1. What challenges do you expect fly Dubai is expected to face in the near future?
2. Describe fly Dubais target markets. How price-sensitive are they?
3. How do you evaluate fly Dubais offering in Ramadan? Do you think it is going to be successful given the fierce competition?

COMPANY Case Flydubai Pricing Strategy FLYDUBAI ENTERS THE AIRLINE MARKET Flydubai entered the airline market in 2009 with a new strategy that differentiated it from the competition: a new and unique pricing strategy for the UAE market. It positioned itself from the start as a low-cost carrier, offering passengers low-cost tickets in order to satisfy the demand in the market. The company believed that the regional market was ready for a low-cost carrier, with a wide range of customers searching for low-cost flights. In order to be able to offer cheap flights, flydubai had to eliminate as many travel complexities as possible and reduce its operating costs. Consequently, flydubai prices include taxes and each passenger is allowed to carry one piece of hand baggage, weighing up to 10 kg. Flydubai's main purpose is to bring more people to and from Dubai. It strives for "excellence, reliability and an interna- tional, pro-business approach," according to an airline official. Moreover, it is attempting to promote Dubai's commercial and tourism sectors by offering travelers a new and inexpensive service. launched operations in India with a direct flight between Dubai and Lucknow. In March 2010, the CEO, Ghaith Al Ghaith, announced that flydubai was flying to 21 destinations and carry- ing 600,000 customers. The airline has had an outstanding performance compared with the rest of the industry. According to the International Air Transport Association (IATA), airlines lost an estimated US$9.4 billion (34.52 billion Dh) in 2010. Airlines in the Arab world, however, enjoyed growth of 23.6 percent in revenue passenger kilometers (RPKS), a key industry metric GROWTH TARGETS Flydubai expected to double its business in 2010, increasing the number of employees from 500 to 800, and serving a mil- lion customers from around the world. Moreover, according to Mr Al-Ghaith, the company aims to become the second largest airline operating out of Dubai International Airport after Emirates, surpassing Indian carriers operating several flights each day to the UAE. Flydubai plans to reach 25 destinations during 2011, and in addition, it has confirmed that it intends to launch ancillary services, including holiday packages and travel insurance, by the end of the year. Flydubai is not considered a direct competitor to Emirates, as they operate in different sectors. However, it is believed that the success of flydubai has had a negative effect on Emirates' income. According to Mr Al-Ghaith, the company is bringing a new business model to the market that will stimulate demand and enhance airline services in the region. The airline, through FLYDUBAI'S EXPANSION At first, flydubai concentrated on establishing itself in the Gulf Cooperation Council (GCC) area and neighboring countries. In 2009, it expanded its operation to cover 16 destinations and began services to Colombo in Sri Lanka. In 2010, flydubai Its differentiated pricing strategy has created a new demand and has enjoyed unprecedented growth in its first year. As Mr. Al Gaith mentioned, "we have big plans for the future and we hope to continue to be successful as we have been in our first year." COMPETITION BETWEEN AIRLINES DURING RAMADAN The holy month of Ramadan is known as the month of generosity; it's time to give and spend time with family and friends. Airline companies have become used to provide discounts to suit customers' needs during this holy month. For example, in 2009, Emirates developed the "fly for less" concept, whereby all passengers traveling to and from Dubai during Ramadan were offered accommodation packages. In addition, it announced discounts on 17 destinations, including Cairo, Delhi and Istanbul. Eithihad Airways has also announced "world deals", offering discounts during August and September, to destinations in several countries including Germany, the US and China. Not only do regional airlines offer special deals during Ramadan, but European airlines such as British Airways, Lufthansa and Turkish airlines have also joined the price cutting war. Lufthansa, the German Airline, has offered discounts on flights from the Arab world to Europe during Ramadan and the feast holidays as well as round trip of Europe. British Airways also plans to reduce economy airfares to popular destinations in Europe and North America during the month of Ramadan. Airlines have tailored their services to make sure that passengers who are fasting receive the highest standards of services. Iftar is offered on board of Emirates flights in order to ensure relaxing trips with high quality food. FLYDUBAI DURING RAMADAN Flydubai has attempted to grasp this opportunity by tailoring special offers to its passengers while facing fierce regional and international competition. The company announced that it would be "giving all passengers 100% reimbursement of their fare if they are traveling during the month of Ramadan." It was the only airline offering the fund airfare refund. Passengers only paid the taxes on their flights, with the fares refunded by email in the form of a voucher for use with flydubai by a certain date. The airline hoped that this strategy would allow it to grow its business during Ramadan, while at the same time building a loyal customer base to sustain its future growth. a