By Christopher Le Coq/Daily News Egypt June 1, 2010, 4:45 pm
CAIRO: Air Arabia, a regional low cost carrier, launched its Egypt operations Tuesday, with its first flight taking off from Alexandria, its third hub, to Khartoum.
The UAE-based carrier will also launch flights to Kuwait, Amman and Beirut, as well as to other destinations further afar within Europe, Africa and elsewhere in the Middle East.
In late 2009, Air Arabia formed a joint venture firm with Egypt's travel and hospitality group Travco with a start-up capital of $50 million. Travco Group has a 40 percent stake in the new firm while Air Arabia has 40 percent stake.
Adel Ali, Group CEO of Air Arabia, said that the new carrier will compliment their existing operations in the United Arab Emirates and Morocco, where it set up its first two hubs.
Hamed El Chiaty, chairman and CEO of Travco Group, said in a written statement, that the partnership “will contribute to the diversification of the domestic tourism industry, which is so vital to the Egyptian economy.”
Ali said: “Egypt has the biggest population in the Middle East, it is a major destination for tourists, geographically it is close to Europe and Africa, which will bring the Middle East and these two regions closer together, and finally, this decision fits within in our business model.”
Egypt, he said, will be a hub in the low-cost carriers’ global strategy.
“At the moment, we have a staff of 100 people and just two planes, with an objective of having four to six planes by the end of the year,” he pointed out.
Asked to what degree this will help create local jobs for Egyptians, Ali was quick to point to the company’s operations in the UAE. “When we started out in the UAE seven years ago, we had 1,000 employees. The number has grown to 7,000.”
“Each plane directly creates 70-80 jobs, but then there are jobs that are indirectly linked to our industry, such as taxis, restaurants, hotels and the like, bringing the actual number closer to 300-400 jobs per plane,” he told Daily News Egypt.
Ali underlined the potential for the development and expansion of low-cost travel in Egypt and in the rest of the region.
“Low-cost air travel represents 25 percent of the market in Europe, while a miniscule 7 percent in the Middle East.
“There is more significant demand for this type of travel for two fundamental reasons: first, on average middle-income revenues are lower in the Middle East than in Europe, making this type of travel highly attractive, and second, there is often no other viable travel option,” he said.
On how the airline’s business will develop in Egypt, Ali said their “strategy is to let it grow organically; part of the company’s success and ability to grow will be on traffic rights.”
He was also quick to point out that the government agencies involved in opening up Egypt’s airspace to foreign competition had been highly cooperative.
The entry into the Egyptian market builds on its existing services, which spans 60 countries across Europe, the Middle East, Africa and Asia.
Source
