Dubai shrugs off crisis with new budget airline

Dubai appeared to shrug off a slowdown in global air travel and its own financial crisis, announced the launch of its first budget carrier, a sister company to high-flying Emirates airline.

Flydubai will take to the skies in two months, with flights to Beirut on June 1 and to Amman on June 2, company chairman Sheikh Ahmed bin Saeed al-Maktoum told reporters.

The company's website listed Dubai-Beirut-Dubai fares starting from €127, compared to the standard return ticket price of €366 with Emirates.

"We are committed to bringing a new option to the market and to growing the region's budget air travel business," said Sheikh Ahmed, also chairman of Emirates.

"This will benefit our economy, our people, and tourism business as a whole."

Despite a global economic slowdown whose effects are being felt in the oil-rich Gulf, Sheikh Ahmed said: "There is a lot of potential in this region... and we have a lot to do."

The Gulf emirate first announced the establishment of flydubai in March 2008, with a start-up capital of €50 million.

"We set the date long time ago. We never really thought of delaying (the launch)... we think that the market is there," Sheikh Ahmed told AFP.

Flydubai will operate two next-generation Boeing 737-800 aircraft on the Beirut and Amman routes, and have four aircraft by the end of the year, he said.

Dubai owns the largest Middle East carrier, Emirates, and has the busiest airport in the region which handled more than 37 million passengers last year, a nine per cent increase from 2007.

The new airline will be based at Dubai Airport. It was first expected to use Dubai's al-Maktoum International airport, but the new hub is running behind schedule and is now expected to open next year instead of this year.

It joins an increasing number of budget airlines in the region.

The neighbouring emirate of Sharjah operates Air Arabia, while Kuwait's Jazeera Airways operates from Dubai and Kuwait, Bahrain Air flies from the neighbouring Gulf archipelago, and Nas from oil-rich Saudi Arabia.

Air Arabia is the Middle East's first and largest no-frills carrier, which carried 3.6 million passengers last year and saw annual profit surged 35.6 per cent to €104 million.

"Nobody can stop competition. It will always be there, whether in your home ground and anywhere else," remarked Sheikh Ahmed.

Dubai's once-booming economy was hard-hit by the global economic crisis, which tightened the noose on finance available for Dubai businesses, especially the massive real estate sector - once the main engine of growth.