Efforts by Saudi Arabia's civil aviation authority GACA to inject competition into the kingdom's domestic sector are unlikely to advance in 2013, Nas Air chief executive François Bouteiller tells Flightglobal, citing the "extremely slow" pace of regulatory reform and inadequate infrastructure.
Qatar Airways and Gulf Air were awarded domestic air licences by GACA in December 2012 as part of a liberalisation drive aimed at breaking the duopoly enjoyed by Nas Air and national carrier Saudia.
But Bouteiller says he is sceptical of GACA's promise to address the country's domestic fare cap and uneven fuel charges - cited by Qatar Airways as a prerequisite for launching internal flights - and he warns that the kingdom's infrastructure cannot support the entry of two new operators.
"GACA sees the need for the change, its intention is to make changes, but the speed at which changes would take place is extremely slow," he says.
Confirming that the civil aviation authority is poised to announce a modification to its domestic fare cap - a mechanism that disrupts pricing models by placing a ceiling on maximum fares - Bouteiller says the proposed revisions are "frankly speaking not going to make a big difference".
GACA has rejected calls to abolish the fare cap, he notes, adding: "They accepted the idea of having consultations, but so far there's absolutely no confirmation [of what action will be taken]."
Bouteiller adds that he is "not optimistic" that GACA will extend the fuel subsidy afforded to Saudia to private operators in the kingdom. GACA president Fahd bin Abdullah had promised to discount fuel prices in March, responding to complaints about the flag carrier's competitive advantage.
Addressing the state of aviation infrastructure in Saudi Arabia, Bouteiller points to a "mismatch" between existing facilities and the capacity required to accommodate two new market entrants.
"They want to have a 20% increase [in flight operations] just in Riyadh and Jeddah," the chief executive notes. "But today existing airlines still see delays in order just to get a gate in Riyadh. If you're then adding 112 frequencies between Riyadh and Jeddah per week, they won't have the gates...It's a concern."
Jeddah's King Abdulaziz International airport and Riyadh's King Khaled International airport are officially projected to increase capacity in 2014 and 2015 respectively, though Bouteiller says improvements are unlikely to materialise until "around 2016, 2017".
The combination of regulatory intransigence and over-stretched infrastructure makes it unlikely that cabotage will get under way this year, he concludes.
"Both Qatar and Gulf Air said that they would be up and running in six months' time after they received their concession," he says. "That was a few months ago, and the process hasn't started yet to my knowledge. Hoping that this would be achieved in six months I think is not quite realistic."
Nas Air increased its domestic passenger numbers by 54% over the final nine months of 2012, Bouteiller says, reversing a previous shift in focus to international flights.
The airline now accounts for 13% of domestic traffic, up from 6% in 2011. Its new three-tier fare structure has partly mitigated the impact of the fare cap, he says, and this year's delivery of 10 Airbus A320s will spur further growth. Nas Air already operates 10 A320s, six Embraer 190s and two E-195s.