SaudiGulf Orders 10 A320s as Kingdom Liberalizes Air Transport

Understood to amount to the largest and, likely, only major commercial orders to take place at the Bahrain International Airshow this week, SaudiGulf Airlines, the Dammam-based full-service Saudi airline, on Thursday announced a firm order for 10 Airbus A320-family narrowbodies and options on another 10, along with 45 CFM Leap-1A engines and a 12-year MRO contract, in a deal worth $4.1 billion in total, company officials told AIN.

Tariq Al-Qahtani, chairman and managing director of SaudiGulf, detailed the deal with Airbus on the second day of the show. He said the deal involved a board decision to introduce the aircraft at the rate of six to eight annually from the second half of 2019.

Now flying six Airbus A320s, SaudiGulf operates mainly within Saudi Arabia but also flies between Riyadh and Dubai twice a day and recently launched services to the Pakistani destinations of Karachi, Lahore, Islamabad, and Sialkot with direct services to Dammam.

Although around 2 million expatriates have left Saudi Arabia in recent months due to a change of government priorities to emphasize employment for locals, the economy remains the largest in the Gulf Cooperation Council, almost twice the size of that in the UAE, the bloc’s second largest.

SaudiGulf CEO and senior advisor Samer Majali said the Saudi marketplace had become crowded and made more so with SaudiGulf’s award of an AOC in 2016. In addition to Saudi Arabian Airlines and FlyNas, the government over the past decade awarded AOCs to Nesma Airlines and Flyadeal, the low-cost unit of Saudi Arabian Airlines.

Cairo-based Nesma Airlines operates flights to 12 domestic destinations from a base in Ha’il, in northwest Saudi Arabia, as well flights from Cairo to six Saudi destinations.

Al-Qahtani told AIN his family founded the business in 1940 in Dammam, where it engaged in oil services and manufacturing. Its airline now employs 600 people. “We founded the airline to create jobs for Saudis, and we are looking to increase [the number],” he said.

Airbus said the Middle East will need 2,825 new airliners by 2037. It forecast passenger traffic into and out of the Middle East to grow at 5.8 percent annually over the same period.

Majali is a veteran of the region, having served as CEO of Royal Jordanian from 2002 to 2009 before taking a position as Gulf Air CEO until 2012.  

SaudiGulf formed in 2013 but experienced a lengthy process with the General Authority of Civil Aviation (GACA) to obtain its AOC. It commenced operations in October 2016 and expected to carry 700,000 passengers in its first full year of operations.

SaudiGulf entered negotiations with Boeing in May 2017 to acquire widebodies. “We signed an MoU with Boeing last year for 777s and 787s,” said Majali. “But we are not finalizing the agreement until we put the narrowbody plans—which is what we did today—in place for the next several years. The widebodies could be in the fleet from 2023 onwards.”

Majali said the pace of change in the kingdom is picking up. “Saudi Arabia is uber-liberalizing,” he said. “Five [airlines]: that’s a lot of airlines. The price of flights is the cheapest domestically in the world. The Dammam-Riyadh route is currently SAR100 ($27) one way. Where can you get that in the world?”

“That for the Saudi public is great," he said. "Also, the Saudi Arabian government is putting a lot of money in airports. Immigration facilities are much better and sharper than they used to be. The government recently announced online visa applications. They are working to improve the visa process for Umrah. Trips should be far easier than they used to be before.”