Air Arabia to bring low fares to lucrative London route

Air Arabia

• New Airbus A321 XLR has long range
• Set for delivery in 2024-25
• Would rival BA, Emirates and Etihad

UAE low cost carrier Air Arabia will take on the highly competitive but lucrative London market when it takes delivery of Airbus aircraft able to fly longer distances, its CEO has confirmed.

Air Arabia announced an order for 120 fuel-efficient aircraft comprising 73 A320neos, 27 A321neos and 20 A321 XLRs at the Dubai Air Show in 2019.

The A321 LXR can fly up to nine hours, opening up more routes for the Sharjah-based carrier.

However, analysts warn it may face challenges operating to the UK capital, such as obtaining slots in prime airports and increased staffing costs.

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“We’re going to get many, many more of these new A321 XLRs, which will fly up to nine hours,” Adel Ali, group CEO of Air Arabia, said in an interview last week with Pulse 95 Radio.

“Our aim [then] is to expand into more European cities, more in Southeast Asia, as well as some longer routes in Africa.”

Ali confirmed the airline was set to take delivery of the longer range aircraft in late 2024 or early 2025, with London among its key target routes.

“I think China is another good market that we should be serving,” he added.

Linus Bauer, founder of Bauer Aviation Advisory, said Air Arabia operating to London “demonstrates an ambitious strategic direction for the airline”. He added that the UAE and UK market is already dominated by British Airways, Dubai’s Emirates and Abu Dhabi’s Eithad Airways.

The narrow body A321 XLR is more fuel efficient than the larger aircraft operated by the likes of Emirates. Bauer said this may favour Air Arabia as it will be able to offer more competitive fares.

Secondary airports

Ali acknowledgesd how competitive the London route was in his radio interview, with fares much cheaper than they used to be, despite rising fuel bills.

“I recall people used to travel from the UAE to London for 4,000 dirham ($1,089) return in economy. Nowadays, you can get as cheap as 2,500, and I’m talking 20 years of cost increase,” he said.

Bauer said the flexibility of the A321 XLR means Air Arabia will be able to service smaller, secondary airports near London, especially as it may face challenges securing slots in primary airports such as Heathrow, Luton or Gatwick.

“Competing with established players like Emirates and British Airways requires strategic marketing, service differentiation, and effective route planning,” he added.

The Dubai to London route was ranked as the third most lucrative in the world by a report issued by aviation intelligence company OAG in 2019.

The research found that Emirates had earned almost $800 million in revenue from the route in the twelve months leading up to March 2019.

Operational complexity

John Grant, partner at consultancy Midas Aviation, said one of the drawbacks for Air Arabia may be the increased staff costs the low cost hub carrier will face servicing long haul destinations like London.

“Such routes will probably require crews to stop over away from base which adds costs and operational complexity. A less than daily service means that crews are sitting in a hotel being unproductive,” he said, adding that “this could blow their cash reserves away really quickly”.

However, Ali was more upbeat and said recent new services such as that to the Italian city of Milan have been successful.

“Normally when you launch any destination, it takes up to two to three years before you see the bottom line profitability,” he said.

Air Arabia in August reported it flew 7.7 million passengers in the first half of 2023, an increase of 47 percent year on year. This resulted in profit rising 78 percent year on year to AED801 million during the six months, as revenue rose 26 percent to AED2.82 billion.