The airline will have to strive to build trust in its regular customers
Rak Airways ceased to exist as a going concern during the financial crisis of 2008-09 and its second iteration can be viewed in many ways as a completely new business. In its favour is the fact that its success will be integral to efforts to make the emirate a tourist destination and it would appear that the ruling family is willing to devote significant financial resources to achieve this.
But there are still questions about the sustainability of Rak Airways’ business model. There is little profit to be made in offering quality services at a price comparable with low-cost, no-frills carriers. There is also confusion over which market the carrier is targeting. Its prices and destinations suggest that Rak Airways has decided to focus on low and middle-income expatriate workers from developing countries and UAE-based holidaymakers looking for bargains. If this is the case, it is unlikely to drive the volumes of tourism expected in the emirate.
Given its choice to halt services for more than a year, the airline will also have to strive to build trust in its regular customers that it will remain a going concern even if credit tightens, particularly as fuel prices are back near record highs.
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.