Saudi Arabian General Authority of Civil Aviation (GACA) announced it would open tenders in Jan-2012 to award licences for foreign carriers to operate domestic and international flights from Saudi airports. According to reports by Arab News, the GACA hopes to make the tender announcements by 23-Feb-2012. Carriers awarded tenders will be permitted to operate any domestic route and will be given multiple options with regard to hub airports. International operations will be permitted within the terms of existing bilateral air services agreements. Prince Fahd Al-Abdullah, Assistant Minister of Defence and Aviation and Inspector General for Civil Aviation Affairs, said he was doubtful foreign investors would invest in the Saudi aviation market but he expects local LCCs such as flydubai, Air Arabia and Jazeera Airways would show interest in entering the market. Foreign carriers would be legally prevented from controlling a majority of traffic on domestic routes.
Saudi Arabia to open domestic market to foreign carriers
You may also be interested in the following articles...
Qatar Airways grows in Saudi Arabia as it catches up to flydubai and appears to end Al Maha ambition
Often overlooked in the story of Gulf aviation superconnectors is Saudi Arabia. A large and underserved domestic and international market in its own right, Saudi also possesses hub capability to challenge its better known rivals. 13 Saudi cities have international service but the flag carrier Saudia only serves five. Foreign airlines have moved in, taking advantage of Saudia's absence and the often favourable geography.
Qatar Airways intends to launch service to two new Saudi points in 2017, bringing its total number of services to 10 as it seeks to narrow the gap with the 13 destinations of the leader, flydubai.
In 2016 Qatar Airways overtook flydubai and Emirates in capacity size, making it the largest foreign airline in Saudi. Qatar's organic growth comes as it is increasingly likely that its proposed Saudi start-up, Al Maha Airways, will not launch. Saudia accounts for only 31% of Saudi's international market. This is likely to grow as Saudia continues its quiet revitalisation, aided by improved hubs at Jeddah and Riyadh. There is also a dual brand strategy with the LCC start-up flyadeal.
Airline disruption: it will happen in the next decade - but no one is preparing for it
Why so unprepared? It seems inconceivable that the structure of an industry with so many artificial constraints can remain intact much past 70 years, while all around it has changed.
This decade alone has been witness to major disruptions in the travel and transportation industries. Most prominent have been in ride sharing – Uber – and in hospitality – Airbnb. Telecommunications, media and music industries have also been turned on their heads; banks and payments are in the firing line; retail generally is being rapidly transformed. There is scarcely an industry whose fundamental structure remains intact. Except the airline industry.
In all cases disrespectful startups, usually applying relatively simple but sophisticated IT solutions, have taken on legacy operations. The legacy industries under attack typically involve extensive capital investment, and are often characterised by significant, unhelpful, and highly intrusive government regulation that restricts competition.
Certainly the legacy airlines have had to deal with a new breed of low cost operations, long and short haul. But almost without exception those legacy operators are still there, fundamentally unchanged.
In terms of other industries, this is no more than fiddling around the margins. And time is running out.