No frills airlines thrill the Middle East

Regional airlines will face stiff competition when low cost airline menaJet takes off later this year

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By  John Irish Published  June 1, 2003

|~||~||~|Middle Eastern air travellers could see a drop in prices of up to 80% when menaJet, the first regional no frills airline, begins operating from Sharjah International Airport in December 2003.

The airline, which has an equity base of US $50 million, will initially run with two Airbus A320s, each carrying a single-class configuration of 162 seats. However, the owners are keeping their options open on whether the aircraft should be leased or bought.

“Every region in the world has its own no-frills airlines. It’s time for Middle East travellers to have the benefits of low fares, transparency and a friendly efficient service,” said Mazen Hajjar, general manager, menaJet.

Hajjar added that the airline would focus on becoming a safe carrier in the mould of other tried and tested models such as Southwest Airlines in the US and Ryanair in Europe.

Although at this stage landing slots have yet to be confirmed, officials from menaJet stressed that flights would be no longer than 3-5 hours and would concentrate solely on the intra-Arab market. Al Zamil, the Saudi business group, and the Bahrain-based Gulf Finance House (GHF), jointly own the venture.

“Sharjah was chosen because we could fast-track the entire registration process. The authorities were willing to provide all the facilities, and Sharjah offers an ideal base from which we can target our likely clientele,” said Esam Janahi, GFH’s CEO. “We have tested the business model to the extent that we are sure that menaJet can prove a successful venture.”
While low cost airlines are new to the Middle East and the Gulf, no frills carriers in Europe and America have proved increasingly popular and cost-effective during the 1990s, particularly with passengers choosing to travel closer to home. According to the Airports Council International, passenger numbers within the Middle East region were the only ones not affected over the last year, recording a growth of 5% in 2002.

Menajet’s Hajjar hopes to attract regular travellers ranging from expatriates and people with regional holiday homes, to business people looking for short holiday breaks.
However, with Europe’s largest low-cost airline Easyjet recently announcing pre-tax losses of £48 million, against a profit of £1m in 2002, experts are not convinced that no frills would work in the region.

“The Easyjet type operation is possible for the foreign labour market, the Indians, Pakistanis, Bangladeshis working in the region. They will immediately jump on a no-frills carrier, but I think the local population and even the expatriates want some good service. The low cost sector for the local population is not so attractive,” Manfred Manburger, a freelance aviation analyst, told Arabian Business.

Akbar Al Baker, chief executive of Qatar Airways, echoed this sentiment: “The passengers aren’t used to the idea of not being served. The no frills concept is totally new to the region. I wonder if this would be financially viable for them to operate in the first place. We have to wait and see.”

Nevertheless, menaJet hopes, by being first off the block, that it will, like other no frills airlines, be able to double the number of passengers on routes within 3 years, while adding new investors, more aircraft and a secondary operating base. MenaJet’s flight into the unknown follows the launch of Sharjah’s national carrier, Air Arabia last February.
However, officials from Sharjah International Airport were quick to point out that the airlines were targeting different markets. “There will be no restrictions on menaJet because of Air Arabia. Everyone will be allowed to compete in an open environment,” said a spokesman from Sharjah International Airport.

In a separate move, Gulf Air’s latest effort to revive its fortunes was the launch of the all-economy, full service Gulf Traveller from June 01. Gulf Traveller will be based in Abu Dhabi and fly six Boeing 767-300s with the objective of serving a number of Middle Eastern routes as well as offering a cheaper alternative for Asian expatriates.

Gulf Air’s CEO, James Hogan, made clear that although it will be all economy, the new carrier will not be a ‘no frills’ airline. Hogan indicated that he was not convinced that the approach would work here and pledged that the new carrier would be a full service offering.

“No frills is not appropriate on seven hour hauls. Customers are not prepared to start paying for their own food and drinks during longer flight segments,” Hogan told Arabian Business. “The low cost phenomena works best on two to four stretches.”

Another factor against the no frills approach, he said, was that low cost carriers in the US and Europe tend to sell a large proportion of their tickets online and at the very last minute. Consumer behaviour in the Middle East, he pointed out, is not the same. Menajet, however, suggested that it would be looking to turn its web site into a travel portal, through which passengers will be able to book their flights.

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