Ras-al-Khaimah based RAK Airways this week announced expansion of its scheduled services with the news that it will begin non-stop services to Bangladesh. The airline, which reformed earlier this year will begin a thrice-weekly service from Ras-al-Khaimah to the Bangladesh capital of Dhaka and to the city of Chittagong. Both routes will be operated with B737-800 narrowbody aircraft and are routes that are not currently operated.
RAK Airways latest reincarnation came with new routes which began on October 10th this year, with a four-times weekly rotation to Kozhikode in India and Jeddah, Saudi Arabia.
Its latest announcement that it will begin services to the two largest cities in Bangladesh will underpin a strategy based around serving markets in Asia that can provide volume in terms of leisure and more importantly target the labour markets and the VFR market that will come with that.
THE UAE TO BANGLADESH MARKET
Ras-al-Khaimah to Dhaka and Chittagong markets are currently not served, however the wider market from the Middle East to Bangladesh is significant with large amounts of Asian workers in the Middle East. Between July 2009 and July 2010 over 2.3 million O+D passengers travelled between the Middle East and Bangladesh, with Biman Bangladesh carrying 33% of this traffic, Saudi Arabian Airlines 14% and Emirates 12%. However, with over 796,000 of these passengers travelling on connecting services RAK will believe that there is scope to introduce more non-stop services from the Middle East to Bangladesh.
The wider market from the Middle East to Asia is huge, with over 31 million O+D passengers travelling between July 2009 and July 2010. Emirates is the leader in terms of traffic with a 16% market share, followed by Saudi Arabian Airlines 8% and Qatar Airways 6%.
RAK STRATEGY
RAK Airways will have obstacles to overcome to make its latest routes be a success. With a small source market at Ras-al-Khaimah it does not have the passengers flow that many of its competitors have at their hub and based airports, and it lacks the network to provide source passengers at Ras-al-Khaimah as it has no connectivity at the destination end of the route, in terms of codeshare or interline partners.
RAK will therefore be dependent on the point-to-point market, however if RAK is able to enter the market with low prices that will appeal to the ethnic and labour market, there is no doubt that eventhough Ras-al-Khaimah is a small market, it will attract passengers who will travel to the larger markets in the Emirates such as Dubai and Abu Dhabi by surface.
The Dubai market to Bangladesh has seen over 550,000 passengers travel between July 2009 and 2010 and whilst non-surprisingly Emirates has the lion share of this traffic with 33%, RAK will believe that Biman Bangladesh which has a 33% share and GMG Airlines which has an 11% share are weaker competitors without the brand and network that Emirates, and can be targeted for a share of their existing traffic.
Ultimately RAK Airways will not be able to compete with its neighbours Emirates and Etihad but it may well be able to create a strong airline based around serving trunk routes where there is scope for additional capacity and markets which are not price sensitive which large ethnic and labour flows.
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