Aug 13 2012
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New Saudi domestic carrier said to be entitled to discounted fuel
The announcement of the winning firms or consortium will be in October, while operations are expected to start at the end of next year. Bahrain's Gulf Air and Qatar Airways were short-listed among the final bidders for the license.
The move is an important as the higher fuel costs was a major factor in the collapse of Saudi low-cost carrier Sama Airlines in August 2010. Saudi Arabia, the biggest Arab economy with a population of over 27 million, still has one of the smallest airline networks in the region relative to its size.
Saudi Arabian Airlines, the national carrier, and private low-budget carrier National Air Services are the only options for flying within the country, where demand for flights is high.
More than 54 million passengers passed through Saudi Arabia's 27 airports last year, according to data from GACA, rising 13.6 percent from 2010. Licensed foreign carriers can fly in and out of Saudi Arabia but not within. With a price cap on domestic flights, private airlines have struggled with profit margins.
"Sama, and all other airlines throughout the region, experienced very low fares and somewhat slow demand for regional travel during the winter season (October 2009 through March 2010). Although revenues were up sharply during the summer peak season, it has not been enough to offset the heavy losses we suffered during the winter," Sama CEO Bruce Ashby said at the time.
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