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Bahrain Air, the first privately owned premium low-priced carrier (LPC), is set to capture what the national carrier Gulf Air loses out from budget travellers who fly no-frills airlines operating through the kingdom.
It is estimated that at least 10,000 budget class passengers use the available low cost airlines in Bahrain per month.
The new airline, with a paid-up capital of BD8 million and authorised capital of BD10 million, will start its operations on January 17 as the second national carrier of Bahrain and the seventh in the region.
Promoted by Bahraini and Saudi investors, the airline is expected to set a new standard in its category while tapping the huge base of passengers flying on GCC and African destinations. Initially, it will cover 13 destinations and 140 flights weekly across the region.
According to Bahrain Air's three-year plan, the airline will have 14 aircraft by the end of 2008 taking the total number of aircraft to 23 in 2009 and 25 by 2010. This will make Bahrain Air the most rapidly growing low cost carrier in terms of fleet expansion with 57 per cent and nine per cent growth respectively in 2009 and 2010.
What is it that makes budget carriers sprout up in the Middle East? One factor obviously is the economic boom. The next could be that traditional carriers, except a few, are not bringing in enough returns. The third is the realisation that the demographics of the region with a large labour class expatriate population support the no-frills concept.
No-frills airlines are sprouting elsewhere in the region too. When Kang Pacific Airlines begins flying in December, it will be the sixth budget carrier in the Gulf, and the third to launch this year. Kang Pacific, with $10 million in capital and one leased McDonnell Douglas DC-10 aircraft, initially will offer flights to the Philippines, Bangladesh, India and Sri Lanka from its base at Fujairah on the UAE's east coast.
There is plenty of room for growth. Three budget carriers, Air Arabia, of Sharjah, UAE, Jazeera Airways of Kuwait and Sama of Saudi Arabia, have snared 6.1 per cent of the seats within the region, according to the International Air Transport Association (IATA).
The current market leader in the Gulf is Air Arabia, the region's first and largest low-cost carrier by routes flown, passenger numbers and revenue. Passenger traffic at the airline, launched in 2003, rose 58 per cent to 1.23 million in the first half of 2007 from a year earlier. During the same period, the airline's revenue rose 67 per cent to Dh513 million ($139.7 million). Air Arabia has carried five million passengers in about four years.
Jazeera Airways, also looking to expand, this year set up a second hub in Dubai and plans a third in the region. NAS Air, the low-cost unit of Saudi Arabia's National Air Services, a Riyadh-based provider of aviation services that manages almost 50 aircraft, launched in February as the kingdom's second budget carrier.
In just two years of operation, meanwhile, Sama has grown to become Saudi Arabia's second-largest carrier after Saudi Arabian Airlines.
Passenger traffic within the six Gulf Co-operation Council states rose 12.8 per cent to more than 109 million passengers in 2006, well above the international average of 4.9 per cent, according to the Arab Air Carriers Organisation.
Airbus's global market forecast predicts that passenger traffic in the Middle East will grow at an annual rate of 7.1 per cent until 2015, compared with a global average of 5.3 per cent.
While these options may seem like a dream come true for low-budget travellers, the resulting surge in air traffic carries with it major environmental costs. Even with the more fuel-efficient technology that has evolved over the last 30 years, air travel remains a significant contributor to climate change. Currently, 600 million tonnes of carbon dioxide (CO2) are pumped into the atmosphere each year from commercial jets alone, while the number of planes in the air climbs steadily higher.
No-frill carriers could also face the heat from record fuel prices, but the growth in demand is so strong and that is enough to keep such airlines flying.
