Group Chief Executive Officer (Executive Board Member), Air Arabia PJSC
Adel Abdullah Ali: Outlook for the MENA region
SuperReturn Middle East Website - http://www.informaglobalevents.com/yt...
Adel Abdullah Ali, CEO of Air Arabia, the first and largest low-cost carrier in the MENA region, sits down with Dori Dana-Haeri at SuperReturn Middle East 2013 . Here Adel shares his advice for startup's looking for private equity funding and gives his outlook for the next 5 years.
About Adel Ali
Adel Ali, Group CEO of Air Arabia, has discussed the airline's growth and challenges in several 2024 media appearances. Speaking on the Morning Majlis for UAE Civil Aviation Day in June 2024, Ali reflected on the history of aviation in Sharjah and expressed optimism about a planned terminal expansion at Sharjah Airport, stating it would complement Air Arabia's order of 120 aircraft scheduled for delivery between now and 2030. He also noted that the airline applies fuel hedging to manage costs and described his philosophy as prioritizing profitability over fleet size. At the IATA AGM in Dubai in June 2024, Ali highlighted new routes to Greece and Poland, as well as expansion in Morocco and Pakistan through the airline's Fly Jinnah subsidiary. He cited geopolitical challenges and supply chain issues as ongoing industry headwinds, and called for collaboration among fuel suppliers, manufacturers, governments, and regulators to advance sustainable aviation fuel. In earlier appearances, Ali described the COVID-19 pandemic as a period that forced the airline to restructure costs and preserve cash, resulting in a less than $50 million loss in 2020, and emphasized that challenges bring adaptability.
Transcript (12 segments)
I
Interviewer0:06
Well, good morning! What a fantastic speech you made earlier on. I was really fascinated. This is Adel Ali, the CEO of Air Arabia. So just give us a quick snapshot of this amazing growth that you have had in this region.
A
Adel Ali0:24
It's been a 10-year history where we started small, two airplanes. We moved on to 35 today and 28 more coming, so that gets us in about two years' time to 50 plus. We had $13 million, today we're worth $1.2 billion. We had five airports operating into, today we operate to 87. And we had 100 people, now we have 1,500 working for us.
I
Interviewer0:58
Fantastic story. And this is a low-cost airline in a region like this is highly counterintuitive. Could you just give us a background of what inspired you, how much the growth of the low-budget airlines in Europe had an inspiration for you or a business model?
A
Adel Ali1:17
Of course, we had to look at what's happening in Europe, we had to look at what's happening in America where the low-cost started 35, 40 years ago. And we just felt that there was a good need in this market to have it, given the demography of the overall public in the MENA region. I think when you set up an airline, you don't think only of the people who are traveling, but you got to think about people who use other methods of transportation. And we just saw thousands of people, the middle income, lower income, traveling on buses, when the weather does not help, borders do not help, scenery does not help. And we just thought all those people are a potential market. And surprisingly, as soon as we set up the airline, we found the demand was far exceeding the supply, and this is why we had to grow and move on.
I
Interviewer2:12
That's a fascinating story, given the fact that it is so counterintuitive and you have had such an amazing success. What kind of advice would you give other startups in the region who might want to start low-cost, go after low-cost opportunity?
A
Adel Ali2:30
I think the advice, my advice from a business perspective: have a business purpose. Don't open any business because you like it or you love it. It has to have a business purpose and it has to make financial sense. And if you're there, then don't give up too quickly. But from a low-cost point of view, life has changed all over the world and the Middle East is no different. People want value for money. And we've seen not just the airline that we have, we've seen a lot of companies have set up budget shopping malls and they have been successful. We've seen budget restaurants, they've been successful. And people are more aware of why they should spend their money. And today we do have very wealthy people who travel on low-cost airlines, but they pay that money and enjoy it in hotels outside. So I think when you can get value for money, regardless whether you are rich or non-rich, you go for it.
I
Interviewer3:33
So you've done a lot of segmentation. Given the fact that we're in a private equity super return conference, what kind of advice would you give in terms of funding from private equity for a startup?
A
Adel Ali3:46
I think you always got to have a very strong idea, very good strong business model. And if you convince people that this business model is a good one, you have opportunities. The funds are available everywhere in the world, and particularly in this region, people will support you if they're convinced. But for us, we've had to get the money to start the business, then we wanted much bigger money, which made us go to the market and IPO the company. And that's where the real value came. And we told the public that we'll take your money to expand the business, and that's exactly what we've done. We took their money and bought 44 airplanes, and those 44 airplanes are making good money to pay back dividends.
I
Interviewer4:33
Fantastic. And how do you see the entire thing working out in five years' time in the region?
A
Adel Ali4:37
I think the region is going through transformation. We've seen 10 years of success, I expect that, and some of the political rumblings that are going around us will calm down. And in the next five years, I can see real success because we have got 350 million people in the Arab world all together, plus the Indian subcontinent of 1.5 billion. We'll be able to tap on those markets, which are great.
I
Interviewer5:03
Super. I know we're running out of time. What a fantastic story, and thank you very much.
A
Adel Ali5:08
Thank you.