Saudi Arabia opens its skies

Saudi Arabia opens its skies to the domestic aviation sector, but national airline Saudia has little to say on the matter.

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By  John Irish Published  June 30, 2003

Saudi Arabia is set to open its domestic aviation sector for competition among national companies. The move will bring an end to years of monopoly by national carrier Saudia.

The measure follows increasing discontent amongst passengers within the Kingdom, who were complaining that the state-owned Saudia was not operating sufficient domestic flights. The airline, which operates 26 airports in the Kingdom, in turn claimed that due to heavily subsidised fares it was losing money in the domestic market.

Within days of the cabinet’s decision, private firms were already beginning to look into creating a new internal carrier. “We have conducted a study on the type of aircraft to be used for domestic flights and how to get good aircraft at a low price so that we can offer competitive fares to passengers,” Nasser Aqeel Al Tayyar, chairman of the Saudi Al Tayyar Group, told Al Watan newspaper.

He added that a feasibility plan carried out in conjunction with Singaporean, Turkish and Indian firms indicated that the idea was economically viable, particularly since the Saudi authorities had launched a comprehensive tourism plan. Reports suggest that Al Tayyar is seeking financial backing from national and international banks to set up the airline.

Describing Saudi Arabia’s aviation market as the largest in the Middle East, Muhammed Al Zeir, executive president of the Kingdom’s National Aviation Service, also confirmed that he would be interested in entering the domestic airline sector.

All this talk of competition will inevitably cause some concern for Saudia bosses. In a recent interview, Prince Fahd ibn Abdullah, assistant minister for civil aviation, alluded to the possibility of privatising Saudi Arabian Airlines.

“It will have a positive effect on the airline’s sales and improve its performance, and these will have a very good impact,” he told the daily Al Okaz newspaper.

When asked by Arabian Business to comment on the latest developments, Saudia refused to directly discuss the subject. “It’s nothing to do with Saudi Airlines, it has to do with the civil aviation authority,” said a spokesperson from the airline. “It’s a ministerial decision,” he added.

Saudi Arabian Airlines currently has a fleet of 120 planes, serving destinations around the globe. The carrier makes most of its income from international flights, earning in excess of SR1.8 billion (US $ 480 million) annually from these services.

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