Air Arabia eyes route expansion in 2017, says CEO

Sharjah-based Air Arabia, the GCC’s only listed airline, believes difficult market conditions are beginning to ease and the aviation industry can look forward to improved sentiment in Q2 2017, group CEO Adel Abdullah Ali told Argaam in an exclusive interview at the Euromoney Emirates conference in Sharjah.

Q: Air Arabia posted a net profit of AED 103 million in Q1 2017, which the airline called “strong results.” However, do you think that Q1 was difficult?

A: Q1 2017 was difficult for the [entire] industry. There was a drop in yields... basically, people paid much less to travel. Yet, we have made AED 103 million profit. [All companies] in the industry were estimated to make a loss. We have exceeded the expectation of analysts. And it was good for us.

If we compare to the last quarter of 2016, we have seen a much more positive reality in Q1 2017 and I see a better optimistic move in the second quarter in 2017.
 

Q: But the Q1 2017 financial results show a 10 percent YoY drop in net profit?

A: The first quarter of 2016 was a historically strong quarter for us, in 53 quarters since [the airline’s inception]. So, to have 10 percent drop on the strongest quarter and when the analysts, because of the environment, believe that we should all be making losses, to still make AED 103 million, it is good.

Q: Do you have plans to expand your fleet in 2017?

A: We have just done that and we will continue to do so. I think we continue to expect about four aircraft every year, adding to our fleet. 

We have been opening new routes, we have put three more airplanes in our hub in Morocco, we have opened [routes to] five more airports in Europe from Morocco. We put two aeroplanes here [in the UAE], we started operating from our Jordan hub to Georgia.

Q: Saudi Arabia is also looking at a low-cost airline. Does that means increased competition for you?

A: Fifteen years ago, when we started a low-cost [airline] we knew there would be a lot of low-cost airlines. There is one in Kuwait. In fact, Saudi always had ... Saudi has Nas that is a low-cost. And there are more coming [in the region]. It is good for the consumer. We have always welcomed competition and we wish them success.

Q: The decline in oil prices leveled the playing field for the premium airlines and low-cost carriers to a certain extent. Did you face any troubles?

A: Our results certainly do not reflect that. We did not lose the seat factor and we did not lose any money as an airline. Competition will always go up and down, and I think the easiest thing to do for anybody is to reduce the rates, but then there is a price to pay when the bottomline gets affected. And I have been seeing this in a number of places, in the region and in the world.

Q: Did Air Arabia consider tightening its HR policies to reduce costs during the market slowdown?

A: Air Arabia, we continue to recruit for our business. We tighten our belt all the time; that’s our nature, that’s how we run our business. We don’t wait for the problem to happen to react to it, we anticipate and we move forward. 

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com