Why Flyadeal Eyes on Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates for Airline Expansion Rather than European Cities?

Sunday, October 6, 2024

Saudi Arabian low-cost carrier Flyadeal is setting its sights on regional growth within the Gulf Cooperation Council (GCC) like Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, citing the Middle East’s potential as a primary focus for its expansion strategy. While European destinations are under consideration, they are not top priorities due to what Flyadeal CEO Steven Greenway described as Europe’s “aviation unfriendly” environment, characterized by high taxes and stringent regulations.

Speaking at the Routes World 2024 conference in Bahrain, Greenway outlined the airline’s strategic roadmap for growth, emphasizing the tremendous opportunities within the GCC and surrounding regions. He also underscored the challenges posed by European markets, which, though valuable, do not currently align with Flyadeal’s near-term plans for international growth.

Prioritizing the GCC: More Growth Potential

Flyadeal, a subsidiary of the Saudi Arabian national carrier Saudia, has been rapidly expanding its operations, with an ambitious target to grow its fleet from 35 to 88 aircraft over the next four years. The airline currently operates predominantly within Saudi Arabia, with 80% of its flights serving domestic routes and the remaining 20% focusing on international destinations. However, with the arrival of new aircraft, Flyadeal plans to shift this balance to 65% domestic and 35% international by 2028, with a clear focus on the GCC and neighboring regions.

“There’s so much more growth to be had in the GCC,” Greenway said, emphasizing the dynamic market conditions in the Middle East. The region’s growing demand for affordable air travel, combined with its strategic position as a crossroads for international aviation, offers significant opportunities for a low-cost carrier like Flyadeal to expand its footprint. Greenway also pointed out that the regulatory environment in the GCC is far more conducive to growth compared to Europe.

Challenges of Expanding into Europe

Despite the allure of Europe’s established aviation markets, Flyadeal faces several hurdles in considering European expansion. Chief among these are the high aviation taxes and complex regulations that make operating in the European Union (EU) a more costly and bureaucratically challenging endeavor.

“Europe is on the list, but not top of the list,” Greenway said. He elaborated that the high costs associated with European airspace, landing fees, and airport taxes make it difficult for a low-cost carrier like Flyadeal to operate profitably in the region. In addition, the strict environmental regulations imposed by the EU also add a layer of complexity that many airlines, especially LCCs, must navigate.

“Europe is aviation unfriendly,” Greenway stated, referring to the burdensome taxes and regulations that airlines face when operating within the region. While Flyadeal is not ruling out future expansion into Europe, the airline’s focus will remain on regions that present fewer barriers to entry and more immediate growth potential.

Strategic Focus on Regional Growth

In contrast to Europe, the Middle East and the broader GCC region offer a much friendlier environment for aviation expansion. The GCC nations, which include Saudi Arabia, the United Arab Emirates, Qatar, Oman, Kuwait, and Bahrain, are rapidly developing their aviation sectors, driven by strong economic growth and increasing demand for both business and leisure travel.

Flyadeal is keen to capitalize on this trend by expanding its regional network and offering affordable, high-frequency flights within the GCC. “We’re looking at all routes within a five-hour range of Saudi Arabia,” Greenway said, highlighting that destinations across the Middle East, North Africa, and South Asia are all under consideration as the airline grows its international footprint.

By prioritizing depth and network footprint over simply increasing the number of destinations served, Flyadeal aims to build a sustainable and profitable business model. This means focusing on strengthening connections within high-demand regions rather than expanding aggressively into new, high-cost markets like Europe.

Fleet Expansion to Support Growth

Flyadeal’s expansion plans are backed by a growing fleet that will allow the airline to serve a wider range of routes, both domestically and internationally. The airline currently operates a fleet of Airbus A320 aircraft, with plans to introduce more A321s, which offer greater range and capacity. Flyadeal is also evaluating the addition of widebody aircraft, with both the Airbus A330 and Boeing 787 under consideration for an order by the end of 2024.

The widebody aircraft will enable Flyadeal to serve long-haul routes, including destinations that fall outside the five-hour flight radius currently under evaluation. However, the airline is cautious about overextending itself and remains committed to its core philosophy of offering affordable travel options with high cabin density, similar to a bus service.

“We’re not just looking to put pins on a map,” Greenway noted. “It’s about building a network that makes sense for us and for our passengers.”

Competing in a Dynamic Market

As competition in the low-cost carrier segment intensifies, particularly in the Middle East, Flyadeal is positioning itself to be a major player in the region’s aviation industry. The airline’s focus on affordable, no-frills service resonates well with the growing middle class in the GCC, where demand for low-cost air travel is expected to continue rising.

The aviation market in the Middle East is also benefiting from the region’s strategic geographic position, which makes it a natural hub for connecting flights between Asia, Africa, and Europe. Flyadeal is well-positioned to leverage this geographical advantage as it expands its network and fleet.

Looking Ahead

While Europe may remain a long-term target for Flyadeal, the airline’s immediate focus is clear: capitalize on the growth opportunities available within the GCC and surrounding regions. By prioritizing markets that offer fewer regulatory hurdles and higher demand for low-cost travel, Flyadeal is positioning itself to become a key player in the Middle East’s burgeoning aviation sector.

With a fleet expansion plan in place and a focus on sustainable, strategic growth, Flyadeal is poised to strengthen its presence both in Saudi Arabia and across the GCC. The airline’s continued commitment to providing affordable air travel options will ensure that it remains competitive in a rapidly evolving market, even as it navigates the challenges of international expansion.

Tags: Airline Expansion, Airline Fleet Expansion, aviation regulations, bahrain, European Aviation, Flyadeal, GCC aviation, gulf cooperation council, kuwait, low-cost carrier, Middle East Aviation, Oman, QATAR, Routes World 2024, saudi arabia, Saudi Arabian Airline, Steven Greenway