Definitely LCCs can work in the MENA
region (Middle East, North Africa). There are a lot of foreigners working in the middle east. Amongst these foreginers are a lot of laborers and a lot of GCC nationals working in other GCC countries. Laborers do not make a tremendous amount of money and the companies that handle them will book them to and from their home countries as cheaply as possible. If that means cramming them onto buses from Dubai to Sharjah so they can be flown home then that's what they will do. For other working outside the UAE they are simply in transit so it's even easier.
The large number of GCC nationals working in other GCC countries will be tempted to travel back to their own countries/cities with these cheaper fairs and there is definitely a market for that.
Most people assume that the middle east is just rolling in filthy oil billionaires. What they fail to see is that there a re a lot of entrepreneurs and small businessmen, these types will take this alternative as it is cost effective.
Air Arabia has been very shrewd about their approach. They fly to destinations that other airlines ignore such as Nagpur and really chop down prices. For instance I flew Sana'a - Sharjah return last year for about 310AED (85USD) three weeks prior to that I flew SAH-DXB
return for about 500US on EK
. Considering Sharjah is only a short car ride to Dubai this left me with a few hundred extra dollars to blow in DXB