NAS plans Saudi Arabian low cost carrier

National Air Services (NAS) has announced firm plans to launch a low cost carrier within Saudi Arabia next year.

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By  Neil Denslow Published  December 1, 2005

National Air Services (NAS) has announced firm plans to launch a low cost carrier within Saudi Arabia next year. At a Dubai airshow press conference, the company, which is the largest VIP aircraft operator in the region, added that the as-yet unnamed low cost carrier will operate up to 16 A320s within five years. Also at the show, NAS signed an order for five A318 Elites, with five options, for Al Khayala, its VIP service. When NAS’s airline launches next year, it will be the third low cost carrier in the Gulf, after Kuwait’s Jazeera Airways and Sharjah-based Air Arabia. The airline will also be only the second major domestic network carrier in Saudi Arabia after Saudi Arabian Airlines. Al Khayala does operate a scheduled service, but this is limited to Jeddah-Riyadh. However, NAS can use the same Part 121 Air Operator Certificate (AOC) for both Al Khayala and the new low cost carrier, which will greatly ease its entrance into the market. “We already have an AOC for scheduled flights, so 70% of the challenge [of launching a new airline] is behind us,” said Mohammed Al Zeer, NAS’s president & CEO. NAS’s plan for the new airline will see it launch operations by next summer with four A320s. These will predominately be used on services between the country’s major cities, such as Jeddah, Riyadh and Damman, as well as to link the Eastern and Southern provinces. Over the next five years, however, NAS intends to grow the airline’s fleet to 16 aircraft, all of which will be used solely for domestic services. The airline has ruled out flying international routes, because of the potential demand within Saudi Arabia. Al Zeer noted that the Kingdom, which is the size of Europe, has 26 airports, and a population of 17 million people who made just 15 million domestic flights last year. “Look at the statistics,” he said. “It is going to be a handful just to serve that market.” In launching the service, NAS will face a number of business challenges. One may include the perception of a low cost carrier in Saudi Arabia. Al Zeer dismissed this problem though, saying that the Kingdom has a large of number of workers and others who would be happy to fly on a no frills carrier. This would be especially true during peak seasons, such as Umrah and Haj, when economy class tickets on Saudia are quickly sold out. “At the high end of the market in Saudi Arabia, there is exclusivity,” he said. “But the majority is average families and people who just want to travel with a good service and a safe service.” The low cost carrier will generally follow the traditional formula for the model, although Al Zeer did say there would a few changes to suit local tastes, predominately in terms of ground services. “The airline will provide all of the aspects of low carriers that you see in America and Europe,” he added. A bigger challenge may be fare competition, as Saudia’s domestic ticket prices are already very low. They may also fall further once the flag carrier begins to introduce its Embraer 170s later this year, which will also increase the number of destinations that Saudia can serve and its capacity. However, Al Zeer believes that a more flexible pricing approaching will give NAS an advantage. “Currently domestic fares in Saudi Arabia are some of the lowest in the world,” he admitted. “However, they are fixed fares, which gives us an opportunity to be more sophisticated.” Also at the airshow, NAS signed up for five A318 Elites with five options as it prepares to expand its scheduled Al Khayala services internationally. The Saudi operator was the second customer for the A318 Elite, which was launched at NBAA early last month. The purchase will be financed by Calyon, the Credit Agricole Banking Group, while Lufthansa Technik will complete the interiors. “When you are in the market for private jet transport of around 15 passengers, you cannot beat the space, comfort and economics of the Airbus 318 Elite,” commented Al Zeer. “In this market, it is the quality of service and comfort that count and the Airbus A318 Elite will help us to deliver both with elegance and style,” he added.

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