All smiles at flydubai

Ghaith Al Ghaith has a broad smile and an infectious laugh. “Welcome, welcome,” he says as we sit together on a couple of chairs amid the hustle and bustle of Dubai Airport Expo.

Al Ghaith has the demeanour of a man who has all the time in the world to stop and talk. But, in fact, every minute he is planning new ways to move his start-up airline into a new space of a world-class carrier.

Echoing the impact its big sister – Emirates – had made on the aviation world, flydubai shocked the industry at Farnborough Airshow in 2008 with the largest-ever order by a start-up with a shock deal for 50 Boeing 737 aircraft.

Like the Emirates deals before, flydubai faced a wave of cynicism that the orders would ever be delivered and that the moderately immature regional market in the Gulf could sustain another low-cost carrier given the head start Sharjah’s Air Arabia and Kuwait’s Al Jazeera had already made.

Being reminded of this scepticism brings another smile from the CEO. “Sure enough, three years ago we started with nothing, but this is the UAE – flydubai would not have been as successful as it is, or would not have been successful at all, were it not for the fortunate position that we are in by operating in this country.

“Our forefathers really visualised the future for us and acted to deliver such a beautiful country — very hospitable, very attractive — plus the vision for aviation.

“His late Highness, God bless him, Sheikh Rashid bin Saeed al-Maktoum, worked very hard to start Dubai International Airport when no airport existed here. If he had not had that vision and power and drive to start this airport, we would not be where we are now as the largest airport in the region. So we owe a lot to that belief and drive.”

Of the 50 aircraft on order, the first 21 have joined the fleet. The latest, which arrived in Dubai at the end of 2011, came with a full fanfare from manufacturer Boeing as it fortuitously turned out to be the 7000^th 737 to roll off the production line at the company’s factory near Seattle.

“We were proud to be a part of this important milestone for the 737,” said Al Ghaith. “With its continuous innovations, the Next-Generation 737 brings the right combination of operational and environmental performance to address the requirements of our markets. It is a major cornerstone to our modern, fuel-efficient and economical portfolio of commercial jets.”

Al Ghaith graduated with a business administration degree from the University of Arizona and returned to Dubai to become a management trainee with fledgling Emirates Airline.

He grew with the airline and was appointed deputy passenger sales manager UAE in June 1988; deputy manager overseas development & marketing in August 1989; area manager UK and Ireland in 1991; and general manager commercial operations Europe and North America in 1993.

He followed this with a spell as senior manager for the Middle East, Africa and CIS commercial operations before being appointed by chairman Sheikh Ahmed bin Saeed al Maktoum as the executive vice-president for the global commercial operations.

When the idea of a low-cost carrier to compete against the Sharjah and Kuwait operations came up, Al Ghaith – working with Peter Hill, the recent CEO of Oman Air and formerly of SriLankan and Emirates – was tasked with setting up the airline in an incredibly short timeframe.

“Everything we have done has been done to plan,” he said. “We said we’ll make money in 2012. We are still on course to make money.”

The airline is breaking the mould among the low-cost carriers. The management team had looked closely at the way the market worked and the Southwest Airlines model from the US was the one that impressed them most – so much so that when former Southwest pilot and flight operations director Kenneth Gile was available he was recruited to the new Dubai airline as chief operating officer.

But instead of just aping the US success story, Al Ghaith and his team are doing very different things.

In December, the airline announced it would be moving into the cargo business with a new division to support its goal of making the transportation of goods and people across the region via Dubai simpler and more cost-efficient.

Thus, flydubai Cargo, which launched on January 1 this year, will transport goods to all of the low-cost carrier’s 46 destinations, as well as additional cities in India and Pakistan.

Cargo, including perishable items, textiles, electronics, couriered items, mail, pharmaceuticals and general cargo, can originate from any point on the flydubai network or beyond.

Al Ghaith, said: “Not only is it unusual for a low-cost carrier to have a cargo division, it is also rare for an airline as young as flydubai. But it is initiatives such as this that set us apart and ensure we continue to lead the way in low-cost aviation, while also supporting Dubai’s position as a logistics hub.”

