Dubai to establish budget airline managed by Emirates

Emirates, the biggest Arab airline, will manage a low-cost carrier to be established by Dubai’s government in a bid to tap soaring demand for travel in the Persian Gulf.

The new company, set up on the orders of Dubai’s ruler, will be led by Emirates commercial operations director Ghaith al-Ghaith, according to a statement issued by the government today on the United Arab Emirates’ state-run WAM news agency.

“If you look at the network for Dubai, there are so many points that Emirates today is not covering,” said Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates and the new airline, in a telephone interview today. “There are so many countries four, five hours from Dubai that we don’t cover.”

Emirates has been urging Dubai to encourage budget carriers to help feed customers onto its long-haul flights. Low-cost carriers haven’t taken off in Middle East as fast as in Europe or Asia partly because Dubai’s airport is too congested, Emirates President Tim Clark has said.

Dubai’s government is spending $33 billion to build what it intends to be the world’s largest airport at Jebel Ali in the south of the emirate. The six-runway al-Maktoum International Airport will be 10 times the size of Dubai’s existing airport and bigger by area than London’s Heathrow and Chicago’s O’Hare airports combined when completed in 2012.

Emirates’ Expansion

Emirates has $60 billion of new Airbus SAS and Boeing Co. planes on order as it vies with rivals such as British Airways Plc, Singapore Airlines Ltd. and Qatar Airways for traffic between Europe, Africa and Asia via the Persian Gulf. It will more than double in size over the next five years, helped by surging passenger growth, Vice Chairman Maurice Flanagan said in a Jan. 24 interview.

The new budget airline, to be based in Dubai, will compete with carriers including Kuwait-based Jazeera Airways KSC and Air Arabia PJSC, a low-cost airline in the neighboring emirate of Sharjah, to attract budget travelers from the Arab world and the Indian subcontinent.

In its first five years the new airline will operate single-aisle planes, al-Maktoum said, declining to provide further details. He did not say if a name for the carrier has been selected, nor what routes the airline would fly. He said more information will be released later this week.

Spending on travel and tourism in the Middle East will almost double in a decade, buoyed by regional economic growth and projects designed to lure visitors, the World Travel and Tourism Council said in a March 6 report.

bloomberg.com