Arabian Business Weekly Update 14 December 2004

With the upcoming launch of Al-Jazeera Airways into the growing stable of low-cost carriers, Emirates should consider this lucrative niche.

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By  Elizabeth Drachman Published  December 13, 2004

Sky's The Limit|~||~||~|The skies just got more crowded. Kuwait has leapt into the airline business, launching a low-cost carrier called Al-Jazeera Airways. Al-Jazeera is set to begin flying in February with two Airbus jets. The airline is the first private venture to take on the local, state-owned Kuwait Airways Corp. It will maintain short flights only, in order to keep costs down, to areas such as Bahrain, Dubai, Lebanon, Jordan and Egypt. Tickets will be some 55% cheaper than the government airline. The new no-frills airline joins other regional, low-cost airlines Sharjah-based Air Arabia, Abu Dhabi-based Ittihad Airways and Bahrain-based Gulf Air. Since the trend is obviously striking a chord with customers, it makes good business sense for a market leader like Emirates to launch its own no-frills carrier. Emirates would do well to follow the example of British Airways, which in 1998 launched its low-cost version, Go, which charged US$187 to fly from London to Rome, a ticket that costs US$570 on BA. Its business increased some 300% in its first year. When Go was established many in the industry believed BA would lose passengers –– why would they pay more? But the opposite happened. Business travellers and others who could easily afford BA remained loyal and those who struggled to meet BA prices jumped over to Go and began flying more –– all of which added to BA’s coffers. With more tourists predicted for the region, Emirates will only continue to face more competition and should make sure it doesn’t get squeezed out of a potentially lucrative niche. ||**||

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