Head of budget carrier says more competition good for market, despite frustration over subsidies
The head of the Saudi Arabian budget airline FlyNas has said he is not worried by the competition posed by new players set to enter the market next year, despite frustration over subsidies offered by local aviation authorities.
Saudi is currently served by just FlyNas and government-run Saudi Arabian Airlines, but these will be joined in 2014 by a Qatar Airways-backed Al Maha Airways and Saudi Gulf Airlines, which this year won licences to operate domestic services.
“Competition will bring the best for customers at one end and it will bring a good pressure on all of the operators to provide good service,” Sulaiman Al Hamdan, chairman of FlyNas holding company Nas Holding, told Arabian Business.
“The size of Saudi Arabia is quite huge, it’s three quarters of the entire size of Europe and there are areas that are extremely underserved. The main hubs where we operate to and from are also underserved. So the market is there. We try to fill some of the gap, but we can’t fill all of the gap,” he added.
FlyNas, which operates 19 Airbus A320 aircraft across a network of 30 domestic and international destinations, recently underwent a major rebrand which included the introduction of business class and long-haul services ahead of the new entrants’ arrival.
Al Hamdan expressed frustration over the Saudi aviation market’s skewed competitive landscape, which sees Saudia offered hefty subsidies on fuel, which may also be extended to new domestic players. FlyNas’s fuel expenses are so high, he says, that the airline refuels its jets in neighbouring countries.
“We’ve been informed that there are certain packages designed for the newcomers, and we were hoping that those would be released so as to benefit us,” he added.
Al Hamdan announced in 2012 plans for an initial public offering (IPO) in Riyadh in the first quarter of 2014. The airline has since appointed Saudi Fransi Capital as bookrunner for the flotation, but Al Hamdan concedes that the original timeframe may prove tough to stick to, with the IPO potentially not even taking place next year at all.
“We are providing all the necessary information that they require... It’s very difficult to guess or to decide when, because there are so many other factors,” he said. “I’m not quite sure to be honest. I can’t give any specific answer here.”