Friday, April 8, 2011

KSA: Foreign Airlines Operating Domestic Routes

The Secretary of Saudi Arabia's Executive Council in February 2011 and later on 5 April 2011 the Assistant Minister of Defense and Aviation (click for full story) suggested that foreign airlines specifically from the Gulf enter the Saudi Domestic market to increase competition and stabilize prices to better serve the consumer. In the past Gulf carriers like Bahrain Air, Emirates, Etihad and Qatar Airways have shown  interest in entering the domestic market, Air Arabia (click for full story) defended the Saudi Government stance of keeping foreign airlines out of the Saudi Market.

The Saudi domestic market is a large market with an estimated population as of mid July 2010 of 25.7 millions of which 5.6 millions are expatriates and 27 airports. This market is currently served by the national carrier SAUDIA and NASAIR a Low Cost Carrier. So, in principle increased competition will benefit consumers by providing alternatives and lowering ticket prices.

Opening up the domestic market to local and/or foreign airlines is easier said than done, there are several legal and regulatory measures that have to be put in place or resolved:

  1. The most important is to remove all subsidies that SAUDIA enjoys. Last August 2010, SAMA ceased operation citing high operating costs and inability to compete.
  2. There are legal and regulatory issues to be resolved:
    1. The Criteria of selecting and qualifying the foreign airlines;
    2. The mechanism of awarding routes;
    3. The required legal status of these airlines in KSA. Are they required to register as Saudi companies? or will they be allowed to actually operate as a foreign entity?;
    4. Aircraft basing issues related to countries of registry and regulatory oversight, including AOCs.
The idea maybe exemplary, but unless the airline domestic market is restructured to allow home grown airlines  like SAMA to compete and prosper, it will be very difficult for foreign airlines to do the same.

No comments:

Post a Comment

Labels

1 Goal 2010 2012 2013 9/11 AA Abu Dhabi ADAC Air Arabia Air Canada Air India Airberlin aircraft airlines airports ambitions American Airlines Amman aviation AVOD AWST B707-300C B767 B777 B787 BA Bahrain Bahrain Air BangaloreAviation Boeing branding British Airways Business Aviation Cabin Crew Canada change chapter 11 CO Commercials communication community compliance contingency continuity Continuous Improvement cost effective creativity Culture curricula Customer Service Delta Detroit Metro DFW Doha DTW Dubai Dubai Air Show DWC efficiency emergency Emergency Response Emirates employees environment ET409 Etihad ETS EU FA FAA family Flight Attendants flight(s) Flightglobal flydubai GACA Galaxy Tablet GAMCO GCC globalisation GOL Greece Green Gulf Air Hala Hamburg happy health home Hopenhagen Human Resources IFE India Iran Iraq Iraqi Airways Jaffa Jazeera Airways Jet Airways Jordan Just Culture Kuwait Airways LA LCC leadership low cost maintenance management manpower MEA MEBAA MENA Michigan motivation MRO MROAM Oneworld Palestine passengers passion people Philadelphia planet earth Privatization professional QAIA Qantas Qatar Qatar Airways Quality Quick Service Restaurant Radio Repair Stations Risk road roots ROTANAJET Royal Jordanian Safety Sanctions. Sao Jose Dos campos SAT Saudi Arabia Saudi Arabian Airlines Security Sharjah Airport SimliFlying Simplicity SKYTEAM SMS social media Southern California Southwest Airlines Star Alliance Sudan Airways support target teachers Technology terrorism tolerance Toulouse tourism traffic Training transition travel TSA Turkey Twitter UA UAE UBM US Airways VIA Rail Violin Vision volcanic ash Wataniya Airways
 
Top Blogs
Powered By Invesp