JEDDAH, 21 August 2005 — One expert predicts that investment in the airline sector will reach SR3 billion once private airlines are allowed to operate in the Kingdom. Essam Khalifa, manager of economic research projects in Saudi Arabian Airlines (Saudia), pointed out that private airline companies working on special flights are expected to merge. After merging, they will be qualified to work in the local market. He added that a private commercial airline company would improve domestic business transportation within the Kingdom since private companies would also move cargo. Having an airline sector which is not a government monopoly will also create more than 5,000 jobs for Saudis.
The establishment of private airline companies will help to increase the number of domestic flights and will also serve destinations not currently served by Saudia.
In his research, Essam pointed out that investors in private airlines would not compete against Saudia; the airline cannot meet the growing demand for domestic flights due to the rapid increases in population and in the number of Haj and Umrah pilgrims. He added that the decision was made after Saudia suffered huge losses in domestic flights because of low prices and increases in operation costs as well as a decline in the number of domestic travelers. An additional domestic airline will help Saudia to focus on international flights and improve its services. Saudia will charge the private airlines for maintenance. The problem of airline reservations will disappear and the demand for domestic flights will increase as well as ticket sales will increase.