Air Arabia:
Flying the Sharjan Flag Mar/May 2026

It appears that all the Gulf carriers — super-connectors and LCCs — are making a concerted effect to restore capacity to pre-war levels and recapture traffic. Dubai has launched a major campaign to win back tourists to the region.

2025 was a particularly impressive year for Air Arabia. It achieved a record net profit of AED1.65bn ($445m), a margin of 21.2% on revenues of AED7.78bn ($2.1bn). This was based on a 10% increase in capacity and a 16% increase in passengers carried across all its bases, at a load factor of 85%, four points better than in 2024.

In fact, Air Arabia’s has been profitable since its inception 23 years ago with the exception of pandemic-affected 2020 and 2018 when it reported a net loss of AED579m. However, the cause of this loss was a one-off write-off of its investment in the Abraaj Group totalling AED1.1bn. Dubai-based Abraaj had presented itself as a leading private equity fund, specialising in health care and transport but turned out to be a major fraud which collapsed owing over $1bn.

Air Arabia rivals Ryanair in terms of operational and financial performance. Indeed, since recovering from the pandemic Air Arabia has been able to report for 2022-25 net profit margins averaging 23%, markedly better than Ryanair’s 14% average. Having virtually no taxes in Sharjah is obviously of assistance, but the airline did pay an effective corporate tax rate of 10% in 2025 because of taxation at its foreign joint-ventures.

All of Air Arabia’s shares are listed on the Dubai Stock Exchange where its share price performance, particularly over the past two years, has been remarkable, boosted by generous dividend policy — AED3.2bn has been returned to shareholders over the past four years. Mostly unaffected by the Iranian war, Air Arabia has a current stock market value of AED22.6bn or US$6.1bn. This is equivalent to about one fifth of Ryanair’s valuation, while it is about one sixth the size. It is in theory worth 50% more than easyJet.

Its balance sheet is strong — total assets of AED17.7bn against liabilities of AED 9.3bn, giving shareholders’ equity of AED8.41bn as at the end of 2025. Cash and short-term deposits added up to AED5.2bn.

One of Air Arabia’s strengths comes from consistency and focus of top management, as at Ryanair, with Adel Ali having been CEO since the airline’s start-up; he is however rather more polite and emollient than Michael O’Leary. (Adel Ali in fact led the start-up project in 2002-03 along with certain Aviation Strategy consultants; from a blank piece of paper we determined the LCC model, developed the business plan, produced the financial projections and made the investor presentations. Alas we can take no credit for its performance, but it’s good for the ego to recall one of the very few unequivocally successful consultancy projects.)

The two main planks of Air Arabia’s strategy are: the Sharjah core and the multi-base foreign expansion.

The Sharjah Low Cost Core

Air Arabia is the flag-carrier of the Emirate of Sharjah (with a population of 2.2m, the third largest, after Dubai and Abu Dhabi of the seven Emirates that make up the UAE) but it is not primarily a national status symbol, it is a key driver of economic growth. Sharjah is geologically unfortunate in that it has no oil or gas, and its economy accounts for just 7-8% the UAE’s total GDP. Its growth strategy relies heavily on inward investment in the tax-free business zones, the most important of which is SAIF (Sharjah Airport International Free Zone). In this zone businesses can be 100% foreign owned, there are no corporate and personal taxes, and rapid company setup is guaranteed.

Air Arabia is intertwined with Sharjah Airport, which is 100% owned by the Emirate and which in turn owns about 18% of the equity in the airline. The Sharjah Airport Authority instigated the start-up plan for Air Arabia. Sharjah Airport itself is less than an hour’s driving time to downtown Dubai, and Dubai is the main O&D point for the airline’s passengers. 54 A320s and A321s, about 60% of total capacity, are based at the airport (Air Arabia has also invested in a two-aircraft base at Ras al Khaimah, one of the smaller Emirates).

Sharjah Aviation Services, a 50/50 joint venture between the airline and airport providing aircraft, passenger, and cargo handling services, generated AED87m in profit share and dividends for Air Arabia last year, equivalent to over three quarters of the profit contribution from the four airline joint ventures.

The airline’s cost efficiency comes not so much from labour — the group claims to have a total workforce of 10,000 both at the airline and associated companies — but from aircraft utilisation. Air Arabia can operate 24 hours a day from its Sharjah base, which, according to an analysis by Skailark, allows it to achieve an average daily utilisation of 14.9 hours for its Sharjah-based A320s, compared to Airbus’s estimate of 8.8 hours as the global average. The average sector time is long compared to Europe — about 3.5 hours (for roughly 2,400km stages) — meaning the aircraft average 4.3 sectors a day, about the same as easyJet but which has an average stage length of 1,200km, of course operating in a much more constrained environment.

Air Arabia’s network is essentially point-to-point but the airline has grown to the point where there is significant connecting traffic. Facilities at Sharjah allow for online baggage transfer. It focuses on the Gulf region, where the GCC (Gulf Cooperation Council) states have an open skies regime, and the dense India market where there is a liberal ASA. The network now extends to Western Europe, Southeast Asia and Central Asia, and the eventual introduction of A321XLRs could extend operations to more northerly European points and South Africa.

