Most airlines have now reported their financial results for the second quarter, and none so far has performed better than Air Arabia. The low-cost carrier, based in the United Arab Emirate of Sharjah, produced a stunning 27% operating margin, ranking it first among all carriers tracked by Airline Weekly.
In U.S. dollar terms, Air Arabia generated roughly $380 million in revenue during the quarter, up 25% from the same three months a year ago, and up 22% from 2019. The company earned an even higher net margin — 33% — thanks to contributions from joint ventures and other associated businesses. While flying passengers is Air Arabia’s core business, it’s also involved in hotels, tour packages, aircraft maintenance, real estate development, ground handling, aviation training, and catering. It has several joint venture airlines based outside of Sharjah as well, namely Air Arabia Egypt, Air Arabia Morocco, Air Arabia Abu Dhabi, Fly Jinnah in Pakistan, and Fly Arna in Armenia. It hopes to soon launch a new airline in Sudan.
One of Air Arabia’s key advantages is Sharjah’s proximity to Dubai — the airport, in fact, is less than 30 kilometers (20 miles) from Dubai’s main airport. Tourism to Dubai has boomed this year, fueled by the post-pandemic travel surge. Also driving the increase is an influx of visitors from Russia, prompting Air Arabia to open three new Russian routes from Sharjah to Yekaterinburg, Kazan, and Ufa. That’s in addition to Moscow, which it’s served for many years. Its Abu Dhabi-based carrier flies to Moscow as well.
According to Cirium Diio, Air Arabia currently serves 73 cities in total from Sharjah, along with six routes from the neighboring Emirate of Ras al Khaimah. India, Pakistan, and Bangladesh are critical markets, accounting for 23 of its total destinations from the United Arab Emirates.
Describing its second-quarter results, Air Arabia spoke of “remarkable growth” and “exceptional performance.” It said it “maintains a strong focus on cost control measures” and saw “steady customer demand” during the quarter. For the entire first half of 2023, Air Arabia flew nearly 8 million passengers, including those at its secondary hubs in Armenia, Morocco, Egypt, Armenia, and Pakistan. Load factor (the percentage of its flown seats filled with paying passengers) averaged 81%. During the half, it launched 18 new routes and added three new planes. “[The] H1 financial and operational performance underscores the resilience and effectiveness of the business model that Air Arabia follows,” the company stated in a presentation for investors.
The airline plans further growth, supported by an order for 120 new Airbus A320-family planes. These include the longer-range A321XLR Airbus will soon introduce. Air Arabia already operates nine A321LRs, also with longer-than-standard range. These have enabled more distant routes to the ASEAN region, for one, including both Kuala Lumpur and Bangkok. The LRs, and later the XLRs, will also provide options deeper into Europe and Africa. Air Arabia began the current quarter with 71 planes in total.
While confident it can continue to grow while maintaining strong profitability, Air Arabia does face lots of new competition. One of its closest rivals is FlyDubai, now with about 80 planes. Wizz Air, based in Eastern Europe, has aggressively expanded its footprint in the Middle East, operating an Abu Dhabi-based venture of its own. Jazeera Airways in Kuwait is growing, with plans for a Saudi Arabian joint venture. And speaking of Saudi Arabia, Saudia and a new state-owned airline called Riyadh Air have aggressive expansion plans underpinned by large aircraft orders. Several of the region’s major airlines, including Saudia, operate low-cost affiliates — in Saudia’s case Flyadeal. Earlier this month, Air Arabia Egypt launched a weekly route from Cairo to Yanbu in Saudi Arabia. It now flies to 12 cities in the Kingdom.
Correction: This story has been updated to correct the country where Fly Arna is based. It should be Armenia. Skift regrets the error.