Saudi Gulf Airlines and Al Maha Airways Set to Fly in 2015

Al Qahtani Group (linked to Gulf Air) and Qatar Airways were both selected in late 2012 to bring new competition into the Saudi Arabian domestic market as part of a series of reforms. Both have been working with the local regulator to establish their respective businesses, Saudi Gulf Airlines and Al Maha Airways, but despite an initial suggestion these carriers would take-off by the end of 2013, we are still awaiting their arrival into the local skies.

The long-awaited arrival of new entrants into Saudi Arabian domestic skies is set to take place before the end of the year, bringing new competition in what for a long time has been a highly regulated market dominated by the Kingdom’s state-controlled national carrier, Saudia and more recently also served by NasAir, one of the fastest growing operators in the Middle east region.

Al Qahtani Group (linked to Gulf Air) and Qatar Airways were both selected in late 2012 to bring new competition into the Saudi Arabian domestic market as part of a series of reforms. Both have been working with the local regulator to establish their respective businesses, Saudi Gulf Airlines and Al Maha Airways, but despite an initial suggestion these carriers would take-off by the end of 2013, we are still awaiting their arrival into the local skies.

Saudia’s long-standing monopoly in the local market ended in 2007 when nasair started operations and it also faced competition from low-cost start-up Sama, although the latter was unable to compete with the flag carrier due to the fuel subsidies it receives from the State and which distort the market.

This and other issues are among the factors that have delayed the launch of the two start-ups, but correspondence from their backers this past week suggest that both will take to the air before the end of the year after gaining initial regulatory licences, an important pre-cursor to taking flight.

Saudi Gulf Airlines is aiming to start operations on November 1, 2015 and will be based at Dammam’s King Fahd International Airport. It will initially serve two local markets (Jeddah and Riyadh) and one international destination with a fleet of four Airbus A320s, according to Abdel Hadi Al-Qahtani & Sons Group president and senior adviser, Samer Majali. “We are working with the General Authority of Civil Aviation (GACA) in preparation for starting operations to obtain the technical license,” he told Reuters this week.

In addition to the A320 aircraft, the airline signed a $2 billion deal with Canada's Bombardier last year to purchase 16 CS300 CSeries modern generation aircraft with an option for a further ten. These are due for delivery from 2016 after certification of the new airliner and will be configured with between 130 and 160 passengers.

Al Maha Airways

Al Maha Airways also plans to inaugurate operations before the end of the year and has already taken delivery of its first four A320s, which are currently operating on the network of its parent, Qatar Airways. Although it may not yet be operating in its own right, the airline made history in late April this year when it took delivery of the four aircraft on the same day.

“It is a moment of significant pride to be welcoming the first aircraft of the new Al Maha Airways fleet, let alone four such aircraft in the same day. Featuring the distinctive new livery of Al Maha Airways, these new A320 aircraft will offer passengers the opportunity to travel on board the latest and most modern aircraft in the skies,” said HE Akbar Al Baker, chief executive officer, Qatar Airways Group and chairman of the venture at the signing ceremony at the Airbus Delivery Centre in Toulouse.

Like Saudi Gulf Airlines, Al Maha Airways will also focus on Saudi Arabia’s major markets, including Jeddah and Riyadh. However, it also plans to link the cities with second-tier destinations such as Abha, Gassim and others.

In our analysis, below, we highlight the largest city pairs in the Saudi Arabian domestic market during the first quarter of 2015. The Jeddah – Riyadh point-to-point market was over 850,000 passengers during the three month period, a 25.4 per cent share of domestic O&D demand. In fact, the cities’ King Abdulaziz International Airport and King Khalid International Airport were at one end of the rest of the top 15 domestic markets with Dammam – Madinah the biggest city pair not involving one of the cities (ranked 16th with just over 50,000 passengers in Q1; a 1.6 per cent demand share).

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