ABU DHABI // Just when it seemed the all-business class airline was a dying breed, a new startup out of Dubai hopes to succeed where its predecessors have failed. Arabjet, a project backed by Saudi investors, is planning an all-premium service next year, in the wake of similar bankruptcies Maxjet, Eos and Silverjet. Mohammed el Shanti, the chief executive of Arabjet, said he remained undeterred by the record oil prices that have left the airline industry awash in red ink. Airlines have struggled to pass on record fuel prices to customers, with more than 24 going bust in the past six months.
Losses are projected to rise as high as US$6 billion (Dh22bn) worldwide this year, for the seventh industry-wide loss in eight years, according to the International Air Transport Association (IATA). "It has never really been a very good time to launch an airline," acknowledged Mr Shanti. But he said Arabjet, which made headlines recently for nearly acquiring the now-defunct Silverjet, would be different from its predecessors in several ways.
The first all-business class airlines flew transatlantic, between New York and London or Paris. As fuel prices rose and the US economy slowed, however, that model increasingly came under threat. When Paris-based L'Avion was purchased by British Airways last week, it brought an end to Europe's three-year dalliance with the premium-only carrier model. Arabjet plans to focus instead on shorter flights within the Middle East. With record oil prices, short-haul flights offer lower operating costs per kilometre than long-haul services.
The new airline has chosen Dubai International Airport as its base, where passenger demand has grown dramatically. Dubai is now the sixth-busiest international airport in the world, rising from the 10th spot just 18 months ago, the Airports Council International reports. With these elements, Mr Shanti believes he can cautiously forge ahead with his launch plans, despite the market turmoil. "We're approaching this very carefully," he said. "We want to make sure we have the right team and the right routes."
Like other all-business class airlines, Arabjet will be more affordable than full-service network carriers, with business class tickets "15 to 20 per cent cheaper", Mr Shanti said. When it launches, Arabjet will become the second all-business airline in the Middle East, after Kayala Airline out of Jeddah, which is owned by the NAS aviation group. Kayala began as a VIP charter operator, but earlier this year rebranded itself as an all-business class service.
Although Arabjet will fly to Saudi Arabia, and therefore depend heavily on the Saudi premium travel market, it will differ from Kayala in several ways. Kayala flies into Dubai airport's main terminal, which receives the majority of incoming flights. But Arabjet is to base itself out of Dubai airport's VIP Majlis terminal. This would offer customers all-premium service "at every touchpoint", Mr Shanti said.
Arabjet was in talks to buy Silverjet before its demise last month, but it opted against making an offer because the British airline's liabilities were unclear, Mr Shanti said. "We were interested, because Silverjet was so close to our business model - we both focused on premium business class service at a lower cost." With the company being dismantled, Arabjet was still interested in some of its assets, Mr Shanti said. It could hire members of Silverjet's management team and acquire the aircraft it had on lease, which were outfitted with low-density, all-business class seating that Arabjet could use.
igale@thenational.ae
