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Saudi Arabia’s first low-cost airline Sama plans to start flights by the summer and expects to carry at least half a million passengers by the end of the year, the company’s top executive said.
Sama, which means elevation in Arabic, will lease up to seven Boeing 737 aircraft by December to tap the lucrative domestic market before starting regional services, CEO Andrew Cowen said. “Serving neighbouring Gulf countries will depend on authorities” approval,” he told Reuters. “The market here is important, with a population of more than 25 million and very strong demand from a customer base left with little choice in terms of prices.”
Saudi authorities are gradually liberalising air transport services by opening domestic flights to private investors. The kingdom also plans to privatise the flagship carrier Saudi Arabian Airlines. With a paid-up capital of 200 million riyals ($53.3 million), Sama was founded by Investment Enterprises Ltd, which is chaired by Prince Bandar bin Khalid al Faisal. It has about 30 other shareholders, including the Olayan Financing Company.
Sama will begin serving mainly Riyadh, Dammam and Jeddah, carrying frequent travellers and pilgrims, Cowen said. The firm aims to post a profit by end-2007 at the latest, he said. “We aim to reach 10 million passengers by 2010... from, let’s say, half a million by the end of December 2006,” Cowen added, hinting that the target for this year was a modest estimate.
The company will directly employ 350 people in its first year and 1,200 by the end of 2010.
Another Saudi firm, National Air Services (NAS), said last year it would launch a low-cost airline and was negotiating with European plane maker Airbus to buy four A320s. NAS says it will also set up a $100 million luxury airline, Al Khayala, to fly between the capital Riyadh and the Red Sea city of Jeddah, but has not said when either will start.