Low cost carriers versus traditional carriers and its impact on financial performance: a comparative study on the UAE airlines companies

Abstract

The initial appearance of US low-cost carriers forced incumbents to create new forms of competitive advantage. However, these hindrances proved to be successful for nearly two decades. In any case, a new report by the NBK capital, an investment bank based in Kuwait, recorded that in the Middle East, especially in the Gulf region, the low cost carrier sector has established itself as a thriving industry with lots of potential in hardly four years. This paper endeavours to highlight some of the differences between the two markets and it gives an explanation as to how the advantages of the Middle East low cost airlines would be enough to bypass the financial performance of the traditional carriers.