MAKING AIR TRAVEL ACCESSIBLE TO BROADER DEMOGRAPHICS, THEY HAVE SUCCEDED IN RESHAPING THE DYNAMICS OF THE REGIONAL AIRLINE MARKET, WHILE ALSO STIMULATING NEW INBOUND TOURISM.
Air transport has always been considered a very special sector in the international context. It facilitates global economic growth, contributing around USD413 billion annually according to International Air Transport Association (IATA), international and domestic tourism, world trade growth and most importantly, it has been a dominant factor in the process of globalisation.
While aviation has evolved in so many ways over the past decades, nothing has had a greater impact on the industry than the evolution of LCCs.
Considered to be one of the most significant consequences of the world airline deregulation, the advent of LCCs has undoubtedly reshaped the world airline market, previously controlled by Full Service Airlines (FSAs).
In the Middle East, the penetration of LCCs is relatively new and was encouraged by the fast growth of LCCs in the European and the US markets.
Featuring a simpler service ethos, more affordable pricing, and the use of the Internet as a sales channel, this new business model has democratised air travel in the Gulf and the wider Middle East, tapping into the region’s vast local population, particularly for the younger market with a set budget, as well as the region’s foreign workers that wish to visit home.
WINGS OF SUSTAINABLE DEVELOPMENT
Over the past decade, liberalisation efforts, undertaken within the Middle East and North Africa have resulted in the advent of LCCs.
Meanwhile, the lack of satisfactory infrastructure and railway systems linking the region, coupled with an increased regional passenger demand for shopping and pilgrimage have also led to the emergence of this new business model.
During the last decade, and since the first regional budget airline, Air Arabia, commenced operations in 2003, the low fare sector has dramatically grown and there are no signs that the expansion will be curtailed.
According to OAG, one of the leading global providers of digital flight information, LCCs in the Middle East have grown at an annual rate of 52 percent during the last decade, whereas FSAs only grew at an average rate of seven percent year-on-year.
The emergence of budget airlines and their dynamic development has significantly affected the degree of competition in the market. Furthermore, the competition stimulated the introduction of new products while also reaching out to segments that were not properly supported before.
LCCs are significant for the development of weekend, city or short-break tourism and in effecting a radical expansion of potential destinations.
In addition they have taken the region by storm with not only leisure travellers, but also business travellers seeking the best value offer available.
Taking advantage of the changed mind-set of the corporate segment, LCCs started enhancing their offering, demonstrating that they are definitely not low in the quality of service.
Moving towards a hybrid model by adopting features of FSAs, Jazeera Airways and flydubai have recently introduced business class seats, while flynas, Air Cairo and flydubai introduced global distribution systems in to their operations.
Recognising the importance of travel agents to its future success, African LCC fastjet is one of the latest airlines to adopt a multi-channel distribution strategy by partnering with Amadeus, Sabre and Travelport.