Flyadeal, the low-cost carrier arm of state-run Saudi Arabian Airlines (Saudia), has received the first of eight Airbus A320 aircraft, becoming the newest operator of the European planes in the Arabian Gulf.
The delivery of the aircraft is part of a lease deal with Dubai Aerospace Enterprises (DAE). Flyadeal will receive the remaining planes this year and next, the airline said in a statement, without giving the size of the deal with DAE or how it will finance it.
Flyadeal will commence operations on September 23, Saudi Arabia's national day, and will initially serve routes within the kingdom before expanding into other markets around the region.
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The budget carrier plans to operate a fleet of up to 50 narrow-body jets by 2020, Saleh Al Jasser, the director general of Saudia said last year. Flyadeal will compete with Riyadh-based budget airline Flynas which has been operating since 2007 and has a fleet of 29 aircraft that fly to 17 destinations within the kingdom and 15 international destinations.
Yields have been under pressure for airlines in the Gulf on the back of softer economic conditions, even as many of their international peers have reported higher profitability in the first half of this year, according to industry body Iata.
However, some of the region's budget carriers that have simpler business models and route flexibility have done relatively well compared to full-service counterparts including Etihad Airways and Emirates.
While larger airlines are being cautious regarding fleet and route expansion, the region's budget airlines are considering growth plans. Air Arabia, the largest low-cost carrier in the Middle East and North Africa, may order new aircraft for its fleet as newer, more fuel-efficient plane models are introduced by manufacturers, the airline's chief executive, Adel Ali told The National in an interview this month.
Second-quarter net profit for Air Arabia, the only listed airline in the UAE, increased 21 per cent to Dh158 million on the back of operational efficiencies and cost cuts.