SpiceJet Setting Up Hub In Ras Al Khaimah, UAE

Filed Under: Other Airlines

You would think that at this point the UAE has enough airlines:

  • There are flag carriers Emirates and Etihad
  • There are two low cost carriers — there’s FlyDubai based in Dubai, and Air Arabia based in Sharjah
  • Etihad has announced that they’re working with Air Arabia to form a low cost carrier based in Abu Dhabi

Now it looks like another airline is setting up shop in the UAE.

SpiceJet To Launch Hub In Ras Al Khaimah

Ras Al Khaimah is one of the emirates in the very north of the country. It’s about a 1hr drive from Sharjah, 1hr30min drive from Dubai, and 2hr30min drive from Abu Dhabi.

SpiceJet is an Indian low cost carrier (at this point the second largest airline in India), and they’re planning on setting up a hub in the UAE, as reported by Gulf News.

The airport and airline have signed an agreement, which will see SpiceJet basing aircraft in Ras Al Khaimah as of December 2019. This is the first international hub for the airline, and the goal is to increase connectivity between India and Europe.

The airline says they see “tremendous potential” in the UAE, as they want to launch flights to Europe, but are finding Indian airports to be increasingly congested.

SpiceJet’s longest range aircraft is the 737, and those planes can’t fly nonstop from most points in India to most points in Europe. However, out of Ras Al Khaimah it is possible to operate to many points in Europe, allowing the airline to essentially operate one stop service between India and Europe.

Now, without the 737 MAX the airline can’t really fly to points in “far” Western Europe, though they can at least make it to Eastern Europe.

For example, a Ras Al Khaimah to London route would cover a distance of 3,250 miles, which is pushing it for a 737-800, but is possible for a 737 MAX 8.

FlyDubai’s current routemap shows where they fly to out of Dubai with the 737-800, and you can expect similar range from flights out of Ras Al Khaimah.

Bottom Line

I’m really not sure I fully understand the economics of this. SpiceJet is setting up a hub in the UAE, which would make them the fifth airline in the country.

Their plan is to connect India to Europe, though I’m not sure how exactly they’re going to make that lucrative. Fares direct from India to Europe (or via all kinds of one stop routings) are already quite cheap, so I’m not sure how much cheaper they’re going to make it.

That doesn’t even factor in spending 10+ hours on a 737, which is something many will want to avoid.

I suppose there will also be a fair bit of demand between the UAE and India, especially among workers from India coming to the UAE. Then again, that’s not exactly high yield traffic either.

I’ll be curious to see if SpiceJet follows through on this, and if so, what exactly their UAE route network looks like.

What do you make of SpiceJet’s Ras Al Khaimah aspirations?

(Tip of the hat to Vineet)

Comments
  1. I am surprised that the UAE government would give fifth freedom rights to Spicejet to fly to Europe, given that they own the competing airlines that are based in the UAE.

  2. @Sam there is not just one UAE government. Every emirate has its own government and own interests. Ras Al Khaimah is competing with the other emirates for tourists so they will most likely subsidize SpiceJet.

  3. Spice Jet will be the biggest Indian airline flying longhaul to Europe, not to mention the only LCC, both factors giving them the best economies of scale to/from secondary and tertiary markets in India. That matters because on low yield routes customers are likely to prioritize cost above convenience.

    By finding a way to operate the route with their existing fleet they’ve made the move incredibly low risk and easy to scale up or down as need be. It can also serve as a test of demand for possible future direct India-Europe services.

    There will be a guaranteed minimum level of direct India-Ras Al Khaimah and Ras Al Khaimah-Europe demand, so it won’t take that much connecting traffic to fill a 737.

    I’ll admit I don’t have any special knowledge or experience on the topic, but the above combined with the presumably favorable terms they’re getting from the emirate and the vacuum left by Jet Airways mean that to me this seems like a smart move.

  4. Given that EK already has cheap fares from India, and the brand loyalty over there, I doubt many people would book spicejet especially because of their low cost model. And even if EK is expensive on other days, the other middle eastern airlines normally keep relatively good prices.

  5. RAK is amongst the least developed of the 7 emirates. Plus they have a large migrant labour population which is biased towards low cost carriers. I wouldn’t be surprised if SpiceJet ends up flying to African destinations instead of Europe from RAK using a likely subsidised base.

  6. It ties in with the review of the Air Services Bilateral agreement that the UAE govt has been asking for the better part of a decade. India UAE have a unique agreement where there was no UAE-wide agreement but each Emirate (well, 4 of them) had individual agreements with India.

