All-business class airline targets Dubai

ArabJet, Dubai’s latest potential private start-up, is planning to launch an all-business class service within the next 8-12 months. Previous attempts to set up private scheduled passenger carriers in Dubai have ground to a halt because of regulatory problems.

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By  Neil Denslow Published  October 1, 2005

ArabJet, Dubai’s latest potential private start-up, is planning to launch an all-business class service within the next 8-12 months. Previous attempts to set up private scheduled passenger carriers in Dubai have ground to a halt because of regulatory problems. However, ArabJet believes that the government will be more willing to support its model, which combines the efficiencies of a low-cost operation with the level of service found in business or first class. “The only [previous start-up] examples we have seen out of Dubai were low-cost, and I think that Dubai strategically does not want to have low-cost carriers out of Dubai Airport,” commented Mohammad Elshanti, ArabJet’s chief executive. “However, we are a very different model and we complement the rest of Dubai’s offerings quite well.” “We also do not want to give the impression that we will be stepping on the toes of Emirates,” he continued. “We are very small, but we might be very beneficial to Emirates [and other carriers], as we will feed Dubai with very high yield passengers.” ArabJet has already completed a first round of funding, securing US $10 million of equity investment from Saudi investors. It is now set to launch a second round with the target of attracting a further $40 million again from Saudi or the wider GCC. The eventual plan is to hold an initial public offering (IPO) in year four or five of operations. The airline’s plan is to operate regional aircraft with 52 all-business class seats on intra-Gulf routes. To begin with, the carrier will have two aircraft and a network focused on Saudi Arabia. It will then add two aircraft a year for the next four or five years, while spreading its network across the GCC and then into the Levant. The carrier is yet to decide which type of aircraft it will operate; it is still in talks with Airbus, Boeing, Bombardier and Embraer. It has, however, drawn up plans for a spacious configuration including an onboard lounge area and a number of hi-tech features. “We will make our decision [about aircraft] in the next 8-12 months,” said Elshanti. “In all aspects though, it will be a very comfortable seating arrangement… The airline will also be very hi-tech driven with onboard internet access, and we are also talking to a couple of vendors about mobile phone usage.” The airline’s technology-focused approach also extends beyond the aircraft. For instance, the carrier plans to allow passengers to use their frequent flyer card for a wide variety of airline purposes, such as checking in and as a boarding pass. It also plans to enable the card to be used for a range of non-airline functions, including as a credit card, for border control e-Gates, car rental and, even as a hotel room door key. “There will also be a lot of linkages across the different touchpoints [throughout the trip] with hotel groups and car rental companies, for instance, which is why our business planning is taking such a long time.” The launch time is also being lengthened by the need to secure an AOC for scheduled passenger services. The Saudi Arabian backing may help in this regard, but the airline is also reliant on a more liberal aviation environment emerging in the region. “We will probably start with a charter licence and then seek a scheduled licence following on from year one, but that depends on what is happening from an aero-political point of view,” said Elshanti. “However, we are absolutely certain that the region will get there. I therefore think we are starting at the right time now, so that by the time those [regulatory] frameworks have changed, we will be ready to operate a scheduled service.”

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