Saudi Arabia’s domestic air market has been that a new airline can confidently place an order for up to 50 airliners within 15 months of starting operations.
Flyadeal, the low-cost sister-company of national carrier, Saudia, began operations in September 2017. In December 2018, it signed up for 30 Boeing 737 MAX 8s, plus a further 20 options.
At present, the Jeddah-based airline operates a fleet of 11 Airbus A320ceo aircraft.
The domestic market has been “amazing”, said CEO, Con Korfiatis, at the first Saudi Airshow in Riyadh in March. “We could only have put out a request for proposals (RFP) for 30 plus 20 aircraft given our experience. In 2018, we carried 2.5 million passengers. We’ve carried 3.5 million now.
“It’s a testament to the market’s potential. We’ve achieved that in the context of our sister airline also growing its operations.” Saudia flies on all of Flyadeal’s routes.
That means, of course, that Flyadeal has not stolen passengers from its longer-established sister-company, but that the market has grown, as many more Saudis have taken to the skies.
“It’s not just people who haven’t flown before. We have [businessmen from] small and medium-sized companies who fly with us, who were infrequent flyers. For example, one passenger who works in Riyadh but whose family is in Jeddah told us that he used to fly back to see them quarterly. Now he does it on a weekly basis.
“There’s a young demographic that’s coming through as well, and we appeal to that demographic. We’re seeing a huge number of repeat customers.”
And Korfiatis is “very, very bullish” about the future of the market. At the time of writing, Flyadeal connected eight destinations (Riyadh, Jeddah, Dammam, Qassim, Jazan, Abha, Tabuk and Madinah) with 12 routes, but there are still many points in the kingdom Flyadeal does not serve, he noted
The growth of domestic traffic for Flyadeal has been so strong that the airline is launching international services later than originally envisaged.
“If you’d asked me a year ago if we would be flying internationally by now I would have said yes,” Korfiatis said. “But the domestic market has overwhelmed us with the volume that’s there.”
He now hopes that international services will start by the end of 2019. No destinations have yet been chosen.
The company’s new 737 MAXs are not scheduled to start arriving from Boeing until 2023, but in the interim, it plans to lease examples of the type.
Korfiatis was speaking in the immediate aftermath of the loss of the Ethiopian Airlines 737 MAX 8.
He said the leasing plan was at the RFP stage. “We will take a breath while the next little time plays out to understand what’s going on with the aircraft and then continue,” he said.
Despite the switch to a new type, the airline will retain the A320s. “The intent was never to phase them out anyway as the market is still growing,” said Korfiatis. “Any MAXs that come in this year or next will be for continued growth, not replacement.”
The oldest A320 in the fleet is around 20 months old, while the youngest was only delivered in February.
Low-cost airlines were unfamiliar to Saudi travellers when Flyadeal launched and some education was necessary to inform local customers about low-cost operations, he noted. “On early flights, people turned up with 45kg of luggage that others weren’t charging for. We do charge for checked-in luggage.”
However, an education campaign, particularly on social media, is showing effects, as can be seen by the queues at airline check-in desks at Jeddah Airport, Flyadeal’s base: “Our customers are not pushing a trolley with six bags,” he smiled.
He added that, with an untapped low-cost market for outbound tourism, plus the Saudi Government’s stated intention to increase religious traffic for the Umrah pilgrimage from 8 million to 30 million by 2030, there was tremendous growth planned. “We see an opportunity here for us.”
Plans are not yet confirmed, but the airline hopes to dip its toe in the religious travel market this year.
 

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