Air Arabia is an Emirati low-cost airline based in Sharjah, UAE. It was established in 2003 as the first low-cost carrier in the Middle East. Air Arabia operates flights to over 170 destinations across the Middle East, North Africa, Asia, and Europe from its bases in Sharjah, Abu Dhabi, Egypt, Jordan, and Morocco. The airline maintains low costs through practices like operating a single aircraft type, online booking, and fuel hedging. Air Arabia's focus on affordable fares and customer satisfaction has contributed to its success as the largest low-cost carrier in the Middle East and North Africa region.

1. Air Arabia

2. Air Arabia
History of the Company
• Air Arabia is an Emirati low-cost airline with its head office in the A1
Building Sharjah Freight Center, Sharjah International Airport.
• It was established on 3 February 2003 by an Amiri decree issued by
Sultan bin Muhammad Al-Qasimi, the Ruler of Sharjah and member
of the Supreme Council of the United Arab Emirates, becoming the
first low-fare airline in the Middle East
• The airline operates scheduled services to 170 destinations in the
Middle East, North Africa, the Indian subcontinent, Central Asia and
Europe to 22 countries from Sharjah, 28 destinations in 9 countries
from Casablanca, Fez, Nador and Tangier, 11 destinations in 8
countries from Ras Al Khaimah, and 6 destinations in 4 countries
from Alexandria.

3. • Air Arabia has created joint ventures at four international
bases namely Abu Dhabi, Egypt,Jordan and Morocco.
• In 2015, Air Arabia rolled out the AirRewards program, the
first loyalty programme by a low-cost carrier in the Middle
East and North Africa region.
• Today Air Arabia consists of a group of airlines and
companies offering travel and tourism services across the
Middle East and North Africa.
• This airlines operates with a total fleet of 52 Airbus A320
and 4 A321 Neo LR Aircrafts. All aircraft cabin interiors are
fitted with world-class comfort seats, offering one of the
most spacious economy cabin seat pitch.
• Air Arabia's current fleet consists of 52 new Airbus A320 and
4 A321 aircrafts.

4. Key Challenges
 High competition of low
cost carrier emerging in
developing countries.
 Perceived image as a cheap
Airline even after
expansion.
 Sharjah losing its magnet as
airline hub to Abu Dhabi.
 Generation of low revenue
as compared to its
competitors due to lower
air fare.
 Vulnerability to fluctuation
in fuel price.

5. Analysing Competitors
costs, price and offers
 Analyzed the Competitors Price
Mix like of flydubai and flynas.
 Observed different business
models of its competitors like
hybrid model.
 Accordingly aimed to set its
price 40% cheaper than regular
economy fares.

6. Role of Air Arabia in the low cost market
 Air Arabia is one of the low cost airlines of
UAE, based in Sharjah.
 Air Arabia uses low cost strategy.
 It offers lower price than what other airlines in
the market offer.
 Planned to target around 85 percent potential
regional customers who cannot afford normal
flying expenses.
 Gained price leadership in the Middle East
region, becoming the first and largest LCC in
the Middle East and North Africa.

7. Role of Air Arabia in the low cost market
 It was the first low-fare organization in the
Middle-East.
 It offers almost 40% less price than the other
airlines.
 Competitors of Air Arabia increased their prices,
but Air Arabia kept its low budget fares.
 Air Arabia won Merit Award for CAPA Low Cost
Airline of the Year 2006 and the World Airline
Award for Best Low-Cost Airline in the Middle
East in 2007.

