RIYADH, 23 June 2005 — The Al-Tayyar Travel Group has plans to operate budget airlines from the Kingdom. Dr. Nasser Al-Tayyar, chairman of the group, said their budget travel would be modeled after India’s hugely successful low-budget airlines. “I am in close touch with the operations of India’s budget airlines so I have a good idea of how they do business.”
The Al-Tayyar Group has already obtained government clearance to be transformed from a limited liability company into a joint stock company. Al-Tayyar said about 30 percent of the shares would be floated in the Initial Public Offering (IPO) within a year. The initial share price will be determined once the process of evaluation has been completed. “The situation has changed and we have strong business partners now,” Al-Tayyar said, referring to nearly 30 leading businessmen who are shareholders in the company.
He pointed out, however, that one of the problems facing overseas investors is the requirement for Saudization of the work force. “We have taken this up with the Ministry of Labor to see if the regulations can be reviewed. They are discouraging investors from coming to Saudi Arabia.”
In another development, Al-Tayyar said that representatives of the travel industry have complained to the Presidency of Civil Aviation about British Airways harming the local travel industry by reducing commissions from seven to five percent. He said that according to IATA regulations the airline industry follows each country’s rules.
Speaking about his plans, Al-Tayyar said the group was waiting for the government’s privatization plans for Saudi Arabian Airlines. “We are 60 percent ready in terms of infrastructure facilities required for airline operations,” he said, adding that there is an existing network of 150 branches in the Kingdom and abroad.
He said the group was also ready to invest in the hotel sector and was awaiting approval from the Ministry of Finance to open up government-owned hotels to private investors. On capital investment, he said a study was being done in order to find out how much additional capital is needed for setting up a separate company specifically for air services. The Al-Tayyar Travel Group would be a shareholder in that company. Another subsidiary will be set up to run the hotel business.
He said the plan was to enter the aviation sector first by operating domestic flights and then, at a later stage, international ones. “We will also support the Kingdom’s tourism promotion plan by operating flights on domestic routes. Initially, we will be leasing aircraft to organize package tours on the domestic sector while continuing our business with Saudi Arabian Airlines for handling the Haj and Umrah traffic. Much depends on what sectors and routes we are allotted. We are waiting for details.”
