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Saudia flying high thanks to revenue boost - ASHARQ AL-AWSAT English Archive
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Abdulaziz Alhamzi. (Asharq Al-Awsat)

Abdulaziz Alhamzi. (Asharq Al-Awsat)

London, Asharq Al-Awsat—Saudi Arabia’s flag carrier has enjoyed a remarkably successful 2014 so far, with growing revenues and plaudits from consumer auditors.

Saudi Arabia Airlines—known as Saudia—had its rating raised to ‘4 stars’ by the UK’s Skytrax airline and airport ranking company, and won in two categories of the company’s annual World Airline Awards, announced at this year’s Farnborough Air Show.

In an exclusive interview shortly after the awards were announced, the airline’s acting director-general Abdulaziz Alhazmi told Asharq Al-Awsat that the company had seen a 10-percent growth in revenue in the first quarter of the year, 2 percent above its own projections.

Alhazmi attributed the growth to a mixture of adding flights to new destinations, as well as an increase in flights to existing ones and improvements in customer service both on flights and on the ground.

“These awards are a sign of the improvement we made,” he said. “Since the start of 2014 and until now, we added around a million extra seats to our fleet, and every time we receive aircraft, we make amendments to our network, in order to increase the number of aircraft in our fleet.”

The airline was also climbing the global rankings of on-time performance, he said. “Last June, we achieved second place among world airlines according to FlightStats, an American website which monitors the performance of airlines.”

Alhazmi pointed out that Saudia recorded the highest performance in its history last June, in addition to the increase in revenue, seating capacity, load carried, and the number of passengers, despite the busy period of the summer season and the increase of flights during the Minor Hajj season.

But he denied that the growth in revenue was due to a hike in ticket prices. “The prices have not risen,” he said. “What happened was reorganization, because the prices which existed were available to the passenger as long as they booked 10 days before departure, and the earlier the passenger planned their trip, the lower the prices they paid.”

Alhamzi also pointed to the airline’s plans for expansion, both within Saudi Arabia—one of the world’s largest countries by area—and in new international destinations.

He said: “We do our best to satisfy our customers as we are the Saudi flag carrier, and we have to live up to our responsibility. We have not achieved our aspirations yet, and there is a steady increase and internal growth in domestic traffic which serves 28 domestic airports. We realize that there is a required seating capacity which we are trying to provide and we stress that we understand this issue and we are working with relevant parties within the government who are supporting us to find solutions for this issue.”

In April, Saudia launched a new Riyadh–Jeddah–Los Angeles flight, which now runs three times a week, and is examining the prospect of new destinations, according to Alhamzi.

“There are other destinations which are still at the stage of development to meet market demands. When we achieve our daily operation target or more, we will look at expanding the new stations. We have automatic mechanisms which show traffic type, traffic movement, and its seasonal tendency and direction, which allows us to know the viability of the routes,” he said.

He added: “The nearest continent we are looking at now is Australia, because of the presence of [Saudi] students [there], and trade and religious travel. We cannot identify the operational times for this route at the current time.”

He also spoke of plans to more than double the company’s fleet over the next decade, taking it from 131 to 286 aircraft between 2015 and 2025.

“The plan will be presented to the Board of Directors to discuss and ratify it, and then the types of aircraft and their sizes will be decided,” he said. “The plan will include adding new types of aircraft which cannot be revealed yet. The growth of the traffic will affect the choice of aircraft type, such as long-range aircraft, seating capacity and so on.”

Alhamzi said the expansion of Saudi Arabia’s airports and growing demand made the plan viable, together with overall growing demand.

“I think Saudi Airlines has a great opportunity for development, due to a number of factors including the opening of the new King Abdulaziz International Airport in the middle of next year, the development of the King Khalid International Airport, and the increase in demand from businessmen which is at pace with the economic growth in the Kingdom, as well as religious and student travel,” he said. “We are trying to attract all these opportunities by increasing direct flights or by making alliances—which was the reason for joining the SkyTeam alliance—or by operating old destinations, such as Toronto, Manchester and Los Angeles.”

Alhazmi also touched on the step-by-step privatization of the airline, a process which he said had accelerated since 2008.

“There is . . . the cargo [side of the business, which operates] in partnership with the private sector, and the ground services. We are working on offering [shares in the] ground services and cargo . . . on the stock market. What is [being] offered for privatization is the maintenance company and aircraft manufacturing, a proportion of which has been bought.”

He added: “We are working on privatizing sections, such as the Prince Sultan Aviation Academy, and a property development unit, as well as the primary airline company, which is currently owned by the state, while we work on the participation of the private sector.”

Alhamzi also said that Saudia’s entry into the SkyTeam alliance with 19 other airlines in 2012 had been a necessary step, and that Saudia brought valuable regional assets to the group.

“Every airline has two ways of facing growth and movement,” he told Asharq Al-Awsat. “It grows alone, which is costly—and will not cover the whole world—or it joins an alliance, which is the second way, and so the passenger can travel through Saudi to anywhere in the world through the SkyTeam Alliance.”

“Saudi Airlines was selected by SkyTeam from among all Gulf companies because of its domestic network and our network in the Middle East and North Africa.”