Saudi Arabia's domestic airline industry has undergone a dramatic makeover. For years, air travel within the Kingdom was the monopoly of one company, Saudi Arabian Airlines (Saudia). Following the government’s decision to open up the Saudi skies, it now faces stiff competition from other local private operators.
There are around 25 airports in Saudi Arabia, four of which are also international airports — Riyadh, Jeddah, Dammam and, more recently Madinah. The largest in terms of passengers is Jeddah’s King Abdulaziz International Airport. Each year it sees a huge influx of passengers coming to perform Haj and Umrah and also during Ramadan. This presented considerable challenges to Saudia as the only carrier in the Kingdom. It demonstrated a need for others to compete both in terms of price and standards. In 2005, Sama started domestic flights in the Kingdom. Marketed as a low-budget Saudi airline, the company was started by Investment Enterprises chaired by Prince Bandar bin Khaled Al-Faisal. It allied itself with Mango Aviation Partners, a UK firm specializing in low fare airline start-ups. Initial investment came from 30 major Saudi private and institutional investors. These included Olayan Financial, Xenel Industries, Saudi Industrial Services, Sara Development and Modern Investment Company for Trade and Industries.
The airline now serves up to 16 domestic destinations in the Kingdom. It also operates international flights to the UAE, Jordan, Egypt, Syria, and Lebanon. In total there are 176 flights a week and, according to a company spokesman, these will increase in the future.
As a low cost, no frills airline, Sama has carved out a niche for itself with Saudi air travelers. There are plenty of customers who prefer the low fares and the fact that there is an alternative carrier to Saudia.
In March this year, Sama began a long-term partnership with Lufthansa Technik to provide its aircraft with more reliable maintenance and services.
National Air Services or Nas was originally founded in 1999 as a private jet operator. In 2001, it moved into aircraft management, signing subsequent deals with some 66 corporate and private plane owners worldwide. Then, in February 2007, it started low budget domestic commercial flights under the name of Nas Air. It now operates to 13 destinations within the Kingdom as well as to three in Egypt (Alexandria, Sharm el Sheikh and Assiut), two in Syria (Damascus and Latakia), two in the UAE (Abu Dhabi and Sharjah) and to Beirut, Amman, Kuwait and Sanaa. There are plans to fly to India, Sudan and Dubai before the year-end and it recently announced adding destinations in Pakistan and Turkey next year as well as further ones in India.
In addition to being a scheduled carrier, it is now the largest private operator of business jets in the Middle East and the leading provider of VVIP and executive air transport services in the region.
Perhaps one of the advantages Nas Air enjoyed as its start-up was taking over some of Saudia’s public service obligation flights. These include destinations such as Dammam, Tabuk, Abha, Qassim, Hail and others. In the view of some travel industry experts, these routes will gradually move to Nas Air and Saudia will stop serving them.
Nas Air’s other advantage is its lower price of ticketing and the convenience of online booking. It is a ticketless airline. In fact the company views itself as alternative not merely to other airlines but to bus and car travel as well. With prices starting as low as SR45 for some domestic destinations, it is certainly competitive.
This month, Nas Air added more aircraft to its fleet to service its growing number of destinations and its private clients. These included six Hawker 750 model aircraft costing $60.5 mullion from US-based Hawker Beechcraft Corp. These were financed in a deal with Arab Banking Corp. Nas Air has built up a relationship with the bank since its inception. Two year ago, it organized the financing for three Gulfstream G-450 aircraft costing $79.5 million and is involved again in the purchase of three additional Gulfstreams. The construction of more airports in the Kingdom will increase the coverage of Saudi air travel and the two private operators will undoubtedly add yet more routes to their networks — to them and to existing domestic and international destinations as they seek to challenge Saudia’s dominant position. But it will not be plain flying. Like any other airline companies around the world Saudi operators are not exempt from the troubles that affect the industry, such as fuel price hikes and fears of catching diseases such as the swine flu. Last year, Sama complained that the supply of subsidized fuel provided to Saudia but to private airlines was unfair and said that it might have to shut down some of its domestic routes as a result. Costs have since taken their toll elsewhere. Al-Khayala, Saudi Arabia’s other private airline, was forced into bankruptcy in April after four years’ flying. And there is the challenge on international routes from the well-established foreign private operators. India’s Jet Airways has announced that its planned low-fare Mumbai-Jeddah flight will now start on July 15. It was to start on June 14 but official delays stalled it (and left hundreds of Indian Umrah pilgrims having to find alternative flights).
There could be other local competitors too. Late last year, the Saudi General Authority of Civil Aviation (GACA), the licensing body for private airlines, said that it was studying a number of applications and that it might approve another new operator next year, if considered needed.