JEDDAH, 18 April 2007 — Saudi Arabian Airlines announced yesterday that it would launch a low-cost airline and a Haj and Umrah service unit as part of its strategic plans to strengthen the national carrier in the face of domestic and foreign competition.
Khaled Al-Mulhim, director general of the airline, has set up 11 working teams for different strategic units. The company’s executive vice president for marketing will supervise the team for a low-cost airline, Haj and Umrah flights and normal airline service.
The setting up of new working teams comes ahead of the airline’s privatization plan. In a statement, Mulhim urged the teams to work together to achieve the privatization plan within a timeframe and realize the strategic goals. “All teams must work together to take the airline to new heights,” Mulhim said and noted Saudia’s past achievements as a result of support from Custodian of the Two Holy Mosques King Abdullah and Crown Prince Sultan, the airline’s chairman.
Mulhim did not say when the airline would begin the low-cost service. But analysts in the Kingdom’s travel market welcomed the plan, saying it would strengthen the airline and help meet the competition posed by the new domestic budget airlines — NAS and Sama — that began services this year.
“Business prospects for budget airlines are high, not only within Saudi Arabia but also to international destinations,” said Alavi Aruveettil, head of sales and operations at Attar Travel, a leading travel management company. He said the passenger response to Sama and NAS had been encouraging.
Saudia is likely to provide low-cost service on its international routes to meet the requirements of low-income passengers, especially expatriate workers in the Kingdom. Alavi said most expatriates who receive tickets from their companies prefer to travel on regular airlines.
Alavi said the Kingdom’s travel industry was bracing for a boom with the launch of four mega economic cities in Rabigh, Hail, Madinah and Jizan, all of which require enormous numbers of foreign manpower. “There are thousands of expatriate workers who pay for their air tickets. They will definitely opt for low-cost airlines,” he added.
There are many factors that make Saudi Arabia a promising market for budget airlines. Saudis love to travel and spend nearly SR60 billion ($16 billion) annually on domestic and international travel and tourism. Saudi Arabia’s population has reached 27 million, including seven million expatriates. About 75 percent of the country’s expatriate workers earn salaries of around SR2,000 ($533) monthly. At present, middle-class Saudis as well as expatriates use the Saudi Arabian Public Transport Company (SAPTCO) and private buses and taxis for long journeys. Such road transport is time-consuming.
The airline has received the green light from the government to transform its main support businesses into five independent companies as part of efforts to speed up the privatization process.
