JEDDAH, 28 March 2007 — Khaled Al-Mulhim, director general of Saudi Arabian Airlines, has ruled out on Monday cutting domestic fares, yet disclosed plans to offer discounted fares to those who make early bookings amid presence of two private budget airlines.
“Reducing ticket charges will not be viable as we believe the present charges are appropriate,” he said.
Mulhim said the presence of a large number of low-cost airlines in the region was one of the major challenges facing the aviation industry. The licensing of two domestic carriers — NAS and Sama — has ended Saudia’s monopoly of the sector.
However, “we have taken steps to counter the challenge posed by low-cost airlines,” he said, adding that Saudia has signed agreements to transport nearly two million Umrah pilgrims from 70 international destinations. “We have set up a special unit to handle Umrah traffic,” he pointed out.
He said a meeting of the executive committee of Arab Air Carriers Organization, which was held in Jeddah recently, had discussed prospects of joint purchase of jet fuel. Mulhim said Saudia was going ahead with its privatization program.
Saudia, according to informed sources, plans to launch an initial public offering of 30 percent of a revamped company early in 2008. By then the carrier will have changed into a holding company.
The units comprising catering, cargo, ground support and the Prince Sultan Aviation Academy are intended to link up with international strategic partners prior to partial privatization.
A more immediate challenge for Saudia is the need to adjust to domestic competition for the first time while pursuing privatization. Sama’s first flight to Jeddah took off from Dammam on March 15. Three weeks earlier NAS inaugurated commercial flights with three Airbus A320s initially between Jeddah and Riyadh.
The company plans to serve all the Kingdom’s airports increasing its fleet to 19 aircraft and projects 10 million passengers by 2011.
The Dammam-based Sama was launched with three Boeing 148-seat 737 aircraft to operate on routes between Dammam, Riyadh, Jeddah, Madinah and Jizan in the first stage.
Another five aircraft will be in service by the end of 2007 with a planned 35 aircraft in five years.