8. Role of Air Arabia in the low cost market
 Among all the existing national airlines till
date Air Arabia is considered to be the
cheapest one.
 Air Arabia has utilized the cost cutting
practices characteristic of other LCCs to
maintain low costs, and thus deliver
competitive fares to customers
 Air Arabia, the Middle East and North
Africa’s first and largest low-cost carrier,
has been named "Low Cost Airline of the
Year" at the Aviation Business Awards
2016

9. Turning challenges into opportunities
 Air Arabia is the leading firm in the field of low cost carriers with the mission
of revolutionizing the air travel in the Middle East and North African region.
 Air Arabia, as a business, aims to be known for its low fares, growing business
volume and profitability, highest operational standards, a motivated work force
and efficient management.
 Air Arabia has a brand name and customer loyalty in the business which gives
it competitive advantage over the new entrants in the industry.
 In the airline industry in the Middle East and North Africa region ,buyers have
higher power of bargaining for low cost and better services. So to weaken this
force of buyers the company maintains the quality of services and the cost of
the services are kept at its minimum in the industry
 In 2008, Air Arabia set about sourcing a fleet management software solution
to enable it to manage and optimise its own operations. This was achieved
with the selection of Envision fleet management solution. .

10.  Rusada developed a bespoke fuel uplift report for the company enabling
Air Arabia’sf inance team to have greater control over their fuel revenue
expense at the end of each month. Now able to make informed decisions on
fuel prices with its suppliers and avoid duplicate payments to vendors,
resulting in a reduction of 0.5% in their fuel bills .
 Air Arabia had compromised in bringing low cost travel to the Arab world –
local partners share control over their foreign bases.
 As inbound tourism gained higher economic policy status, even the more
conservative governments have moved to allow more or less homogenous
airlines. Air Arabia has established cross-border joint ventures
in Egypt, Morocco and Jordan.
Turning challenges into opportunities

11.  In UAE ,where the train facility is not good and because of the hot and dry
climate travelling with cars is also not possible flights are the best option as it
is more convenient and time saving.
 Though there are many international airlines in the industry , the Air Arabia has
established itself in the region for the past many years and is holding the
position of leader in the LCC airlines
 Air Arabia has routes in more than 65 destination all over the world but as the
UAE is a main attraction of global tourism so the routes of the airlines are
increased.
 To ramp up its fleet, the airline placed one of the region’s largest single-aisle
aircraft orders of 120 Airbus A320 Family aircraft that will drive Air Arabia’s
global expansion strategy.
 Air Arabia leads all other airlines in terms of operational efficiency, according
to the LCC, with the carrier stating it has achieved an aircraft utilisation rate of
over 14 hours per day in the year-to date period, becoming the most efficient
operator of A320 equipment.
Turning challenges into opportunities

12. How Air Arabia Maintain Low Cost
 Cost Cutting Strategy – measures implemented by a company to reduce its
expenses and improve profitability
 Simple Product
 Single Passenger Class – economy class
 No Free Meals, Snacks – income source
 Unreserved Seating – board early and quickly
 Positioning
 Price Conscious Travelers
 Frequent Short Haul Flights
 Aggressive Price Based Marketing Strategy

13.  Low Operating Cost
 Universal Aircraft Model - Airbus 320s
 Comfort and Efficiency
 Lowered Training and Maintenance Cost
 Brand New Planes
 Reduced fuel cost and environmental impact
 Innovation - Sharklet Technology
 Fuel Hedging
 oil prices represent the largest and most dangerous threat to an LCC
 Short, Medium Term Contracts – Stabilize Operating Cost.

14. AIR ARABIA COST CUTTING PRACTICES
Air arabia has indulged various cost cutting practices like Sharklets and
Fuel headging.
Sharklets: sharklet are fin like
structure that are established at the
end of the main wings
The edge of the flat wings produce a
vortex called wing tip vortex. This
vortex creates a resistance for the lift
of the flight. The sharklets will reduce
the vortex and the extended wingspan
will help in producing more force for
the same fuel consumption.
Using this sharklet technology Air
Arabia has increased its efficiency by 4
percent and lesser emissions.

