As challenging market conditions in the global economy continue to place even more pressure on airlines, the low-cost carrier (LCC) model is weathering the storm well. The precarious economic climate in Europe dealt a significant blow to the aviation sector, as reduced wage growth among households across the continent has caused many would-be travellers to search for cheaper airline alternatives. This, combined with the unrest that occurred in some traditional tourism destinations in the Middle East and north Africa as well as the impact of rising oil prices, has left many larger airline carriers to suffer a haemorrhaging of profits.

Value for money

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For Air Arabia, a central component of its success lies in its LCC business model. “Despite recent challenges, Air Arabia continued to outperform the market,” says the company's CEO, Adel Ali. “Air Arabia’s annual turnover was a record $653.3m in 2011, a 16% increase compared to 2010, and we served 4.7 million passengers, which is our highest number to date. The appeal of Air Arabia is very simple: we offer value for money, a huge range of destinations and we are completely committed to making the Air Arabia experience – from booking through to arrival – as efficient and pleasurable as possible.”

The challenging economic landscape is providing a great opportunity for LCC airlines such as Air Arabia. According to data from an LCC study by industry blog Airline Business, revenues across 36 LCCs increased by 19% to $58.7bn in 2010, and operating profits doubled to $4.2bn in 2011.

With a customer-centric business model characterised by a solid commitment to value-for-money services and convenience, Air Arabia’s LCC model has enabled it to keep its business well afloat. “In just eight years, we have grown from a single aircraft serving five destinations to become a leading regional airline with a fleet of 30 aircraft and a strong network of 73 destinations spread across the Middle East, north Africa, Europe and the Indian subcontinent,” says Mr Ali. “Air Arabia continues to [stay] on a growth trajectory, and we have ambitious plans to expand our global network.”

International positioning

Headquartered in Sharjah International Airport, Air Arabia has taken significant steps to capitalise on its smaller size. Its highly efficient and world-class services at Sharjah have proven popular with travellers seeking decongested yet well-managed airports in the Middle East.

“Air Arabia alone flies to 55 destinations from its base in Sharjah, so it is fair to say that the airport is already a significant aviation hub in the region,” says Mr Ali. “Moreover, there are approximately 2 billion people within a three-hour flight from the UAE, so the potential for future growth is self-evident. Air Arabia’s second and third hubs in Casablanca [Morocco] and Alexandria [Egypt] continue grow organically, spreading our wings into various destinations across Europe and Africa.”

Although the spectre of continued economic slowdown looms large over the aviation industry, Mr Ali remains confident that consumer demand will hold up well for Air Arabia, because of the compelling value-for-money proposition its LCC model offers.

“The past few years presented serious challenges to the global aviation sector and led to the industry’s highest loss ever,” says Mr Ali. “However… Air Arabia’s operations have proved to be resilient and, throughout last year, the airline continued to maintain normal services. The next five years will be a period of continued expansion, as we are committed to providing our customers with a growing range of destinations and value-for-money fares.”