Flying Carpet is hidden deep in the caverns of the desert island, in a room with a iron crate for a ceiling. Prince managed to find his way to the Flying Carpet, and open the ceiling crate. He then sat on the carpet, and flew to the ruins of Basra. Once reaching Basra however, the Flying Carpet was spooked, and it quickly flew away, dropping the Prince on the ground unceremoniously.
Although the Flying carpet can be sat on upon first finding it, the iron crate covering the ceiling must first be opened. Otherwise the carped speeds up into the crate crushing the Prince.