are to inject further capital into Saudi Arabian budget carrier Sama, but the airline is dismayed over the kingdom’s
domestic fare cap which, it claims, is preventing its domestic services from
turning a profit.
Sama is to receive another SR200 million ($53.3 million) to
support its expansion and development, on top of the SR300 million put into the
company during its start-up phase.
carrier has generated a 250% rise in revenues over the first half of this year
– although this has to be viewed in context of the carrier’s not starting
operations until March 2007 – and it claims its relatively-young international
routes are already profitable, despite the rise in fuel costs.
Sama chief executive Andrew Cowen says the carrier’s
domestic services are “chronically unprofitable”, partly because of fuel prices
but also because the Saudi domestic cap on economy fares has not been raised in
claims Sama’s predicament contrasts with the
experience of flag-carrier Saudi Arabian Airlines which, he says, benefits from
a subsidised fuel rate.
are continuing to work very closely with [the Saudi civil aviation
administration] to alleviate this situation, enabling us to invest further in
Saudi domestic routes,” he says.
the difficulties, Cowen says the carrier’s performance has been promising,
adding: “Sama has seen very strong bookings on
international routes, clearly demonstrating the huge demand for quality,
low-fare regional travel between Saudi Arabia
and the Middle East.”
1 million passengers booked flights with the airline during its first year. Its
network covers 12 domestic and 10 international destinations.
“Sama’s shareholders have been very encouraged by the
progress Sama has made in the past year since launch,”
says chairman Prince Bandar bin Khalid al Faisal, adding that the stockholders
have “decided to strengthen” the financial position of the company.
particular importance to shareholders in making this further financing
available is our success in gaining early access to international routes.”