15. AIR ARABIA COST CUTTING PRACTICES
 Fuel Hedging: Fuel heading is a strategy used by airline to reduce their
risk of volatility of the future prices of the fuel using a jet fuel swap.
 A jet fuel swap is and agreement where by a floating price is
exchanged for a fixed price over a specific period of time. Similarly
refineries utilize jet fuel swaps in order to fix their profit margin, also
called as crack speed.
 To under stand better let us illustrate with an example.
 B.C airlines purchased a fuel swap from J.L refineries at the prevailing
market price of 133$/BBL for 10000 BBL. Depending on the future
prices there are two cases 1.) decrease in the price of the fuel 2.)
Increase in the price of the fuel.

16. AIR ARABIA COST CUTTING PRACTICES
Case 1. Decrease in the price of the fuel:
If the price of the fuel decreases in the future such as by 10$ per
BLL the new price of the fuel is 123$/BBL
By the agreement of the jet fuel swap B.C airlines owe the loss
that is 10000BBl x 10$/BBL resulting in 100000$ to the refinery.
But the loss we owe to the refinery can be compensated by the
profit earned on the decreased fuel price without changes to the
airline ticker fare.

17. AIR ARABIA COST CUTTING PRACTICES
Case 2. Increase in the fuel price of the fuel:
If the prices of the fuel increases by 10$/BBL the newer price is
143$/BBL
By the agreement of the jet fuel the refinery owes us the profit
amount that is 10000BBL x 10$/BBL amount to 100000$ to the B.C
airlines.
The profit earned on the swap is compensated to the increased
fuel price and the airline flight fare remains constant.
Thus using the Fuel hedging techniques the Air Arabia airlines have
managed to keep their prices constant during the fuel crisis, where
other competition airlines has increased their fares.

18. USER FRIENDLY BOOKING SYSTEM
 Air Arabia, the first and largest low-cost carrier in the Middle East and North Africa,
announced the launch of its new state-of-the-art mobile website. Passengers can use their
smart phone to access www.airarabia.com, which provides quick and easy access to the most
important travel information.
 The airline will continue to make its mobile website more user-friendly by offering additional
services which makes the travel experience with Air Arabia even more convenient.
 Currently offered in English and Arabic languages, the new mobile website will see more
language additions in the months to come.
 As part of its commitment to improve technology and customer innovation, the airline has
also rolled out an enhanced online check-in facility to include a wide variety of destinations
it operates from.
 “At Air Arabia, they place great importance in investing in leading technology and identifying
new areas where we can make our customer’s flying experience more convenient.
.

19.  The new mobile site also serves as a new booking channel allowing customers
to book their tickets round the clock and while on the move. The new channel
complements Air Arabia strong distribution channel and payment channels
such as website, online, travel agents, call centre, sales shops, cash
collection points and many others.
 Air Arabia’s online check-in facility, which was earlier restricted only for
outbound passengers travelling from Sharjah, enables passengers to check-in
12 hours before their flight, while passengers travelling from Sharjah
International Airport will be able to check-in as early as 24 hours before their
scheduled flight. The new online check-in facility is launched in partnership
with SITA-DCS.
 In addition, the airline has also rolled out its enhanced online menu, allowing
customers not only to book their meals in advance, rather to choose from a
variety of over 50 items of food and beverage

20. AIR ARABIA SERVICE FOR ECONOMY
CLASS
 Pre-order the meal of your choice while booking your tickets
 An interactive “Fun onboard” programme for passengers to mingle with each
other
 A chance for kids to take pictures with cartoons at the airport
 Educational quizzes and sample uniforms for kids to wear onboard
 Air Arabia in-flight magazine ‘Al Nawras’ available for passengers
 The option of online check-in is available from 24 hours before departure
from Sharjah, and 12 hours prior from all other airports for Air Arabia flights.
 Air Arabia does not serve alcoholic beverages on its flights

