FlyDubai Will Oust Indian Rivals From The Persian Gulf

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Source:  www.glgroup.com

Summary

Not only does FlyDubai have the support of Emirates, the Dubai Government, the Dubai Civil Aviation Authority and the lowest operating cost base of any low cost airline today, it will undermine and undercut the weaker pretenders from India.

Analysis

As one of the intended key beneficiaries of Dubai World Central Al-Maktoum International Airport, FlyDubai will leverage its unique position as a new player on the field by forcing product, price and service to ensure that the likes of Paramount Airways, IndiGo, Kingfisher Airlines, Air India Express, SpiceJet and Jet Airways all feel the pain of its presence.
Of course, FlyDubai’s “market distorting” existence keeps its penetration away from defacto parent Emirates and allows both airlines to grow in complementary sectors with very little overlap. This overlapping predicament for India’s airlines represents an operational and political headache.
Had India not afforded traffic rights to FlyDubai, Indian carriers would almost certainly be prohibited by the UAE, leaving the domestic Indian arena chronically oversupplied with capacity, leading to another downturn – one that would be more devastating than the last one. Quite frankly, there are already too many Indian airlines plying their trade, none of whom seem to be fairing better than the next guy.
By the same token, allowing FlyDubai to step into India, those same airlines simply are unable to compete and will continue to fight for scraps of O&D traffic that is probably the lowest yielding of all between the UAE and India – the construction worker market looking to bag bargain flights home to Kozhikode and Thiruvananthapuram, for example.
FlyDubai can survive on thin margins, but Indian airlines cannot.
This existential threat is one that both Kuwait and Oman will soon learn when FlyDubai starts flights to those countries very soon.Just as Southwest Airlines pioneered the low cost airline concept, FlyDubai will push that competitive boundary beyond the means of most other operators who are struggling just to survive, let alone enter into cut-throat competition.

Could FlyDubai have done all that without state backing?

Unlikely.

Government support goes a long way if used properly.

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