flydubai exposed to short-term fuel volatility
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flydubai outlook improves, with reduced losses and faster rebound despite global uncertainty
As airlines worry about having passed their peaks and entering a downturn, flydubai, the LCC owned by the Dubai government, is on an upwards trajectory. This is very welcome after flydubai's sudden and sharp 1H2015 loss occurred as most other airlines were in party mode, buoyed by low fuel prices. flydubai significantly narrowed its 1H2016 loss despite double-digit growth. With the industry worrying about its health, flydubai appears to have caught the cold early and rebounded from it. An improvement in load factor, uplift in business traffic (19%) and reduction in expenses may show greater efficiency that can be maintained – the silver lining to the financial upset.
flydubai's 1H2016 loss narrowed to USD24.5 million from 1H2015's USD40 million, despite a 14.9% increase in flights. Losses per passenger decreased about nine percentage points faster. Unlike its bigger sister Emirates, also owned by the Dubai government but run separately, flydubai is primarily a point-to-point operator - so it depends on the health of Dubai.
Emirates Athens-Newark fifth freedom adds to season of trans-Atlantic disruption; a test for Trump
On 23-Jan-2017, the first full business day of the Trump administration, Emirates announced it would start Dubai-Athens-Newark service on 12-Mar-2017, with a daily 777-300ER. Emirates' 12-Mar-2017 launch of service will undoubtedly add to the list of complaints from the big three US airlines – American, Delta and United.
The list of potential protective targets is growing as the new Administration settles in: renewing the fight against Gulf fifth freedoms while pursuing a blockage of DOT's grant of a permit to Norwegian Air International; Gulf airlines in their home market; and unfair access in China.
It is difficult to see the US airlines winning all of their claims. At worst, their mounting complaints will result in the details being lost as the new administration under Trump eyes indisputable wins with infrastructure and non aviation transportation matters. The loudest voices may be ignored until there is a full government in place to wade through the complainers.