Air Arabia Eyes Growth in 2016

Last year Sharjah-based low-cost carrier Air Arabia made Amman its fifth hub through a 49 percent acquisition of Petra Airlines, which was then relaunched as Air Arabia Jordan.

On the sidelines of the recent Arab Aviation and Media Summit in Bahrain, Air Arabia CEO Adel Ali spoke to Venture about his company’s investment in Jordan and it’s upbeat outlook for 2016.

How has Air Arabia Jordan been performing in terms of passenger numbers?

It’s been just like any new startup starting at a very difficult time when the geopolitical situation in the whole region is not at its best. But I think for a startup it’s been relatively good, and it continues to progress. These things do take time but we are optimistic about the way it’s going.

So do you think you entered the market at the right time?

I think you’ve got to start at some point. Timing is not something that you can always control. I guess we’re going through phases, if you look at it from 2008—when the financial crisis happened—and today we are in 2015 and we don’t know when [things will improve]. I think we are still confident that from a geographical position it’s good. Our philosophy has always been that we expand in the right way in the Arab world, and Jordan is one of the countries on the list. We believe that as the time moves on, potentially in the Levant [QAIA] is one of the key airports. And Jordan enjoys an open sky relation with most countries especially in Europe.

Air Arabia Jordan already flies direct from QAIA to Saudi Arabia, Erbil, Sharm el-Sheikh, and Kuwait. What other routes are you planning to launch in 2016? And will you be expanding your fleet accordingly?

We would like to. It’s too premature to specify [destinations]. But yes our purpose of setting up an airline in Jordan is to make sure that we go to Europe from Jordan and the Middle East and to connect the two together as well. We have two airplanes. As we start routes we will be adding more because we have not started a business for just two airplanes.

How much potential demand is there for low cost traveling among Jordanian travelers?

I think Jordan is no different than any other market. The demography is right, the size of Jordanian people who live outside Jordan, and those are all potential customers. Jordanians are very educated people with high usage of technology. These factors allow the development and growth of the low cost business model.

What are some of the main challenges you face in the region?

I think the uncertainty of the geo-political situation is always a concern. The continuous air traffic challenges that exist; quite a lot of routes have got some military activities, which means you can’t use those routes. For example, the inability to fly over Syria to Lebanon adds an hour to the journey and that is a cost. Those sort of things are unavoidable because safety matters.

If the world becomes a much peaceful place, we will see the [industry’s] growth increase from 4 and 5 percent to double digits again. Our annual growth is about 10-11 percent, but the industry is growing at about 5 percent.

Do you think airlines pay higher fees at QAIA compared to other airports in the region?

Jordan airport departure tax is on the higher side in the region. There’s been a lot of investment in the airport, but life is all about comparing and if we compare [The airport fees] to the region then they are on the higher side. But we pay and every other airline pays.

What about fuel prices, what’s a suitable price for airlines?

I think $70-80 is good for everybody. Now, [lower prices] are good for the short-term because it’s [cheaper] fuel for airlines. But in the long-term, it will have an impact on the economy and if that happens then people may not be able to afford to travel as frequently. Whenever the fuel has been low, globally the industry has not done very well.

What are your plans for Air Arabia as a whole in 2016?

We are getting six more airplanes and we will continue to expand our business. We hope to move from 115 airports to 122 airports.