The UAE, with a population of less than 10 million, is home to no fewer than four major airlines. While the flag carriers of Dubai and Abu Dhabi – Emirates and Etihad – enjoy global profiles, the country’s two low-cost, short-haul airlines have also established themselves as major forces in Middle East aviation. And with aircraft on order and aggressive route expansion programmes, Air Arabia and Flydubai are still far off peaking.

The two budget carriers have much in common. Both launched this century, they have similar-sized fleets and, true to the low-cost carrier rulebook, each sticks with one type: Sharjah’s Air Arabia operates 41 Airbus A320s and Flydubai 50 Boeing 737-800s. With bases – at Sharjah’s modest airport and Dubai International’s bustling terminal two – less than 30min drive apart, and many shared destinations, they vie largely for the same demographic.

However, when it comes to business models, Air Arabia and Flydubai have taken somewhat different paths. Publicly-listed Air Arabia was the region’s first low-cost carrier and has stuck most rigorously to the no-frills philosophy with one-class cabins – albeit 168 seats with a generous 32in pitch. Since setting up in 2003, it has established three overseas units – Casablanca, in Morocco; Alexandria, in Egypt and Amman in Jordan, as well as, in May this year, the UAE emirate of Ras Al Khaimah.

Flydubai, by contrast, has taken its product substantially upmarket since launching in 2009, introducing, first seat-back screens and then in 2013 a business-class section with three rows of four 21in-wide seats, pitched at 42in. Unlike its rival, it has not opened overseas subsidiaries, but since October this year it has been offering 70 flights a week from Dubai’s second airport, the new Dubai World Central, to destinations it already serves from Dubai International.

Flydubai’s chief executive, Ghaith Al Ghaith – a long-serving Emirates executive before moving to run the start-up – justifies the move to a more hybrid model. “We had to react and change,” he says, adding: “It is not a case of one product fitting all. Our customers require segmentation and there is nothing wrong with that.” His counterpart at Air Arabia, Adel Ali, simply argues: “You are either low-cost or not low-cost. Where do you draw the line? You end up confusing yourself and the customer.”

The two airlines’ fleet expansion plans will also take them in different directions. After taking delivery two months ago of its 50th and final aircraft from an initial order placed at Farnborough in 2008, Flydubai will in May welcome the first of 11 more 737-800s, ordered, along with up to 100 737 Max aircraft, at the 2013 Dubai air show. The Max versions will be delivered between 2017 and 2023 and take the fleet towards treble figures by the end of the decade, factoring in replacements.

For Al Ghaith, the biggest constraint on growth is not competition or sluggish demand but lack of traffic rights to fly into certain foreign airports. “Tomorrow, if the dynamics of the bilaterals become more clear, we could double in size,” he says. “We now have 50 aircraft and our next milestone is 75 by 2020 or maybe before. Then a fleet of 100 is not too far away, but we may reach a point where we would need a break in the bilateral regime. If we had rights we could reach a fleet of 100 easily.”

Air Arabia, on the other hand, is on a slower growth trajectory, but will opt for either A320neos or Max aircraft for the next stage in its expansion. The airline has seven more A320s to arrive before the end of 2016 and four in 2017, but Ali insists he is “open minded” about the next-generation choice. “We are in dialogue with both manufacturers and happy to not to rush things,” he says. “It will probably not be too far in the future, maybe 2016, before we wrap things up.”

Flydubai serves 94 cities – 59 of which did not previously have a direct link to Dubai. It introduced 27 routes in 2014 and will bring on another 19 this year. Its biggest markets are Saudi Arabia, with 14 destinations, and Africa, where it serves 12 points. Also popular are Russia, as well as eastern Europe, and the Indian subcontinent. “Our philosophy is that we fly to places that aren’t properly served, linking the region to Dubai,” notes Al Ghaith.

However, while Air Arabia has Sharjah to itself, Flydubai is dwarfed at the world’s busiest international airport by its big sister, based in the vast terminal three. Al Ghaith insists Flydubai and Emirates operate separately with no consultation on whether destinations should be served with a Flydubai 737 or Emirates widebody – indeed there is a route overlap of 36 cities. “Our route strategy is totally independent,” says Al Ghaith. “We don’t sit down with them and plan our routes.”

Indeed, the contrast between Flydubai’s modest offices next to terminal two and Emirates’ plush headquarters facing the other side of the airport reinforce the impression that the smaller airline is very much a low-cost carrier with a wary eye on the bottom line. When he launched the new carrier, Sheikh Ahmed Bin Saeed Al Maktoum insisted Flydubai would not be “Emirates lite” but have very much its own identity and have to “stand on its own two feet”, recalls Al Ghaith.

While Air Arabia’s multi-base, joint-venture strategy has allowed it to extend its brand and reach from western China and Russia to western Europe and well down into Africa, it has presented Air Arabia with challenges, with tourism to Egypt and Jordan hit by domestic unrest and the spillover from the Syrian crisis. However, its Moroccan operation, where five A320s are based, is going “from strength to strength”, says Ali, thanks to robust European traffic.

Expansion southward into French-speaking west Africa also offers much potential. “We are in dialogue to allow us access,” says Ali. “Morocco is a gateway and business hub for West Africa.” Max or Neo aircraft will also allow Air Arabia to develop longer routes into Europe, Africa, Russia and China from Sharjah and Amman. “It could add 800-900km to where we can fly,” says Ali. “If [the aircraft] do what [Airbus and Boeing] say they can do, it will be good for us.”

Find out all the latest news and views from this year's Dubai air show.

Source: Flight International