Air Arabia in joint venture to launch low-cost airline in Pakistan

The UAE-listed Air Arabia Group and Pakistan's Lakson Group formed a joint venture to launch a new low-cost carrier serving domestic and international destinations from the South-Asian country.

The new carrier, Fly Jinnah, will be based in Karachi to initially serve domestic routes across Pakistan before expanding its route network internationally, Air Arabia said.

“We are confident that Fly Jinnah will add value to the air transport sector of Pakistan and directly contribute to the local economy through job creation and the development of the travel and tourism sector,” Sheikh Abdullah bin Mohammed Al Thani, chairman of Air Arabia, said.

The new Pakistan-based airline marks Air Arabia's third joint venture deal to establish a new airline after announcing similar deals in Abu Dhabi in July 2020 and in Armenia in July. The Sharjah-based airline has been pushing ahead with expansion in the wake of the Covid-19 pandemic last year as low-cost carriers bet on a recovery in air travel demand amid rapid vaccine campaigns around the world.

The new airline will contribute to Pakistan's economic growth and job creation, while providing the country with "reliable and value-for-money" air travel, Air Arabia said.

“Fly Jinnah will serve Pakistan’s travel and tourism sector and will play a constructive role in contributing to the nation’s economic growth,” Iqbal Ali Lakhani, chairman of Lakson Group, said.

“This partnership also reflects our commitment to support the development of Pakistan’s air transport sector while providing the citizens and visitors of the country with a new option of value-for-money air travel.”

The partners will soon start the process of securing the air operating certificate, which allows the airline to start operating, according to the statement.

More details about the launch date, fleet size and destination network will be announced in due course, Air Arabia said.

The air transport industry, including airlines, their supply chain and tourism spending, is estimated to contribute $3.3 billion to Pakistan’s gross domestic product, according to the aviation industry lobby group International Air Transport Association (Iata). In total, one per cent of the country’s gross domestic product is supported by inputs from the air transport sector and foreign tourist arrivals.

In July, Air Arabia formed a joint venture with the Armenian National Interests Fund to launch Armenia’s new airline, Fly Arna. The new carrier will apply for its air operator certificate in the coming weeks.

The Sharjah-based group acquired a 49 per cent stake in the joint venture and will manage the business in Armenia, Adel Ali, Air Arabia group chief executive, told Bloomberg TV last month.

Air Arabia Abu Dhabi, a joint venture between Air Arabia and Etihad Airways, was launched in July 2020 with a maiden flight to the Egyptian port city of Alexandria from its base at Abu Dhabi International Airport.

Air Arabia operates five bases in Ras Al Khaimah, Sharjah, Abu Dhabi, Egypt and Morocco.

The airline swung to a quarterly profit as revenue more than quadrupled and passenger traffic increased across its five bases amid a gradual recovery in air travel from the Covid-19 pandemic-driven slowdown.

It posted a Dh10 million ($2.72m) net profit in the three months to June 30, compared with a Dh239m loss in the same period a year earlier. Quarterly revenue was up 313 per cent to Dh496m.

The Lakson Group was established in 1954 and owns and operates more than 15 companies in Pakistan, according to the statement. The group operates in more than 50 cities in Pakistan and employs more than 17,000 people.

In July, international and domestic passenger travel demand showed "significant momentum", compared to June and remained far below pre-pandemic levels, Iata said in its monthly report. Extensive government-imposed travel restrictions continue to delay recovery in international markets, it said.

Domestic traffic was back to 85 per cent of pre-crisis levels, but international demand has only recovered just over a quarter of 2019 volumes.

“July results reflect people’s eagerness to travel during the Northern Hemisphere summer," Willie Walsh, Iata's director general, said. "The problem is border control measures. Government decisions are not being driven by data, particularly with respect to the efficacy of vaccines."

"A recovery of international travel needs governments to restore the freedom to travel," Mr Walsh added. "At a minimum, vaccinated travellers should not face restrictions. That would go a long way to reconnecting the world and reviving the travel and tourism sectors."