British Airways (BA) is pouring capacity back into its Dubai service that was cut during the global financial crisis, citing a return in premium demand. From the end of this month, the UK flag carrier will add a Boeing 767 to the route, to make it three flights a day from its base at London Heathrow Airport.
The extra capacity, which will be added for its winter schedule, comes after first and business-class passenger demand "pile-drived" downwards in March last year to premium cabin occupancy levels of just 30 per cent, said Andrew Crawley, the director of sales and marketing at BA. That forced the airline to halve its daily services into Dubai International Airport from four to two as part of a global capacity reduction campaign that included temporarily parking four of its 747 jumbo jets last year.
BA also competed aggressively on price, Mr Crawley said, with BA following global trends as its average fare prices fell by between 20 per cent and 30 per cent. "Last year, in a market like that, you had to compete to be relevant." The third flight will be extended into the summer if demand continues. Airline traffic has grown every month this year in a gradual climb back from the depths of last year. In August, traffic for Middle East airlines increased 12.3 per cent compared with the same period last year and there was a 13 per cent increase in capacity after many airlines added new planes.
"All of the Middle East is growing right now," Mr Crawley said. "Because of the low base of 2009, it means that everyone will be growing." BA's Middle East "seat factors", or average occupancy level, was 78 per cent, a figure the company described as encouraging. Airlines often require their aircraft to be two thirds full to break even. BA's announcement of growing traffic last month helped its share price reach a two-year high this week, to 264 pence. The airline's year-to-date passenger traffic is still down more than 7 per cent on the same period last year due to cabin crew strikes and the ash cloud that grounded flights across Europe in April.
In the Middle East, the return of business and first-class passengers is helping the company to raise its yields, or average price per ticket. "We're seeing yields up between 15 to 30 per cent, although this isn't about price increases, it is about the mix changes: business travel is coming back," Mr Crawley said. BA is the oldest airline to serve the Middle East. Its precursor, Imperial Airways, began with flying-boat services into the Dubai Creek in 1937.
Now, BA has services into all six member nations of the GCC, representing the second most important market in its Asia Pacific and Africa region after India. The market is significant for BA because of the heavy traffic flows from the Middle East into the UK and the transit traffic to BA's 22 destinations into the US. Last year, BA reinstated its Saudi Arabia services into Jeddah and Riyadh after exiting the market in 2005.
The withdrawal left competitors BMI and Saudi Arabian Airlines to split the spoils of the UK-Saudi market but after a year back in service, BA's flights are 65 per cent full into the kingdom and the carrier plans to add a sixth flight each week there at the end of the month. The increase in services to Dubai will see BA ratchet up the stakes with Emirates Airline, the largest international airline by capacity, which operates five daily flights into London Heathrow. One of BA's strategies to compete globally has been mergers, acquisitions and code-share agreements under a new holding company, the International Airlines Group.
"We've got big competitors in the Middle East market, which are challenging," Mr Crawley said. "We'll meet that challenge head on." igale@thenational.ae