With 60% of all shipments expected to be transit cargo, flydubai has signed interline agreements with other airlines when moving items outside its network. It expects to carry 1,500 tonnes of cargo each month on its Boeing 737-800 NG aircraft, which is equal to 15 Boeing 777 freighters. In particular demand are auto parts travelling from Dubai to countries in the former CIS, handicrafts from Kathmandu and fruit and vegetables around the GCC countries.

“We have an exemplary on-time record and transporting cargo will be no different. It will also be fully security screened before being loaded on to the aircraft, ensuring safe flights for all our passengers and crew,” Al Ghaith said.

Meanwhile, in line with the IATA e-freight initiative, all shipments will be transported with electronic documents rather than paper air waybills. The move is estimated to save $1.2 billion across the industry.

“Earlier this year we created our own engineering and maintenance division, and cargo is another example of our rapid expansion,” Al Ghaith said.

The airline had already demonstrated its desire to be first to market with ideas or innovations. It was the launch customer for Boeing’s new 737NG Sky Interior delivered in October 2010, and the Lumexis “fibre to the screen” (FTTS) in-flight entertainment system.

There has been speculation that flydubai could also be an early customer for Boeing’s 737MAX programme – the improved narrow-body which competes with the Airbus Neo.

Al Ghaith is playing his cards close to his chest.

“We are planning to make an order but we are not ready to make a decision yet, especially because the new Boeing 737 MAX and Airbus A320neo just came into the market,” he said.

“We are currently in discussions. We are evaluating the aircraft and we will be taking a decision in the very near future; in a year or so,” he said, adding it was “difficult” to estimate the number of planes to be ordered.

Training has also risen up the flydubai agenda. It is to be the anchor customer for a new airline-training centre operated by the CAE-Emirates joint venture ECFT.

The new centre is set to open in the third quarter of 2012 in Dubai’s world-class commercial park, Dubai Silicon Oasis, and flydubai has signed a multi-year exclusive training services agreement with ECFT for Boeing 737NG training.

“Today’s increasingly competitive market requires airlines to achieve maximum efficiency and effectiveness from every area of operations, including training. At the same time, safety is paramount to passenger confidence and growth,” said Gile. “We have trained with ECFT since our inception and we are very well satisfied with the exemplary service we receive and the quality of the training programmes.”

ECFT will provide comprehensive initial type-rating and recurrent training solutions for flydubai line pilots and cadets, including ‘wet’ training with ECFT instructors and ‘dry’ training, in which flydubai instructors use ECFT simulators and other training tools.

The carrier has announced plans to recruit more than 400 pilots over the next four years to meet the needs of its growing fleet and serve its rapidly expanding route network.

With its rapidly growing fleet, flydubai has also been turning its attention to maintenance.

While at the Dubai Airshow, many thought that flydubai could be announcing new aircraft orders – but in fact it was the world of MRO and spares support that was order of the day.

It signed two new fleet MRO contracts with Abu Dhabi Aircraft Technologies (ADAT), part of the Mubadala Aerospace MRO network, with a combined value of $54 million.

Al Ghaith, the flydubai CEO, said: “I was really proud to be able to sign this contract with a UAE company. Mubadala has been doing a lot of great things  for the UAE and it is good to work with them.””

The primary agreement, for integrated component support (ICS), covers the repair management and forward component exchange and will see ADAT provide total material support to flydubai’s entire fleet. The contract allows flydubai to budget its maintenance spend in advance, while having spare parts readily available.

“By outsourcing the maintenance and components support and management to ADAT, we will benefit from reduced maintenance costs and increased capital liquidity, as a result of having to hold less spare parts. This will create a saving of $35 million for the airline over the next five years,” Al Ghaith said.

The power on the ground also was a point of attention as Al Ghaith also signed a $20 million contract with Honeywell for the maintenance support on the carrier’s auxiliary power units (APUs) installed throughout the fleet.

Honeywell’s 131-9B APU supplies auxiliary power to each of flydubai’s Boeing 737-800 NG aircraft for engine start, as well as to power on-board air conditioning and pre-engine start-up.

With new routes starting to Iraq, flydubai’s house is very much in order and with targets looking achievable Al-Ghaith could indeed, be smiling all the way to the bank.