The entrance of Qatar Airways and Gulf Air into Saudi Arabia’s domestic aviation market this year will be “chaotic” due to insufficient infrastructure in the country, according to the CEO of low-cost carrier nasair.
The kingdom’s General Authority for Civil Aviation (GACA) earlier this year awarded licenses for the two new operators to begin internal flights, which are currently only served by nasair and incumbent Saudi Arabian Airlines.
GACA is spending billions on upgrading airports such as those in Riyadh and Jeddah, but Francois Bouteiller believes that these hubs will initially struggle to accommodate the influx of new services.
“The issue is that they started late and they’re much behind the curve when you look at the progression and the market demand,” Bouteiller told Arabian Business. “If you’re going to add two more airlines in there, the first year might be very chaotic for them, because they will really struggle before the new airports and infrastructure is there.”
Qatar Airways has said that it will place ten narrow-body aircraft in Saudi Arabian airports, while Gulf Air is yet to make public its plans.
“Sometimes when you arrive you have 20, 30, 40 minutes to wait for a gate to be available to unload your passengers,” Bouteiller added. “This is with today’s number of airplane - we’re adding ten airplanes this year. You can imagine that you have two new airlines that will add services, between Riyadh and Jeddah most likely - where are they going to put them?”
According to CAPA Centre for Aviation, Saudi Arabian Airlines, known as Saudia, currently controls 94 percent of the domestic market, with nasair the remaining 6 percent. A third domestic operator, SAMA, went bankrupt in 2010.
Bouteiller said that he welcomed the competition that Qatar Airways would bring to the market, but admitted it would bring added pressure for both nasair and Saudia.
“Having new carriers that come in with a structure that is very well funded will put pressure [on us], but will put pressure on Saudia as well,” he said. “We have tighter margins, but we have a lower cost base. If you look at Saudia, they’re still asking the government for significant billions to cover their losses.”
Bouteiller added that nasair was on track to record its first ever year of profitability in full-year 2013.