Saudi aviation liberalization must be supported by higher safety standards

Enjoying the largest domestic market in the Middle East, the aviation industry in Saudi Arabia still hasn’t managed to replicate the rapid growth of its GCC neighbours because of the regulatory impediments. Nevertheless, as a result of the long-awaited reform, the GACA expects Saudi annual traffic to reach 100 million passengers per year by 2020. However, the increasing scope of operations still presents a lot of challenges, including those regarding aviation safety standards.

Currently in Saudi Arabia just the national carrier - Saudi Arabian Airlines - and a single LCC – flynas - serve a population of 28 million, in contrast to the four airlines available to the neighbouring UAE's 9 million people. However, with the domestic economy buoyed by high oil prices, a growing young and increasingly affluent population as well as improving aviation infrastructure and a market opening up to more competition, the outlook for Saudi aviation is strong.

The passenger traffic carried by the country’s local airlines increased at an annual average growth rate of 12.2% between 2008 and 2012 alone. However, the most significant change for Saudi Arabia’s market, which has been looming for some time, is set to come in 2014. Under the on-going regulatory reform process, two new players, Saudi Gulf Airlines and Al Maha Airways, have been already awarded licences to operate domestic and international flights and are expected to intensify the competition in the market. The related challenges, however, are also likely to follow.

“The increasing activity within the Saudi Arabian civil aviation sector will naturally affect the demand for appropriate line maintenance support of the intensified operation, requiring an increased number of skilled personnel and staff to maintain the new aircraft. However, while job opportunities in the aviation sector are on a rise, so is a shortage of people equipped with the right skills within the regional. The Middle East is expected to require over 53,000 additional technical personnel over the upcoming two decades,” says Asta Zirlyte, the Head of FL Technics Line Maintenance Dep. “At the same time, while establishing a new line station might cost up to $80 thousand in equipment and tooling, training of the appropriate amount of qualified professionals might add a significant amount to this number, not mentioning the time it requires.”

Al Maha Airways plans to have 10 A320s flying during its first 12 months of operations, and expects to add another 10 to 15 narrowbody aircraft followed by a number of widebody machines afterwards. If all goes according to the plan, the complete Al Maha Airways fleet should consist of around 50 aircraft. SaudiGulf Airlines has ordered 16 CS300s from Bombardier and intends to base itself at Damman, initially operating a limited schedule of three to four flights daily to Jeddah and Riyadh. A planned international expansion will cover routes in the Middle East, as well as Africa and South Asia.

In addition, flynas has embarked on a plan to take over 20% of Saudi traffic and carry 20 million passengers by 2020. The airline currently covers 23 Middle East destinations and is moving into the long-haul market seeking to serve an impressive eight destinations in five countries. The airline’s aircraft utilization has already improved and increased to from 5.4 hours per day in 2009 to more than 13 hours per day in 2013. Foreign LCCs are also watching the market in the Kingdom. Cebu Pacific, plans to operate to Dammam and Riyadh from Manila, targeting 1.5 million migrant worker market of Filipino expatriates, who are thought to be living in Saudi Arabia. 

Currently, many of the Gulf airports have either already surpassed or are nearing full utilization. As for Saudi Arabia, the airports in the country have lately been operating at an average passenger capacity utilization of 130%. To cater to the growing traffic, Saudi Arabia is making huge investments to expand its airports. 

“Reducing turn-around times might take some of the pressure off the insufficiently developed infrastructure, while this issue is being dealt with. This is exactly what third-party line maintenance providers might offer. Having much experience of working with LCCs, third-party line maintenance providers’ main focus is on minimizing the carriers’ maintenance-related downtime. The carriers would then be provided with the necessary reaction speed and faster AOG resolutions, which would result in significant cost savings to the carriers as well as the ability to focus on their primary activities. In addition, the HR-related issues could be managed on timely manner, as independent providers usually already have all the necessary capabilities to cover the possible fleet-related changes of their clients,” shares Asta Zirlyte, the Head of FL Technics Line Maintenance Dep.