How do you differentiate RAK Airways from its competitors?
The United Arab Emirates is home to some of the world’s most successful carriers. It is quite a busy marketplace, yet it is not very crowded. There are plenty of opportunities as the UAE continues to grow and RAK Airways has very ambitious growth plans in the next few years.
The UAE is home to two very successful low-cost carriers. We found that to set ourselves up as a low-cost competitor to Air Arabia and Fly Dubai was going to be a relatively impossible task for two reasons. First, Air Arabia is well established. Second, Fly Dubai, which has come a long way in the past two to three years, is extremely well funded and has been able to grow much quicker than a normal business model would permit.
This is not the situation for RAK Airways. [Our] investors have not lavished a huge start-up fund to enable us to go out and purchase [our] first 20 aircrafts. The investors of RAK Airways wanted an airline that would support the growth of Ras Al Khaimah (RAK) in particular. So we wanted to offer a more inclusive product that brings better value to our customers than what the [other] low-cost carriers have provided.
We are an emirates flight, rather than a low-cost-plus. We provide an inclusive product relevant to the [price] we charge. As RAK airport is relatively remote, compared to say, Sharjah, we run a bus service, which is a complimentary service that enables our passengers to begin and end their journey where they live. We also leverage the locational advantage of RAK such as parking in RAK Airways. Our customers can park here at a low cost, and so there is a convenience of having the local airport [in RAK] for the local residents.
That has naturally positioned us. Our unique selling point is also based around service. We have got a European-type travel model where you get on board, you have a comfortable seat, and you are served by friendly, professional staff.
How do you view RAK’s position as an air hub for the Middle East and north Africa [MENA] region? How does it compare to Doha in Qatar, for example, in terms of attracting and managing passengers and cargo traffic?
We are just at the beginning. The airport development plan is not realised yet and so there is quite a long way for us to go. From our network perspective, we see significant growth potential in terms of RAK. We are aiming our operations more towards supporting the business objectives of RAK as an emirate.
The critical mass now, as we have proven over the winter with the German charters that we have been operating, is such that operators are looking towards charter programmes in particular coming into RAK, because there is sufficient demand. So, for example, we operate at the moment six flights a week to Germany and Austria, with 235 seats, and it is [usually] full.
I think the appeal of Dubai, with its infrastructure and the major cargo operators, will make it very difficult to compete head on with them. Air cargo is only just beginning here, yet there is a significant propensity towards RAK as it starts to develop. Part of the airport’s plan is to build a purpose-built cargo hub, which RAK Airways wants to be party to. We have had demand for ad hoc freighters throughout the winter and we have taken advantage on [some] of those occasions.
It is only in the past 12 months that RAK Airport has gone out to tell people that ‘we are open for business’, and there has certainly been plenty of demand as RAK develops and RAK Airport gets [better known].
Did the political unrest in other MENA countries, and spikes in oil prices as a result of geopolitical issues, have any major impact on RAK Airways as a business?
What we have seen is that there has been a significant shift of European tourism into RAK because of weariness over some of the traditional airline stops, such as Sharm el-Sheikh in Egypt. So that gives us a foothold, especially in the big tourism markets such as Germany, because they are seeing RAK as a stable and viable alternative. We also offer competitive pricing. That has proven very successful, and we want to be able to continue supporting that.
As far as fuel is concerned, there is no question that for us it has gone up in price. Although it is quite stable now, and has been for the past month, there are some significant differentiators in price in, for example, Pakistan and Nepal, [where] fuel is extremely expensive. As a small carrier, when operating in those destinations, it is very difficult to spread the cost of fuel across the network. So what we have had to do is to take stock of our network, and we cut two routes in order to develop. With the increase in fuel price, we could not sustain them.
What has been RAK Airways’ expansion strategy so far? If you look forward five years, where will RAK Airways be as an airline?
We will expand steadily. RAK is very ambitious about its tourism aspirations for the coming years. We know that the ambitions for RAK are significant and our expansion will be associated with the RAK Tourism Authority and the government in terms of their overall expansion. So we will be looking very closely with them into choosing routes which support RAK’s [tourism].
We have a five-year plan that has been approved by the [RAK Airways] board, and in five years we will have a network of 25 routes and we hope to have 1.5 million passengers, which is three times the numbers we have today.
There are [several] initiatives under way, such as the Real Madrid football-themed park. This part of the world is football crazy and the opportunity to bring your family to a place endorsed by Real Madrid, one of the most well-known teams in the world, is destined for great success. The Waldorf Astoria, an iconic hotel in New York, will be the first experiment with the brand’s expansion in the Middle East, [based] here in RAK. There [are currently] three shopping centres in RAK, and there are two more that are being developed, basically on the back of the number of tourists that we brought into the emirate. There are a lot of 'opening soon' signs which is great.
When you think about the market here, because there is not a [large] indigenous population, many will to come in from the outside and that is something that should not be underestimated for an airline. [For example], there are about six cement factories here. All the industry which supports the building of the UAE is based here, and all the workers are expatriates, largely from Bangladesh. So it goes without saying that you cannot take for granted that there is a labour force which is [largely] expatriate.
As more and more people are becoming long-term residents of the UAE, the growth will come more from people coming in. The management demography of the UAE has changed dramatically over the past 25 years and so it is not now only white Europeans; it is people with management qualifications and skills from developing countries, looking for opportunities in the UAE, which is fantastic. All of these developments are very significant for us. There will be a definite role for RAK Airways to support the aspirations of RAK in tourism as well as its business terms.