Saudi Arabia's budget airline Flyadeal is weighing up a new order of at least 50 narrow-body jets from either Boeing or its current supplier Airbus, as it seeks to quadruple its fleet to more than 100 aircraft by 2030.
The all-Airbus operator could decide on additional aircraft as soon as next year, Con Korfiatis, chief executive of Flyadeal, told The National on the sidelines of the Global Aerospace Summit in Abu Dhabi.
The state-owned airline is considering the bigger single-aisle models, including the Airbus A321 Neo and A321LR, Mr Korfiatis said on Wednesday. He added that the airline will also decide on the Boeing 737 Max and more of the A320 Neos, as it seeks to expand its international route network.
“When we're ready to, and we know what we want to do beyond the current order book, we will go out with a campaign again and let's see where it takes us,” Mr Korfiatis said.
Flyadeal's current order book of 30 A320 Neos will cover its existing requirements through to 2025, and it is studying the types of aircraft it will need to support growth and the replacement of older leased jets. The order was announced at the Paris Airshow in 2019, with deliveries starting in 2021 over five years.
“We've got an order book going all the way to 2025, so we're looking at what we're going to do beyond,” he said at the aerospace summit at Emirates Palace.
“We will need more aircraft, it's just a matter of how many more and when do we want them, so that analysis is going on right now.
“A larger narrow-body would make sense for us — there's space in our fleet for an A321-type aircraft. We've got 186 seats on an A320 and getting that up to 240 seats on an A321 reduces our seat cost further — and that means we can pass on more savings to our customers.”
Opting for Airbus jets on the new Flyadeal order is not a “preordained” outcome, the chief executive said.
“At whatever point we've got an idea of how many more aircraft and what size we want them to be, we will run a campaign," he said. "It's not necessarily more Airbus aircraft because with the fleet size we will have, we would already have economies of scale as a group."
“So we would run a campaign and see how the OEMs [original equipment manufacturers] present themselves.”
In 2019, Flyadeal scrapped its commitment to buy 50 Boeing 737 Max jets in favour of an all-Airbus fleet. The 737 Max is a potential contender as the airline studies its fleet growth needs beyond 2025. The aircraft has resumed service after a two-year worldwide safety ban on the model after two fatal crashes was lifted.
“They've got the Max back up and running and they've got different size and range variants, so they have competitive products,” Mr Korfiatis said.
Could wide-body aircraft work on Flyadeal's low-cost business model? The executive said it is under consideration and that if there is a case for it, then it would be a “small sub-fleet”.
“The backbone of this model and its success is very much driven by the economics that a high-density narrow-body provides,” he said.
“The initial next steps would be, yes, more A320s even, but larger narrow-bodies and narrow-bodies with longer range as well to get us further away.”
The airline expects to expand its fleet to at least 100 jets and carry about 50 million passengers by 2030. This is in line with Saudi Arabia's Vision 2030 to diversify the economy from oil, Mr Korfiatis said, as the kingdom seeks to develop its air transportation sector and attract more tourists.
The future fleet expansion size is on the “conservative side” and could be even bigger as the hub grows, he said.
Of the planned 100 jets by 2030, 50 are expected by 2025, he said, underscoring the requirement for the new plane order.
Flyadeal's current fleet comprises 11 A320 Neos and 11 A320 Ceos with 22 jets in total.
The airline is bullish about a rebound in travel demand this year. It forecasts it will carry six to seven million passengers in 2022, up from just over four million in 2021, according to Mr Korfiatis.
Flyadeal, which operates 27 routes, earlier this month announced plans to expand its international network with new routes to Tbilisi and Batumi in Georgia, Azerbaijan's Baku, Amman in Jordan and Sharm El Sheikh in Egypt.
“Over time, we will operate to maybe 100 destinations, so clearly at some point the number of international destinations on the map will be more significant than what it is now,” Mr Korfiatis said.
Flyadeal is currently at 130 per cent of airline seat kilometres, a measure of a flight's passenger-carrying capacity, as compared with February 2020, before the onset of the pandemic, he said.
“That's not a common story, it's partly because we're still a very young airline and there's so much uncharted waters to do, but we do live in an environment where the world is still not our oyster,” he said, pointing to lingering pandemic-related restrictions in some areas.
Higher oil prices are a challenge, but the low-cost airline has not imposed a fuel surcharge as customers are price-sensitive and the airline is absorbing the higher fuel cost, Mr Korfiatis said.
Asked about how Flyadeal would fit into Saudi Arabia's plans to establish a new carrier, he said: "It's a case of a broader ecosystem working together to deliver the national objectives" of growth.
During the pandemic, Flyadeal retained all its employees and aircraft and did not seek out government support. It expects to be "in better shape" in 2022 with new routes and aircraft deliveries, Mr Korfiatis said.
