No Saudi Domestic License for Gulf Air

Gulf Air denied on Wednesday that it has been awarded a license to operate domestic air services in Saudi Arabia. The surprising news comes eight months after Saudi General Authority of Civil Aviation (GACA) announced that the Bahrain-based carrier has won the license.

“Gulf Air did not bid and has not been awarded domestic traffic rights to operate in the Kingdom of Saudi Arabia,” the company said in a statement published on its website. “The airline’s involvement is in a consultative capacity only to the Al Qahtani Group, a consortium of privately owned companies.”

The name and branding of Gulf Air will not be used for a new domestic service in Saudi Arabia, the company said, adding that the carrier is currently negotiating another consulting agreement to provide the Dammam-based Al Qahtani Group with support to obtain an air operator’s certificate in the Kingdom. A GACA spokesman confirmed to al-Sharq daily that Al Qahtani, a fully Saudi-owned company, is the winner of the license.

The carrier did not say why it had waited more than six months to clarify the matter after GACA announced last December that Gulf Air and Qatar Airways had won the competition to operate domestic routes in Saudi Arabia. The two airlines are not expected to start operations until 2014 as they continue to negotiate with the state-run oil giant Saudi Aramco over fuel prices.

There are only two airlines currently serving a domestic air market of 27 million people in Saudi Arabia: the national carrier Saudi Airlines, aka Saudia, and budget airline National Air Services (NAS).

The entry of new airlines is expected to add pressure on Saudia as it undergoes a slow privatization process. The company incurred losses of SR1.7 billion (US$453 million) last year despite receive government support and subsidized fuel.

Photo courtesy of Jez B via Flickr