2013 A Year of Transformation In KSA

As 2012 winds down, good news from the region continue, with Etihad passing the ten (10) Millions passengers carried mark.

However, the most exciting news are GACA in Kingdom of Saudi Arabia (KSA) awarding two (2) operating licenses not one (1) to Gulf Air and Qatar Airways.

KSA is the biggest market in the region with a population of 28 millions and 27 airports and boasts the largest domestic market in the region. The operating license will authorize both domestic and international destinations. Recently, GACA also looked at fuel prices and it is expected that airlines will be allowed to raise fares by 10%.

The market is currently dominated by Saudia (government owned) and NAS AIR a low cost carrier. The government wants to privatize Saudia and has been selling parts of some of the airline divisions like Cargo and Catering.

2013 should see the transformation of the aviation market in KSA with the entry of Qatar Airways and Gulf Air, both with extensive networks, very competitive, with immense resources and very experienced. Both Saudia and NAS AIR will face competitive pressures in terms of levels of services, passenger feeds and pricing. Competition will not be only on the domestic routes but will spill over into international markets as the new entrants are awarded international routes from their KSA hubs and they integrate their KSA networks with their own, providing massive passenger feeds in both directions.

A Happy and Prosperous New Year to you and your loved ones,"live long and prosper".

Middle East Business Aviation

Business Aviation in MENA is starting to pick up, the sector was adversely affected by the financial crisis in 2009. According to the Middle East Business Aviation Association (MEBAA) the sector is worth one Billion USD annually and expanding. As a precursor to any further discussions, a look at the regulatory environment in MENA is required in order to understand the challenges and problems facing the sector.

Most of the countries in MENA with the exception of the Kingdom of Saudi Arabia (KSA), have adopted the EASA EU-OPS as the basis of their regulations. GACA in KSA have the FAA regulations as the basis of theirs.

The FAA has developed different regulations to cater for different sectors of the industry Part 91 (General operating and flying rules), Part 125 (Operations of large aircraft greater than 20 passengers or 6000 lbs payload when common carriage is not involved), Part 135 (Regional and Commuter airlines) and Part 121 (Air carriers). Commercial operations are authorized through an AOC under Parts 121 and 135. Private operation is authorized under Parts 91 and 125, however Part 91 has provisions for operations allowing a certain amount of charges to be collected and to allow Netjets and time sharing. The definition of private carriage and common carriage is defined in FAA AC120-12A. Private carriage operator do not  have to adhere to the same strict operating rules that are mandated in Parts 121 and 135.

EASA on the other hand has EU-OPS1 that is the equivalent to FAR Part 121 and 135. Except for a few provisions that are related to the number of passengers carried on board or the aircraft maximum take off weights all "common carriage" operators require an AOC and have to adhere to strict rules. In essence a corporate jet operator engaged in "common carriage" operates to the same rules as a legacy or a low cost carrier.

These differences in regulatory regimes have posed challenges for Business Aviation of commercial and safety implications, subjects that will be addressed later.

2013 Round The Corner

Having survived the Mayan Apocalypse and we are assured of a 2013, it is a good time to look
at what is happening in the MENA region now and what will shape events in 2013.

1. Australian Regulators tentatively approved the Emirates/Qantas agreement to relocate the Qantas
    Singapore hub to Dubai and code share.

2. Etihad is rumored to be looking at purchasing 49% of Kingfisher or maybe 24% of Jet Airways, either
    way it is looking for big time expansion in India.

3. Qatar Airways joined Oneworld and started operating the B787.

4. Saudi Arabia's GACA postponed the third airline license until 2013. However, it is reported that domestic
    fares will rise by 10% in 2013. This has been a sticking point with the new entrants.

5. The CEO of Gulf Air will be leaving by the end of the month and the Deputy CEO has been appointed
    acting CEO, until such time the Board decides on a permanent replacement. He is expected to be a
    Bahrain national. The last Gulf Air PCE from Bahrain was Mr. Ibrahim Al Hamar now Managing Director
    of Bahrain Air who was replaced by James Hogan. The airline scaled down their B787 and converted the
    A330 orders into A320s.

6. Iraqi Airways took delivery of its first A330-200 and B737-800. Now that the dispute with Kuwait
    Airways over damages resulting from the first Gulf War in 1990 has been settled, Iraqi Airways is
    expected to expand.

7. The privatisation of Kuwait Airways has been launched with the formation of a company to manage the
    airlines fleet renewal and staff issues. Certainly, the resolution of the dispute with Iraq will help matters
    specially that the airline will get half of the award as a cash infusion ($250 millions).

8. Royal Jordanian is counting down towards its 50th anniversary and took delivery of the last A320 in its
    fleet renewal plan.

Of course there are many many other exciting stories about the airlines of the region that will certainly unfold in 2013.