JEDDAH: Saudi Arabia on Sunday announced its plan to open up its skies to foreign airline companies. Prince Fahd bin Abdullah, president of the General Authority of Civil Aviation, said GACA would invite tenders in the third week of January from Saudi and foreign airline companies as well as foreign investors to operate domestic and international flights from Saudi airports.
“GACA is now working with a specialized consultant to complete some procedures related to tenders to select and license new operators,” Prince Fahd said in a statement. He hoped that an announcement inviting tenders could be made by the end of the lunar month of Safar (Jan. 23). Asked whether the move would attract foreign investors to the Kingdom’s civil aviation sector, Prince Fahd said: “Let’s wait and see the response of companies.”
GACA said it would provide airline companies that make the best offer with all facilities to operate domestic and international flights successfully. “We’ll not insist that they operate from specific airports and will give them multiple options, including free selection of domestic routes,” it added. “Licensed airline companies will be able to operate international flights within the limits of bilateral agreements,” the GACA statement said. The licensed company will have the freedom to choose any Saudi airport as its hub and also to operate international flights. Dr. Saad Al-Ahmad, an aviation consultant based in Riyadh, said it was for the first time Saudi Arabia was opening up its skies to foreign airlines and investors. He hoped Gulf investors and airlines such as Air Arabia and FlyDubai would join hands with Saudis to establish strong airlines to enter the market.
Speaking to Arab News, Al-Ahmad said the move would not affect Saudi Arabian Airlines as the national carrier has been operating domestic flights at heavily discounted rates. Al-Ahmad said he was doubtful whether foreign airlines and investors would enter the market in the wake of global financial crisis. “What I believe is international carriers and investors may not be that keen … but startups like FlyDubai, Air Arabia and Jazeera might be interested in exploring these opportunities to set up joint ventures with Saudis,” he said, adding that the GACA statement was not clear about foreign operators in domestic routes.
“What I read from the statement is that they are hoping for an international mode of action in this regar … for example, a Saudi joint venture with a professional, experienced carrier with the Saudi partner having the major stake,” he said. “It’s just like in the United States, where the authorities do not allow more than a 25 percent stake for a foreign partner on domestic routes.” When asked whether in the future there will be foreign participation in domestic routes, Al-Ahmad was of the view that “currently with the quality and capacity of Saudi airports and regulations the expectations are weak. What I envisage is that we will have a new airline, a new model of transport and it could be a low-cost carrier with small airplanes (70-seater) due to the low capacity range of the domestic destinations.” – Arabnews