Saudi Arabia Opens its Skies for Foreign Carriers

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Saudi Arabian Airlines
Saudi Arabian Airlines

Saudi Arabia?s General Authority for Civil Aviation (GACA) had said on Sunday that, it will open its skies for foreign airline companies to operate domestic and international flights which will help the country to meet growing demand.

This decision will help both Saudi Arabia Airlines and private National Air Services to meet the growing demand. The GACA said it is currently working on different technical procedures for the bid which would be taking place in the month of January.

According to the state news agency reports, GACA has said that it will allow both local and foreign airline companies to apply for the license.

Jarmo Kotilaine, Chief Economist of National Commercial Bank, said ?Overall this is a good decision by bringing foreign carriers that other source of revenue you are likely to bring in more success than low cost carriers inside the kingdom had. The move also goes well with the Saudi restructuring.?

Earlier this year, authority was planning to open its sky for Gulf Carriers, but it was not fully prepared for it. To take the step ahead, The Shura Council, which was appointed by the king, said it is looking forward to give license to all Gulf Carriers and to operate domestic flights and meet the growing demand.

Once these airlines get the license then they will be having all the freedom to choose any Saudi airport as their base. GACA has also clarified that, ?We?ll not insist that they operate from specific airports and will give them multiple options, including free selection of domestic routes. Licensed airline companies will also be able to operate international flights within the limits of bilateral agreements.?

Prince Fahd Al-Abdullah, Assistant Minister of Defense and Aviation and Inspector General for Civil Aviation Affairs, said ?GACA is now working with specialized consultant to complete some procedures related to tenders to select and license new operators.?

Current Situation of Arab Airline Companies

Currently, there are two major airline operators in Arab country- state owned Saudi Arabian Airlines and low cost National Air Services, and both serve their service to around 27 million passengers yearly.

However, with the growing demand both airlines are finding it hard to maintain profit margin.
Saudi Airlines is one of the largest carriers in Middle East, and has planned to offer 450 million shares to other carriers of Middle East.

However, with the current airline crises and growing demands, Dr. Saad Al-Ahmed, Aviation Consultant in Riyadh said, ?The move will not be affecting the present Saudi Airlines because the national carrier is already working under heavy discount rate.? He also hopes that Air Arabia and FlyDubai would join hands and establish a strong airline company to meet the demand and improve financial problem.

However, he doubts about the sudden entry of foreign investors and airlines due to financial crises which the world is facing now. According to the news agency he stated, ?What I believe is international carriers and investors may not be keen to bid on the proposal. But startups like FlyDubai, Air Arabia and Jazeera will be interested in exploring this opportunity and will set up joint venture with Saudis.?

On asking about the future foreign investment in domestic airlines, Al-Ahmed replied, ?Currently with low quality and the capacity of Saudi airports and regulations expectations are weak. What I envisage is that we will have new airline, new model of transport and low carrier with small airplanes, due to low capacity of domestic destinations.?

Currently, everyone is eyeing on the development taking place in the GACA move and bidding that will be taking place by the end January next year.

Sources: Deccan Herald, Arab News, Wall Street Journal

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