Qatar Airways is in talks to introduce an airline in Saudi Arabia, hot on the heels of the Kingdom's newly launched aviation liberalisation policy.
Saudi Arabiaannounced earlier this year it would approve new airline licenses in September, ending years of speculation about whether the country would allow foreign airlines to fly domestic routes. Qatar Airways CEO Akbar Al Baker met with Saudi Arabia’s Prince Fahad bin Abdullah Al Saud to discuss the potential venture.
“With a market that is underserved and keen for greater domestic air services, the Kingdom represents a key growth area,” said Al Baker.
However, he said that while Qatar Airways is interested to enter the Saudi domestic aviation market, their investment will be dependent on the host government’s careful reconsideration of certain policies.
During the meeting, the Al Baker expressed concern over excessive fuel charges in the Kingdom and the government’s policy of controlling domestic air fares, which he believes, are not in the best interest of both travellers and airline operators.
“Such factors are detrimental to airlines as fuel represents a major cost of their operations. Capping airfares will also never allow any airline to operate commercially in the Kingdom,” he said, citing the demise of domestic carrier Sama Airlines in 2010.
Saudi Arabiahas invested considerably in boosting its aviation sector, allocating more than US$12.5 billion for airport-related projects. The first of three phases of the new King Abdulaziz International Airport in Jeddah, for instance, is currently under construction at a cost of US$7 billion.
The new facility will have the ability to handle 30 million passengers annually, over three times its current capacity, when construction of the first phase is completed in 2014.
Despite the hefty amount injected into the Saudi airport infrastructure development programme, CAPA reported that the country’s domestic passenger market has expanded just 11 percent in the past five years.
“Without effective competition, the Saudi domestic aviation market appears moribund. Last year, 22.6 million passengers flew in the country’s domestic market. Growth was limited to just 2.3 per cent – well below growth in the rest of the Middle East,” the agency mentioned in a recent report.