Overview
Most industrial sectors in Saudi Arabia have been experiencing an economic boom, including aviation. For the past 60 years, state-owned Saudi Arabian Airlines has been the country’s only licensed operator for domestic and international flights. However, the Kingdom’s growing aviation sector has been greatly enhanced by the launch of two new domestically operating budget airlines, the privatization of Saudi Arabian Airlines and by a number of airport expansion projects throughout the Kingdom.
Market Demand
Due to the Kingdom of Saudi Arabia welcoming Umra visitors, who come to perform certain religious rituals throughout the year, and Haj pilgrims, who come to perform certain religious rituals during one specific time of the year, Saudi Arabian Airlines carried more than 17 million passengers during 2006. This is compared to 16 million in 2005 and 15.7 million passengers in 2004.
To facilitate domestic travel and to accommodate the increased number of passengers, the General Authority for Civil Aviation (GACA) awarded licenses to National Air Services (NAS) and Sama Airlines to begin operations as domestic, private, low cost carriers in December 2006.
National Air Services (NAS) owns five single-aisle aircraft to serve domestic destinations and is expected to expand to serve other destinations in the Middle East. NAS has a budget of $2 billion and plans to own a fleet of 100 aircraft by 2010 to serve its projected 10 million passengers by 2011.
Dammam-based Sama Airlines has launched with three aircraft to operate domestically within the Kingdom. They plan to own another five aircraft by the end of 2007 with a planned fleet of 35 within five years.
Moreover, in an effort to attract foreign investment, there are plans to privatize the national carrier, Saudi Arabian Airlines. This will also play a vital role in the development of the Kingdom’s aviation sector. By the end of 2007, the catering, cargo, ground handling, pilot training and technical services will become private, independent companies.
The Saudi government allocated contracts valued at U.S. $817 million to GACA to expand and upgrade the country’s existing airports. This will help to accommodate the increased number of passengers and to compete more successfully with other airports in the region. The allocation will also add to the economic, civil, social, political and religious development in the region.
By Yousef Daqqaq
