FlyDubai – passenger growth yet lower profits


(Posted 02nd February 2017)

After carrying 14.4 percent more passengers in 2016 has FlyDubai seen its profits shrink by a staggering 68 percent, or more than two quarters to only 8.6 million US Dollars.
This comes inspite of a 2.4 percent rise in revenues to 1.37 billion US Dollars and a record number of passengers carried, i.e. 10.4 million over the past year.
While the second half of 2016 showed improvements in profitability has the full year nevertheless been challenging in regards of pressure on yields, which a double digit rise in passenger numbers could not compensate for. This reflects the sort of difficult operating environment all Gulf carriers have faced last year.

Sheikh Ahmed bin Saeed Al Maktoum, Chairman of flydubai, said among other comments: ‘These results see flydubai report its fifth consecutive full-year of profitability. In 2012, our third year of operation, we carried 5.1 million passengers. This year, we have carried 10.4 million passengers demonstrating that flydubai continues to help change the way both business and leisure passengers travel around the region. An established tourism destination and global centre for business together with the UAE’s geographic location has supported the need for increased connectivity‘.

Mr. Ghaith Al Ghaith, the Chief Executive Officer of flydubai, while reviewing the Annual Results for 2016, commented: ‘Over the last two years we have seen passenger traffic grow cumulatively by 52% in terms of RPKM [1]. We continue to demonstrate that we gain loyal customers across our network who recognise the benefits of direct air links and enjoy our onboard offering. The continuation of mainly lower fuel prices and ongoing cost management efforts are reflected in the 16% improvement in terms of ASKM [2] over the last two years. We have however seen a difficult pricing and operating environment‘, acknowledging what has been said here before. In 2016 did eight more Boeing B737-800 join the FlyDubai fleet which now has an average age of just under 3.9 years.
FlyDubai will be the first airline in the Middle East to receive the new model Boeing 737 MAX 8 and the first of these aircraft will enter into service in the second half of the 2017. However, the overall capacity will not grow during 2017, as short term capacity needs continue to be adjusted, due to the ongoing challenging operating environment. Four of the presently used Boeing 737-800NG’s will be retired in 2017 keeping capacity at par.

Mr. Ghaith Al Ghaith, while looking to the year ahead, then said: ‘We will remain prudent throughout 2017 as we will continue to operate in a challenging socioeconomic environment. Yields will remain under pressure and we expect to report flat growth in the year ahead. We are looking forward to receiving the first Boeing 737 MAX 8 in the region which will bring further fuel and operating efficiency to our young modern fleet. We are focused on our strategy to lead in innovation, to provide an unrivalled experience on board and on the ground, as we continue to meet the travel demands of our passengers‘.

In East Africa does FlyDubai serve Kilimanjaro, Dar es Salaam, Zanzibar and notably also Entebbe, the latter albeit no longer with daily flights. While FlyDubai has been granted traffic rights into Mombasa has no announcement been made at this stage when these flights will commence and if they will be in conjunction with another waypoint before or after calling on the Kenyan port city.