Saudi Arabia Market More Upbeat

Saudi bizjet management and charter operator NasJet sees a bright future for management in the kingdom, as the old ownership model falls out of favor, COO Yosef Hafiz told attendees at the Corporate Jet Investor Dubai meeting on April 1.

Hafiz began by saying that, in his opinion, Saudi Arabia was the topic of the day. “What are we doing in Saudi Arabia?” he asked. “What's happening? What's going on? I tried to Google it yesterday when I was preparing this presentation. I couldn't find anything. So I know that people are hungry for information [on] what's happening in Saudi Arabia.”

Saudi aviation regulator the General Authority for Civil Aviation (GACA) recently introduced new rules for registering private aircraft, he said. “[We are] operating under two different sets of regulations for private business jets. It's going to be either a GACA Part 125 operator's certificate for private business jets, or a Part 121, for commercial operations.”

There are six commercial AOC holders in the kingdom, he said. “[A]ircraft management competition has risen and [this is] going to continue...Competition has [also] led aircraft owners to seek operators who can provide them a better level of service. So that's helped us internally, at NasJet, and other companies, to enhance levels of service.”

Hafiz told AIN that NasJet had recently sold one of its aircraft, in addition to earlier sales last year, bringing fleet size down to 18. “We've sold a [number] of our Hawkers, but that's proven to be very beneficial,” he said. “Even though we may have reduced fleet size, we're actually making money now. We're making a profit, which is where companies need to go to sustain themselves.”

Although NasJet operated a single Citation Excel, the focus was on larger aircraft, such as Gulfstreams, Legacys, and Globals, he said.

NasJet saw good margins in aircraft management, he said. “That's our core business. We do supplement that with charter. Many of the aircraft we operate are on a commercial airline operator certificate. So there's a high demand, especially from the government sector, for charter flights. That helps our aircraft owners offset some of their costs.”

Projects Boost Market

Increased government spending had led to many positive outcomes. “We see a lot of initiatives from the Saudi government [aimed at] improving services and… Saudi Arabia overall. Megaprojects have led them to utilize private business jets on a much higher scale. The future megaprojects and the Saudi Vision 2030, as well, are a big initiative of the Crown Prince of Saudi Arabia.”

The Red Sea project is off the coast at Jeddah and Yanbu. “They're building small islands…There's going to be a requirement for aircraft flying in and out of that area, just like the Maldives, probably seaplanes, maybe smaller aircraft...Neom City [is] another big megaproject that's being built in the northwest corner of Saudi Arabia. The largest entertainment park in the world will be south of Riyadh.”

He said megaprojects would push the aviation industry to provide more lift and more aircraft. “We see [many] ministers and government officials wanting private business jets, and using aircraft which maybe they haven't used before. It's [a] very interesting…dynamic.”

Under new regulations, he said, GACA had also taken a strong stance against non-compliant owners and operators. “There's a big push back from some of the aircraft owners, but eventually they're all going to have to comply… There're only two choices: either a private configuration 125; or 121 Special Unscheduled. And those are the only two choices that owners have.”

Gray market charter had been almost eliminated. “It's almost nil,” he said. “Cabotage has been eliminated completely. I'm sorry for the UAE operators who used to be able to come into Saudi Arabia and fly Riyadh-Jeddah. That no longer exists.

“Restrictions on foreign investors have been removed…. If you look at Vision 2030, they are opening up for foreign companies to come in and invest. There are government websites like SAGIA [the Saudi Arabian General Investment Authority], and so on, that can assist with companies setting up their own entity. They do not require a Saudi partner anymore. So that's changed, as well. They're trying to give a boost to outside investors to come into Saudi Arabia, invest, and open up.”

Outside companies and consultants, including a helicopter operator in Abu Dhabi, had visited, spurring a drive toward helicopter market development. “Today, you'll see primarily government helicopters either run by Aramco or the Saudi Red Crescent,” he said. “But there are no helicopters offered for private transport today. We're going to see a big change over the next five years, with [200] helicopters coming into the region.”

He stressed the primacy of aircraft management in Saudi Arabia’s future. “I think it's not about ownership. We've learned that over the past 20 years. We started out as NetJets in the Middle East...We used to do fractional ownership. We used to do ad hoc charter. We used to own the assets. That doesn't work. We've learned over the past few years, and the changes that we've made have really shown positive results for us as a company."