JEDDAH, 9 May 2006 — The Supreme Economic Council has set an end-of-the-year deadline for announcing the two new national private air carriers in the Kingdom, according to a civil aviation official.

General Authority of Civil Aviation (GACA) President Abdullah Rehaimi, speaking to a group of businessmen in finance, law, accounting, insurance and support services related to the aviation sector, at the Jeddah Chamber of Commerce and Industry yesterday, outlined the strategy and goals of opening the sector to national investors.

The orientation conference on the liberalization of the domestic air transport sector comes two weeks after the Supreme Economic Council approved the process and regulations for licensing two new national airlines and the time schedule for issuing the licenses. According to the schedule, registering applications for the two licenses begin May 13, 2006 and will continue until July 1, 2006. A month is allowed for inquiries and clarifications and then finalized applications should be submitted by no later than July 30, 2006. A decision will be made about the two approved applications by Dec. 30, 2006.

The licenses issued would allow the carriers to operate international flights after two years provided they meet all obligations, regulations and standards of service. The applicants will be evaluated on their capital, financial qualifications, and the congruence of the suggested services with their financial resources and the fleet of planes.

Rehaimi emphasized the importance of the civil aviation sector as a vital economic resource for the Kingdom and as a growing industry worldwide.

“This sector has a positive impact on other sectors, such as tourism, commerce and industry. Socially, it contributes to people’s lifestyle and luxury. It also helps at times of crisis and natural disasters in providing aid,” he said. “The size of the local market and its demand is more than what is available. Also, the absence of many of the support services has made it clear that the private sector should be allowed the opportunity to contribute in developing this sector.”

Officials estimate that the complete liberalization of the civil aviation sector would create 50,000 additional job opportunities in the sector and related sectors as well as contributing an additional SR25 billion annually to the national income by the year 2020.

Rehaimi explained that the comprehensive program for the strategic transfer of the civil aviation sector focuses on six points: the main transfer, opening the civil aviation sector, organization and human resources, airport operations, on-board aviation (crew) services and information technology. The goals for the strategy include providing services to everyone and avoiding increases in domestic ticket prices, equality among all carriers, allowing competition, using and developing the surplus capacity at the airports and supporting the restructuring of Saudi Arabian Airlines. GACA conducted several studies on the best strategy for liberalizing the civil aviation sector and prepared the economic bylaws of civil aviation for establishing the system for licensing two carriers, which was approved earlier this year.

Some of the main points for the licensing strategy include maintaining the current ceiling on economy class local fares and obliging each of the three carriers with a share of the local “public service obligation points” — routes with particularly low profit margins.

Applicants will make an offer to choose either Riyadh or Dammam as their hub (Saudi Arabian Airlines is offered Jeddah airport as its hub.) There will be no restrictions on the number of flights in the local market.

The applicants for the two slots will also be considered on the basis of their long-term business plans, the credibility of the application and other factors. GACA will form a committee headed by the organization’s president to evaluate the applications. The economic bylaws of civil aviation will be made available on the GACA website (www.GACA.gov.sa) as well as the application forms and the procedure. Questions can be sent to [email protected].