New era begins for Saudi aviation

Three months after receiving its licence from the General Authority of Civil Aviation, Sama's first flight to Jeddah took off from Dammam on March 15.

Three weeks earlier NAS inaugurated commercial flights with three Airbus A320s initially between Jeddah and Riyadh. Flights to Medina start on March 31 and shortly after to Jizan and Gurayat.

The company plans to serve all the Kingdom's airports increasing its fleet to 19 aircraft and projects 10 million passengers by 2011. By then the airline expects to have 642 weekly departures.

Big challenge

While full of enthusiasm the privately-owned carriers face a big challenge to maintain profitability in a market where the national airline subsidised domestic fares and still encountered losses on most of its 26 internal routes.

However, NAS executive director Mohammed Al-Zeir says the investment is sound since the Kingdom's aviation market is the largest in the Middle East.

Sama, headquartered at Dammam, has launched with three Boeing 148-seat 737 aircraft to operate on routes between Dammam, Riyadh, Jeddah, Medina, Gizan. Another five aircraft will be in service by the end of 2007 with a planned fleet of 35 aircraft within five years.

Both carriers have eliminated frills such as in-flight refreshments and other complimentary services though these can be purchased if required.

Sama whose slogan is "Simply Fly" and NAS have done away with traditional ticket methods allowing passengers to book and pay for seats on the web and through ATMs, over the counter at banks as well as through travel agents and other outlets.

Low-cost fares

Sama's chief executive Andrew Cowen says that passengers can fly from Dammam to Riyadh for as little as $26. The earlier a booking is made, particularly online, the cheaper the fare.

NAS chief executive Peter Griffiths says "the earlier you book, the less you pay, particularly if you pay online. What we are trying to do is fill the aircraft as quickly as possible."

The company which also operates a wide ranging executive jet network as well as its exclusive business-class Al-Khayala airline, is planning for an initial public offering with two years, he says.

Saudi Arabian Airlines is also looking to launch an initial public offering of 30 per cent of a revamped company early in 2008.

By then the carrier will have changed into a holding company with a group of stand alone subsidiaries in the final phase of the programme.

The units comprising catering, cargo, ground support and the Prince Sultan Aviation Academy are intended to link up with international strategic partners prior to partial privatisation.

A more immediate challenge for Saudi Arabian is the need to adjust to domestic competition for the first time while pursuing privatisation. The airline has already promised to respond with its own discounted internal fares.