    The 4th Emirate being RAK. The downfall of Jet has ironically benefitted consumers (at least in this sector) as all the Indian LCCs have taken their routes/slots and commenced operations at very low prices.

    If the new agreement has clauses whereby FlyDXB and Air Arabia largely connect tier 2/3 cities and Indian carriers get more of the prime slots for Tier 1 routes, then combined with the expected Visa on Arrival for Indians, it would be a gamechanger for this sector and for Tourism in UAE in general (previous Visa on arrival waivers for major countries like Russia and China have doubled inflow from those countries).

    Rates on this route are dipping below domestic routes within India.

    @JB while EK fares to/from India are usually an order of magnitude more than the lowest available price. Often 2x-3x (And this includes comparisons with an Indian FSC – Vistara). Even FlyDXB doesn’t exactly compete with the Indian LCCs, since its very much a *regular* airline compared to LCCs

  7. Spicejet, come from Ras Al Khaimah to Cyprus . We have no low cost airlines flying to Middle East and India /Asia , You will fill the planes with 1.) UAE based passengers who like a long weekend or holiday in beautiful Cyprus , with mountains and beaches and no concrete jungle 2) Indian tourists hungry for new locations 3) Cyprus based passengers wanting to visit UAE ( many business passengers ) and India for holidays .
    We only have Emirates and Qatar and Gulf flying to Middle East and onwards .

  8. “I suppose there will also be a fair bit of demand between the UAE and India, especially among workers from India coming to the UAE. Then again, that’s not exactly high yield traffic either.”

    Inaccurate – the demand for labor is high and the travel expenses are provided by the contracting firms.

  9. I think the viability of their RAK operation depends on a number of factors.

    I can see why they are venturing into this-

    India UAE has a fixed demand and the mix of transit and O&D customers should make filling a 737 not too challenging.

    With their low fares, I see SG stimulating new demand from the smaller tier 2 and tier 3 cities verus the major cities such as Delhi and Mumbai that are well served by existing carriers. The combination of a narrow body air craft and low cost product is an ideal product to target these thinner markets who would get low fares and seamless one stop connectivity. This was actually the rationale behind the EY 9W partnership where Jet was supposed to use its narrow body planes to bring passengers from smaller cities in India. Unfortunately, the cost structure and lack of focus inhibited from realizing this potential. Spicejet would do well to be cognizant of this.

    Africa too could be an interesting continent for them to target.

    Post the 9w debacle the India outbound market has seen major price escalations. While earlier it would have been difficult for a low cost carrier to sustain a cost advantage, there is an opportunity now given that the air fares have risen 20% on average.

    It is also likely that RAK will support this operation heavily and even subsidize it. This will allow SG to offer lower fares and more importantly link city pairs that cannot be serviced by mainstream carriers.

    While other carriers such as Jazeera and Air Arabia are pursuing a similar business model, Spicejet’s brand recognition and network scale in India would give them a huge advantage in the primary source market. Meanwhile, competitor Indigo has put their European expansion on hold and is instead focused on South East Asia essentially leaving Spicejet’s path clear from it’s more formidable competitor.

    Moreover, this is a very low risk strategy for Spicejet considering it is not investing into a new fleet meaning exit costs will be low if things dont quite work out to plan. Coincidentally Indigo has scrapped plans of serving LGW non stop. It seems both the Indian LCCs have taken note of the painful experiences of other LCCs around the world who forayed into long haul and also wide body operations.
    It’s good to see them taking a pragmatic view and also avoiding competitive overlaps with each other.

    Overall, I can actually see this working. Spicejet can actually stimulate new demand verus competing with large incumbents who will be happy to cede those low yielding segments. That’s when low costs have succeeded.

    Having said I certainly wont be lining up to buy tickets for a one stop flight to London via RAK on a 737 max

  10. Can anyone tell how Ras Al Khaimah or RKT (seriously folks, it’s not Marrakesh here!) is as a place to connect? Because it looks quite a bit like an oversized shed in the desert…

    I’m not seriously considering flying them to get to India, as there are more convenient ways to get there. The idea of spending 1) 10 nearly consecutive hours or more in a narrow-body aircraft which 2) stops at a shed in the desert which is a hub for 3) an Indian low cost carrier is far from tempting.

    Air India actually already operates a flight to this airport from India, so it might well work.

    It may be an interesting way to get to Ras Al Khaimah, which is one of the few Emirates that I haven’t visited yet. And other alternatives to fly in there mean that I first, for example, must make my way to Pakistan or so. That will definitely make the journey more interesting than the destination! 😀

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