UAE plane fares to get cheaper as competition ramps up

Airfares are expected to be driven down as competition between airlines flying out of the UAE heats up and more carriers add routes, travel agents say.

Even among UAE carriers, there is fierce rivalry for passengers. "It's one of the burning issues," said Sunil D'Souza, the UAE country manager for Kanoo Travel. "The competition among the Gulf carriers is increasingly rapidly. In the UAE, you have Emirates Airline, Etihad [Airways], Air Arabia, and now RAK Airways, and another private carrier from Fujairah is also going to start.

"More and more regional carriers are coming up. It's good news for the customer. The customer is getting better options and better rates. But for the airlines obviously that means there is a price crunch or capacity crunch because they are competing for the same pie."

Albert Dias, the co-founder of Musafir.com, an online travel agency based in the UAE, said that in particular there was increasing competition between Emirates and the Indian carriers, with the UAE airlines now aggressively pushing promotions to fill seats.

"That's always going to be there," he said. "Emirates is trying to secure their loads, versus the Indian carriers like Kingfisher and Jet Airways that are trying to fill up their seats as well."

Such competition has already led to calls from India for Gulf airlines to reduce their services to the subcontinent.

Travel agents have also noticed that UAE airlines are now prepared to negotiate with them on fares, whereas once they would not adjust prices.

"Airlines now are far more willing to negotiate in terms of special deals to promote underperforming sectors in particular," said Mr Dias. "We've seen a lot of those deals coming through this summer, and far more in far greater value this summer than last summer."

Etihad has more than 100 aircraft on order. The carrier flies to more than 70 destinations in Europe, the Americas, Africa, the Middle East and the Asia Pacific region. It has a fleet of 61 aircraft and operates more than 1,000 flights per week. Etihad expects its fleet to serve more than 100 destinations by 2020. The airline has also made it much easier for passengers based in Dubai to fly out of Abu Dhabi with the launch of additional bus services.

As Emirates Airlinecontinues to grow at a rapid pace, the carriers based in the UAE are launching destinations that overlap.

Still, travel agents say that air fares are up, more than 10 per cent on last year in many cases, largely because of higher fuel costs, so it is more a case of competition keeping prices in check rather than prompting them to fall sharply.

Passenger traffic for the region's carriers grew by 8.3 per cent in the first seven months of the year, while capacity rose 9 per cent, according to the International Air Transport Association.

Sheldon Emmanuel at Al Tayer Holidays in Dubai said certain airlines, including British Airways and KLM, were being much more aggressive with their advertising of special deals.

"One of the things we're seeing is the reducing difference between the rates on full-service airlines and low-cost airlines," said Mr Dias. "So if you wanted to purchase a ticket from Dubai or Sharjah to India or most Middle Eastern countries, previously you'd see a Dh500 (US$136.27) to Dh1,000 difference in some cases between a low-cost airline and a full-service airline, but today that difference is down to maybe Dh50 to Dh150."

rbundhun@thenational.ae