Tuesday, Jul 03, 2012

--Eyes Saudi market but any move contingent on industry "rethink" there

--Saudi Arabia represents "key growth area"

(Adds details, background throughout.)

By Tim Falconer

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--Qatar Airways on Tuesday expressed an interest in launching an airline registered in Saudi Arabia, but the carrier said it has concerns about excessive fuel charges and the Saudi government's policy of controlling domestic air fares.

Qatar Airways, in an emailed statement, said Chief Executive Officer Akbar Al Baker has held talks with Prince Fahad bin Abdullah Al Saud to discuss opportunities arising from the kingdom's newly-launched aviation liberalisation policy.

With a market that is underserved and keen for greater domestic air services, Al Baker said Saudi Arabia represented a key growth area.

The vice president at Saudi's General Authority of Civil Aviation told Zawya Dow Jones last month that the kingdom plans to open its skies gradually, phasing in new airlines to avoid an abrupt crowding of the sector. The Middle East's biggest economy is in the process of vetting applications for new airline licenses to operate out of the country, as it looks to shore up its under-developed transport sector to meet growing demand.

Mr. 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.

Capping airfares, he said, will never allow any airline to operate commercially in the kingdom, citing the demise of domestic carrier Sama Airlines due to such measures. Mr. Al Baker also stressed that other airlines operating domestic flights within Saudi Arabia were facing the same problem of rising costs, pointing out these needed to be addressed by authorities.

Last month, Mr. Al Baker said Qatar Airways, one of the biggest buyers of commercial jets over the past few years, plans to freeze aircraft orders at a time when the global aviation industry is struggling in the face of high oil prices and taxes, combined with fears over a shaky global economy and Europe's ongoing sovereign debt crisis.

-By Tim Falconer, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com; Twitter: @ZDJnews

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

03-07-12 0658GMT