New Saudi airline operating licenses in may take 3-6 months
New Saudi airline operating licenses in may take 3-6 months
GACA earlier announced that Qatar Airways and Bahrain’s national carrier Gulf Air had become the first foreign airlines to obtain carrier licenses under which they would be able to run local and international flights in the Kingdom.
Fourteen foreign and local companies had applied for the licenses, which mark a major reform of the aviation market in Saudi Arabia.
Currently, only national carrier Saudi Arabian Airlines and budget airline National Air Services serve a domestic market of about 27 million people. Foreign carriers can only fly in and out of Saudi Arabia, not within the country.
Over 54 million passengers passed through Saudi Arabia’s 27 airports last year, up 13.6 percent from 2010, according to GACA data. But the Kingdom has one of the smallest airline networks in the region relative to its size, and passengers have complained about the limited range of flights as well as the quality of service.
In a statement to Reuters, the GACA spokesman said Qatar Airways and Gulf Air were working on final procedures for their operating licenses.
He did not comment on whether other firms among the 14 that applied for carrier licenses might eventually be successful. The 14 included firms fully owned by Saudis, Gulf firms, and consortiums of Saudi-Gulf and Saudi-Chinese companies.
Over the past year, Saudi Arabia has taken steps to liberalize its economy in several areas in an effort to create jobs and diversify away from heavy dependence on oil. For example, it is trying to develop a home mortgage industry.
Earlier this month the information minister said GACA would be allowed to grant permission for airlines to raise their fares under certain circumstances, and that fuel prices at Saudi airports would be reviewed to ensure fairer competition.
Abdulwahab Abu Dahesh, a Saudi financial analyst, said he believed the government would also remove subsidies now provided to existing Saudi airlines.
“This has to happen in 2013 because there will be no competition unless that problem is solved,” he said. “This needs to be resolved before these firms start operations.”
Qatar Airways could be a strong competitor in Saudi Arabia. It is growing rapidly, and in October became the first major Gulf airline to announce plans to join the Oneworld alliance, a global group of carriers which cooperate in areas such as route networks, frequent flyer schemes and procurement.
Akbar Al-Baker, chief executive of Qatar Airways, has said he is interested in the possibility of launching an airline in Saudi Arabia.
By contrast, Gulf Air has been struggling; last month it cut an order for Boeing planes and revised a deal with Airbus as it restructured its fleet to reduce pressure on its finances.
Nevertheless, Riyadh has been supporting Manama politically and economically during the social unrest that has plagued Bahrain since last year. A Saudi operating license could help Gulf Air by letting it diversify beyond its weak home market.
Officials for Qatar Airways and Gulf Air declined to comment on the airlines’ plans when contacted by Reuters.
Brent crude oil rises for a sixth day as supplies tighten amid strong demand
- US West Texas Intermediate crude futures were at $68.98 a barrel, up 34 cents
- The potential of renewed US sanctions against Iran is pushing prices higher
SINGAPORE: Brent crude oil rose for sixth day on Tuesday, passing $75 a barrel, on expectations that supplies will tighten because fuel is rising at the same time the US may impose sanctions against Iran and OPEC-led output cuts remain in place.
Brent crude oil futures climbed to as high as $75.20 a barrel in early trading on Tuesday, the highest since Nov. 27, 2014. Brent was still at $75 a barrel at 0311 GMT up 29 cents, or 0.4 percent, from its last close.
Brent’s six-day rising streak is the most since a similar string of gains in December and it is up by more than 20 percent from its 2018 low in February.
US West Texas Intermediate (WTI) crude futures were at $68.98 a barrel, up 34 cents, or 0.5 percent from their last settlement. On Thursday, WTI rose to as high as $69.56, the most since Nov. 28, 2014.
Markets have been lifted by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) which were introduced in 2017 with the aim of propping up the market.
The potential of renewed US sanctions against Iran is also pushing prices higher.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA said new sanctions against Tehran “could push oil prices up as much as $5 per barrel.”
The US has until May 12 to decide whether it will leave the Iran nuclear deal and re-impose sanctions against OPEC’s third-largest producer, which would further tighten global supplies.
“Crude prices are now sitting at the highest levels in three years, reflecting ongoing concerns around geopolitical tensions in the Middle East, which is the source of nearly half of the world’s oil supply,” ANZ bank said.
“Oil strength is coming from Saudi Arabia’s recent commitment to get oil back up to between $70 to $80 per barrel as well as inventory levels that are back in the normal range,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.
OPEC’s supply curtailments and the threat of new sanctions are occurring just as demand in Asia, the world’s biggest oil consuming region, has risen to a record as new and expanded refineries start up from China to Vietnam.
One of the few factors that has limited oil prices from surging even more is US production, which has shot up by more than a quarter since mid-2016 to over 10.54 million barrels per day (bpd), taking it past Saudi Arabia’s output of around 10 million bpd.
As a result of its rising output, US crude is increasingly appearing on global markets, from Europe to Asia, undermining OPEC’s efforts to tighten the market.