Shoura members call to reform aviation industry

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RIYADH - Engineer Osama Kurdi, a member of the Shoura Council, stressed that privatizing commercial aviation in the Kingdom requires government responsibility for monitoring the sector and addressing obstacles, new airlines face as they attempt to build their businesses.

Foreign investment in the airline sector and other industries will provide benefits from increased competition and the technological experience of companies and investors that choose to participate, he said.

Dr. Ihsan Abu Hleiqah, a former Shoura Council member said that because privatization is a new experience, it must be improved to ensure that investors have opportunities to succeed.

He pointed out that the aviation sector should receive support from the General Authority for Civil Aviation, through organization of the market and protection of competition.

Authorities should limit control by the national carrier, which has dominated the sector, owns a big fleet of aircraft, knows the market and receives government support, Abu Hleiqah said.

New aviation companies are hindered by the price of fuel and the authority should ensure that all carriers receive the same assistance and privileges, particularly as they relate to fuel costs, he added.

An official source in Sama said the company is coordinating with other carriers so passengers who booked seats on the airline can fly on other carriers.

The company will keep in contact with passengers who reserved flights after August 24, 2010 and make arrangements for their air travel, the source said.

He added that the rise in fuel prices is among the reasons that led to the airline shutting down as of Tuesday.

Sama began flying in 2005 and offered service to 10 destinations in Saudi Arabia, Egypt, the United Arab Emirates, Jordan, Syria and Sudan. The carrier, which flew 164 weekly flights with a fleet of six Boeing 737-300s, said last year that it signed agreements to buy 58 Airbus A320s and 12 787s in the next three years, according to published reports.

Sama has long expressed concerns about aviation regulations in the Kingdom and said it was forced to fly some routes that were not profitable. Airline officials have said delays in reforming regulations on the price of fuel, domestic fare caps, and subsidies that meant the airline had to cover mounting costs itself, Air Transport Intelligence, an industry publication, reported.

Earlier this year, Sama stated that the failure to overhaul the regulatory structure, which it said provided unfair assistance to Saudi Arabian Airlines by providing large domestic fuel discounts, meant it would have to stop operating the public-service routes, Air Transport Intelligence reported.

The airline, which suffered a loss of SR1 billion, had received a SR200 million loan from the government to help with fuel costs and SR500 million from shareholders, but it needed another SR300 million to keep flying, according to a Bloomberg report.

Bruce Ashby, Sama's executive president, said airline officials are working to find the money they need to resume operations.

By Majed Al-Maimouni

© The Saudi Gazette 2010