Saudi market grows as liberalisation lets LCCs in; Nas Air and Sama growing internationally

Everyone benefits: Liberalisation has ended Saudi Arabian Airlines’ monopoly, but the national carrier is now more efficient as a result of competition with the low-cost upstarts.

In a country where there are 27 airports with scheduled, commercial operations, Saudi Arabia’s aviation market is difficult to get a full picture of. Nearly 90% of the country’s 42.2 million airport passengers are, however, concentrated at the four international airports; Jeddah, Riyadh, Dammam and Medina. Since anna.aero last analysed Saudi Arabia in April 2008, data has been released which shows that the greatest growth in the last 15 years took place in 2007. The four main airports then grew by 12.1%. In Medina alone, the growth was 75%. This was the year that saw the establishment of two new low-cost carriers; Nas Air and Sama.

In 2008, growth was more modest, as a result of falls in Riyadh, while strong growth was still to be seen in Jeddah. This can largely be attributed to Saudi Arabian Airlines having concentrated its network around its Jeddah hub.

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Source: GACA

The last decade has seen consistent growth, even in times of global financial instability, such as after 9/11, as well as during the SARS epidemic and the Second Gulf War

Many of the country’s remaining airports are served by Public Service Obligation (PSO) flights, servicing the communities living in remote desert towns. All domestic flights also have capped fares, which puts pressure on the domestic airlines; however, the three carriers Saudi Arabian Airlines, Nas Air and Sama now all enjoy subsidised fuel in return.

Egypt now largest country market; Saudi Arabian Airlines dominates both domestic and international

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Source: OAG Max Online for w/c 7 December 2009 and flysama.com

Since our last visit to the Saudi Arabian market, Egypt has overtaken the United Arab Emirates as the leading international country market non-stop from Saudi Arabia and now stands for 22% of capacity. The importance of pilgrimage traffic to Saudi Arabia is reflected in the top country markets all having considerable Muslim populations.

In the domestic market, Saudi Arabian Airlines dominates with an entire 85% capacity share, followed by Nas Air at 10% and Sama at 5%. In the international market, the Egyptian market dominance is reflected in that Egyptair is the second largest carrier, after Saudi Arabian Airlines. The Saudi low-cost carriers Nas Air and Sama have, however, now risen to third and fourth place respectively.

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Source: OAG Max Online for w/c 7 December 2009 and flysama.com

While Saudi Arabian Airlines offers 42 international, scheduled non-stop destinations, Nas Air and Sama offer 10 and 7 destinations outside Saudi Arabia respectively.

Saudi Arabian Airlines restructuring and privatising

When anna.aero studied Saudi Arabia in April 2008, Saudi Arabian Airlines had a 40% share of the international market. Since then, the national carrier has rationalised its network, reducing capacity by 20%. Still, Saudi Arabian is the second largest Middle Eastern carrier by capacity after Emirates, even though the Saudi airline has a more discreet profile than several smaller carriers in its neighbour states and does not share the same growth ambitions.

Liberalisation of the Saudi market has led to the decision to privatise Saudi Arabian Airlines, which is currently being restructured in preparation for this, including modernisation of the fleet. These efforts may lead to further liberalisation in the shape of the abolishment of subsidised fuel and the domestic fare cap.


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