Qatar Airways delays Saudi operation 'Al Maha Airways' until 2014 as government dabbles on reform

Qatar Airways has named its forthcoming Saudi Arabian carrier "Al Maha Airways" but says it will not start operations until the first half of 2014 at the earliest. While Qatar has been unusually quiet on the operation and is not known to have ever stated a launch date, Saudi regulators had said it would launch before the end of 2013 as part of its liberalisation process. Qatar, along with a Gulf Air-linked group, was awarded in Dec-2012 a licence to operate domestic flights in Saudi Arabia as part of overdue reform in the aviation and tourism sector.

The Saudi government is right to rejuvenate the sector, but reform in early initiatives - the privatisation of Saudi Arabian Airlines - has proven slow. It now seems loosening the reigns on the domestic market is more challenging than imagined by regulator General Authority of Civil Aviation. GACA says it has had prolonged negotiations with government entities to reduce fuel prices for new carriers. Saudi Arabian Airlines receives fuel subsidies that distort the market and forced the exit in 2010 of start-up Sama. A cap on domestic fares makes some flights unprofitable even for Saudi. Qatar Airways CEO Akbar Al Baker told Reuters in reserved remarks he has an "undertaking" from Saudi authorities that these two "contentious issues" will be resolved. While domestic growth has lagged international growth - creating opportunity - there are, as Mr Baker said, "many challenges".