Qatar registers airline in Saudi to gain foothold in the Kingdom

The Saudi government has already said it would be looking to external airlines to help boost its domestic air transport network as with more than 25 airports the Kingdom is set for a massive transportation expansion.

Emirates from Dubai and Gulf Air from Bahrain were already widely believed to have been studying ways of entering the domestic market and linking to their hubs for international flights.

Last year Qatar Airways were in talks with Saudi Arabia’s independent airline Nasair about the Riyadh carrier providing feeder services.

But now Qatar have changed the game.

Chief executive officer Akbar Al Baker has held talks with HRH Prince Fahad bin Abdullah Al Saud to discuss opportunities arising from the Kingdom’s newly-launched aviation liberalisation policy.

After those talks Al Baker said the Kingdom represented a key growth area with a market that is “underserved and keen for greater domestic air services.”

Many industry analysts believe the ‘underservice’  in the Saudi domestic market has been in many ways due to the Saudi government support of monopolies in areas such as ground handling, subsidies and fuel charges.

Low cost carrier Sama ceased operations in 2010, alleging it was a victim of a two-tier fee charging that subsised the national carrier Saudia. Rival Nasair also complained it was buying fuel cheaper in India that it could get it from Saudi providers.

The issue was taken up by Al Baker with Prince Fahad and he expressed particular concern over excessive fuel charges in the Kingdom and the government’s policy of controlling domestic air fares which, he said, were not in the interests of the travelling public nor airline operators. 

Al Baker said such factors were detrimental to airlines as fuel represented a major cost of operations.

Capping airfares, he said will never allow any airline to operate commercially in the Kingdom, He stressed that other airlines operating domestic flights within Saudi Arabia were facing the same problem of rising costs, pointing out these needed to be seriously addressed.

Al Baker said Qatar Airways was keen to invest in the Saudi domestic aviation market, but this was dependent on a fundamental rethink by the government of certain factors which needed to be tackled.

Analyst Saj Ahmad commented: “Qatar Airways' interest in starting up a Saudi-based airline will come as welcome news for the Saudi Government, which to date has not yet seen much in the way of interest since launching its much talked about aviation policy.

“As Akbar Al Baker rightly points out, conditions in the country are not yet ripe to launch a new airline while fares and fuel surcharges are effectively forced upon airlines by the Government and that will have to change if the Saudi's want to increase competition and attractiveness to the country.

“That said, with just Saudia and NAS Air in the country, Qatar Airways making a play here could be just the sort of move Al-Baker was looking for to grow traffic into Doha as well as dispensing the need for a dedicated low cost airline.”