Saudi Budget Carrier flynas to Become Profitable in 2014

Reuters07.04.2014 Aviation & Space
Saudi Budget Carrier flynas to Become Profitable in 2014

Saudi Budget Carrier flynas to Become Profitable in 2014

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Saudi Arabia's first and only budget airline, flynas, aims to grow at least 20% annually and expects to turn profitable in 2014 after seven years of losses, the company's Chief Executive said.

More than 64 million passengers passed through Saudi Arabia's 28 airports in 2012, up nearly 19% from 2011, according to the latest data available from the General Authority of Civil Aviation (GACA).

But the Kingdom, the biggest Arab economy and the largest country in the Gulf, still has one of the smallest airline networks in the region relative to its size.

Saudi Arabian Airlines (Saudia), the national carrier, and privately held flynas, launched in 2007, are currently the only options for flying domestically within the country, and they are struggling to keep up with demand.

Several other domestic airlines, including a subsidiary of Qatar Airways, are expected to start flying in the next year or two as a result of deregulation.

But private carriers have had trouble boosting their profit margins because of price caps on domestic flights and high operating costs. In 2010, Sama Airlines was forced to halt operations after incurring a loss of about $300 million.

“Until now we are actually not making a profit, but we hope to cross over this year. We have to grow very quickly and get critical mass. We need to grow at least 20% a year. God willing, we hope to make a profit this year - it won't be much but it will be a profit,” flynas CEO Raja Azmi said in an interview.

Riyadh-based flynas is 37% owned by Saudi investment firm Kingdom Holding and the rest by National Airline Services Holding.

Flynas currently carries 3 million passengers annually and claims 15-18% of the domestic market; its growth plan envisages a market share of 30% over the next two years and passenger numbers hitting 20 million annually by 2020, Azmi said.

Azmi, who managed a low-cost airline in southeast Asia before joining flynas in 2013, declined to specify how much the company would invest in growth, beyond saying it would require hundreds of millions of riyals over the next five years.

The growth plan will focus on increasing the number of flights to the airline's 21 current destinations and targeting the long-haul sector with five to six new destinations including London, Manchester, Kuala Lumpur and Jakarta.

The company will expand its current fleet of 18 aircraft to 27 with six Airbus A320 and three A330 planes.

The Saudi domestic air travel market, currently 25-30 million passengers annually, is expected to grow 6% per year, Azmi said.

Source: Reuters



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