21. CUSTOMER ORIENTED VISION
 They value their customers love and support
 View passenger’s comfort as key to company’s success.
 value-for-money customer proposition will remain the key factors In its
business’s success.
 Its plan is to achieve 85% of the market share who will be among the potential
regional customers who cannot afford normal flying expenses.
 How do they maintain customer satisfaction level
 Provide great flying experience with good customer care at low cost Customer
Loyalty Cost Cutting strategy accompanied by customer oriented vision
 Pay less, Fly more
 Despite other LCC market competitors, AIR ARABIA has not at all lost its human
touch.
 It has consistently had low priced airline services and its customer oriented
 Crew members are dedicated

22. How do they maintain customer satisfaction?
 Introduced new products and services to further bring value to our
customers.
 Providing customers with the most competitive fares, greatest number of
destinations and highest-quality services
 Reviewing its operations without entering into any situation that may
have put its passengers, staff and aircraft at risk
 Offering one of the most fitted with spacious economy cabin world-class
comfort seats
 Ready to serve its customers. Special assistance to pregnant women and
passengers with special needs Airport Activities

23. How do they maintain customer satisfaction?
 Constantly maintained low prices, thus preserving customer loyalty.
 Expanding flights to more exotic destinations. 100 destinations
 Its booking system has been expedited by a user-friendly online service, reducing
turnaround time at airports, and keeping planes in the air.
 Upgraded its online presence with a cutting-edge mobile Web site that provided
travel information on the move
 Air Arabia prices are on average 40 percent cheaper than the regular economy
fare.
 Air Arabia is always ready to serve its customers wherever they are. This message
emphasized the three main elements of the value by the company:
 great flying experience,
 affordable price, and
 good customer service.

24. Why don’t all other airlines apply the same
business model as air Arabia?
1. If luxury model based airlines shift to Low cost carriers, they will be
competing in a market owned by Air Arabia.
2. Air Arabia’s aircraft model can reduce the turnaround time and in
order to achieve the same speed, other airlines have to change their
aircraft models which is not feasible.
3. It will be hard to get the same customer satisfaction and customer
loyalty as Air Arabia.
4. Air Arabia has the experience of cost cutting and the companies that
follow the same without experience may fall into “price cutting
traps”.
5. It will be hard to meet the value triad of air Arabia – great flying
experience, affordable price and good customer service.

25. What challenges does air Arabia face? What will
happen if other airlines apply the same business
model as Air Arabia?
 Air Arabia does not face too many challenges but if the fuel hedging becomes
difficult, It will be hard to keep the prices of the tickets consistently low.
Savings from fuel hedging will also not last longer.
 The low prices of air Arabia are highly dependent on oil prices.
 The prices can also go up if they plan to expand quickly.
 The company is currently in the blue ocean phase(no competition or very less
competition).
 If other airlines try to apply the same business model as air Arabia, blue
ocean can quickly turn into a red ocean.
 This can result in price wars and the outcome may not be good for either of
the airlines.

26. CONCLUSION
Air Arabia’s business model has consistently put low fares, frequent flights and safety at the top
of it’s agenda. Such efficacy has earned them high ranking and good reputation among airline
companies worldwide.
The network expansion strategy, the persistent focus on cost control by hedging fuel prices, and
the use of world leading fleet rates and high load while preserving passenger’s comfort have
been the key factors behind Air Arabia’s success.
The major credit for Air Arabia’s success goes to their price cutting strategies, which helped
maintain their prices all the while keeping customer comfort in mind, all of which led to a high
customer loyalty.
Air Arabia has a number of accolades under its wing over the years, some of them are:
 Skytrax’s WORLD Airline Award for best LCC in MENA
 Low cost carrier of the year at the Aviation Business Awards for three consecutive years.
 Air Arabia groups CEO was named “Airline CEO of the Year” twice by Aviation Business
 In acknowledgement of its exceptional offer granting low cost solutions and high quality
travel expenses to passengers, the company was awarded the “Airline Business Award” at
the Airline Strategy Award 2014.

27. THANK YOU