Air Arabia is one of Airbus’s most important narrowbody customers (and is much more financially secure than some of its bigger orderers). In 2019 Air Arabia placed a firm order for 120 A320 family aircraft — officially 73 A320neos, 27 A321neos and 20 A321XLRs, through there is flexibility on the final division between types. As the A320s are powered by CFM LEAP-1A engines, Air Arabia was not caught up in the P&W GTF crisis, but did nevertheless suffer delays, with deliveries starting finally in the third quarter of 2025,

The list price of the order was announced as $14bn, but Air Arabia should have been able to negotiate a discount of about 50%, which is compatible with the AED22bn ($6bn) of capital commitments reported in the 2025 accounts.

The hard product is standard LCC: A320s are configured with 174 economy seats and the A321s with 215 seats. Load factor is around 85%. Pricing is designed to stimulate traffic, with a simple three-level fare structure: the Basic fare covering just the seat and a small carry-on; the Value fare adds a checked bag and a complimentary meal; the Extra fare adds seat selection, priority boarding plus more checked bags. As Sharjah is a dry state, there is no alcohol, which may curtail airline ancillary revenue (just 15% of total revenue), but which enhances service and efficiency on board.

The Foreign Base Expansion

From a purely financial perspective the multi-base strategy does not look compelling; 38% of the fleet capacity is based at the four foreign airports but in total last year they contributed just 7% of the group’s net profit, according to the limited data provided the company’s 2025 accounts. This implies that Air Arabia Group generates 90% of its profits at its Sharjah base and its net profit margin there must be considerably greater than the Group’s total 21%.

While Air Arabia can export its operating model to the foreign bases, it becomes subject to foreign regulatory regimes and cedes majority ownership at the joint venture airlines.

Air Arabia Maroc has a base at Tangier, where it controls about half the airport’s seat capacity, and is the second airline to the flag-carrier RAM at Casablanca. This airline is a joint venture between Air Arabia which owns 44% of the equity and local Moroccan investors and banks which have 56%. It has a fleet of 10 A320ceos and flies primarily to western Europe but also domestically. This is the largest and longest-established of the joint ventures, but, probably because of strong competition from Ryanair, was only marginally profitable in 2025, contributing 1.3% of group net profits.

Established in 2010, Air Arabia Egypt mainly operates from Alexandri, flying to the Gulf, Europe and India but with a fleet of only four A320s. It would appear to have just broken even last year. 51% of the joint venture is owned by Travco, a leading Egyptian tourism group.

Air Arabia Abu Dhabi was established in 2019 as a joint-venture with Etihad,which has 51% ownership. Operating from Zayed Airport, it is designed to be the regional low cost subsidiary of Etihad. It codeshares with Etihad and offers a full connecting service. In 2025 it was the best performing of the joint ventures, contributing 3.3% of group net profits. There are plans to add another two aircraft to the current 12 A320s. Prospects have been enhanced by the closure in October 2025 of Wizzair Abu Dhabi. This was a joint venture between Wizzair and ADQ, the state-owned Abu Dhabi Developmental Holding Company, which at one point had grandiose plans to grow to a fleet of 100 aircraft.

Fly Jinnah is a joint venture with the Lakson Group (55%), which is a leading industrial and media conglomerate in Pakistan. Set up in 2021, It is has recently doubled its fleet to eight A320s and is extending its operations from domestic to international, mostly gulf destinations. It is Pakistan’s first LCC and has achieved a market share of about one third in the very underserved domestic market; it has potential for rapid growth, if Pakistani politics allow (see Aviation Strategy, Jan/Feb 2026). In 2025 it contributed 2.2% of the Air Arabia Group’s net profits.

There are other joint ventures which have been closed down or have never started operations — Fly Yeti (Nepal), Air Arabia Jordan, Air Arabia Saudi.

The strength of the Sharjah operation provides Air Arabia’s management with the luxury of experimenting with diversification and testing new markets, a strategy which also is useful when the unexpected happens. Air Arabia was able to shift A320s to Pakistan when the Iranian war broke out.

There are also limits to growth at Sharjah associated with the surge in LCC competition. much of which is backed by powerfully commercial and political interests. Recent arrivals include Flyadeal, the lower cost subsidiary of Saudia and SalamAir, a Muscat-based lower cost operator owned by the Omani government, which connected with but is officially separate from the flag-carrier Oman Air. In the key India-Gulf market Akasa Air, which has claims to being a ULCC, had been expanding rapidly before the war.

But by far the biggest competitor to Air Arabia is Flydubai. Smaller than Air Arabia, with 15.7m passengers in 2025, officially separate from Emirates Airline but an integral part of the Dubai aviation complex, Flydubai is set for a major expansion once conditions return to normal. It has an orderbook of 150 A321s, 75 MAXes and 30 787s.