Saudi budget carrier has reduced losses in 2012 so far by 70 percent, says CEO
Saudi Arabian budget carrier Nas Air will be profitable next year for the first time since it started operations in 2007, the CEO of parent company National Air Services (Nas Holding) has said.
"Next year we are anticipating a real profit for Nas Air," Sulaiman Al Hamdan said in an interview with Arabian Business. The airline made a SAR72m profit in the third quarter of this year, but will end 2012 with a small loss, he said. Nas Air is currently the only low-cost airline operating out of the kingdom.
"For 2012 we have managed to reduce our losses by 70 percent compared to 2011," Hamdan said. "Fuel is one part. What we have done is improved our operational efficiencies. Our aircraft are flying now an average of 12 hours. We have improved the productivity of our crew, so that they're flying a range of 90 hours. We have improved our revenue by 28 percent."
The airline, which flies to six domestic routes within the kingdom and nineteen foreign destinations, has a 75 percent seat load factor, up from 62 percent in 2011, with an aim of boosting it to 80 percent, Hamdan said. It plans to add 50 percent more seats in 2013 by increasing flight frequencies, opening new routes and adding more aircraft to its fleet in the first six months of next year.
To cut costs Nas Air is also phasing out Brazilian-made Embraer aircraft from its fleet and moving solely to Airbus.
"Operating two types of aircraft is very costly from all aspects of maintenance, training, pilots and spare parts. It doesn't fit with the LCC (low-cost carrier) model," Hamdan said.
The Riyadh-based carrier, which is 37 percent owned by billionaire Prince Alwaleed bin Talal's Kingdom Holding, started operating in 2007 and has suffered consistent losses due to higher oil prices and political instability in the Arab world, causing it to withdraw from several countries. In 2010, Sama Airlines, another budget carrier that operated in Saudi Arabia, suspended operations after amassing over US$300m in losses.
Saudi Arabia plans to open up its aviation market by issuing a third operating licence by the end of this year for which 14 companies have applied. The licence will allow the carrier to operate both local and international flights. Qatar Airways, Bahrain Air and Gulf Air are among the airlines bidding for the licence.
Two criticisms of Saudi Arabia's aviation industry have been the fuel subsidies given to national carrier Saudi Arabian Airlines and a cap on domestic fares, which have disadvantaged competitors.
Nas Air withdrew from India, Syria and Yemen and is considering flying to destinations like Ethiopia, Iran and Iraq as part of its strategy to operate within a three-and-a-half-hour radius from its base in Saudi Arabia, Hamdan said.