JEDDAH: ARAB NEWS
Published — Friday 21 December 2012
Last update 21 December 2012 1:03 am
Investors in the aviation sector expect a 10 percent increase in air ticket prices on domestic routes in the Kingdom following the new air ticket regulations approved by the Council of Ministers last Monday.
“We expect a 10 percent rise in ticket prices in the first phase when the new regulations are applied and prices will go up further at later stages,” said Nasser Al-Tayyar, managing director and CEO of Al-Tayyar Group.
He said the Cabinet decision to revise jet fuel prices would definitely reduce the operation cost of airlines. “This will create greater competition among airlines and encourage more investment in the sector,” he told Al-Eqtisadiah Arabic daily.
Al-Tayyar said fair competition would lead to the success of the Kingdom’s aviation market. He called for bringing Saudi Arabian Airlines’ domestic flights under a separate company for the benefit of passengers.
Faisal Al-Turki, vice president of Nesma Airlines, said jet fuel prices in the Kingdom were 30 percent higher than in some airports of other countries in the region. “The decision to review the fuel prices will increase profits of aviation companies,” he added.
Al-Turki said lower jet fuel prices would enable airlines to operate their flights at a reasonable cost. “An increase in ticket prices will enable airlines to extend better services to passengers,” he pointed out. It will also pave the way for the development of the Kingdom’s aviation sector. Mohsen Al-Najjar, an economist and air transport specialist, commended the Cabinet for giving more powers to the General Authority of Civil Aviation to fix air ticket prices and improve airport services. He emphasized the need for airline companies operating domestic flights to control their expenditure.
“There is no point in some companies operating wide-bodied aircraft to operate domestic flights and ask passengers to share the cost of its expenditure,” he said.
Al-Najjar said the decision to cut jet fuel prices would benefit the Kingdom as more airlines would be encouraged to fill their aircraft with fuel from Saudi airports.
Last Monday, the Saudi Cabinet approved a comprehensive strategic plan for GACA, including plans to upgrade the Kingdom’s airport facilities and increase domestic ticket prices.
The Cabinet, chaired by Crown Prince Salman, deputy premier and minister of defense, approved a committee to revise fuel prices at Saudi airports, said Culture and Information Minister Abdul Aziz Khoja.
The minister said: “GACA will be enabled to practice its responsibilities and specializations to manage and operate airports,” adding the authority would establish a guideline for ticket prices.
“GACA will prepare the ticket price guideline in coordination with the Ministry of Finance, and it will replace the current price system,” he said.
Under the new plan, GACA will expand operations at the Kingdom’s airports with participation from national and international corporations.
Prince Fahd bin Abdullah, president of GACA, thanked the Cabinet for approving the plan. He said the ticket price guideline referred to economy class tickets on domestic routes in the Kingdom, adding they would be based on prices fixed by the government.
“The price of economy tickets will stay the same until a change is announced at a later date,” the prince said, adding there has been no change in economy class ticket prices for a long time.