NAS, which already operates all-premium carrier Al-Khayala, lodged an application with the Saudi Arabian General Authority of Civil Aviation (GACA) in August for a domestic low-cost carrier license. NAS has asked UK-based low-cost player easyJet if it can use its brand but NAS marketing manager Yasir Niazi says it is prepared to launch a low-cost carrier later this year with or without a foreign partner. EasyJet says it will likely not decide on the franchise proposal from NAS until early 2007.

"NAS is committed to launching this low-cost airline," Niazi says. "We are able to launch as soon as we get permissionbut it will take three or four months to get the licenses."

To help fund the launch, NAS has raised additional capital through a new shares offering led by investment firm Abraaj Nas. EasyJet is not being asked to invest but only sell its name.

EasyJet says "it is evaluating an opportunity to franchise its brand following a recent joint approach by Jeddah-based NAS and Dubai-based Abraaj Capital". It says there would not be any overlap with its current business because the new carrier will only fly within the Middle East. EasyJet just extended its network to Turkey but has no plans to expand further east. Niazi says the start-up will be limited to domestic routes for the first two years.

NAS became the first privately owned aviation company in Saudi Arabia in 1999 when it launched a business jet fractional ownership and charter service. Its fleet has since expanded to 47 aircraft and last year it launched an all business-class service connecting key cities in Saudi Arabia and neighbouring countries with Airbus A319s and A320s.

NAS is now in a position to expand into the lost-cost sector following liberalisation at GACA. Sama, founded by Investment Enterprises and headed by Prince Bandar bin Khalid al Faisal with support from UK-based Mango Aviation Partners, is also seeking a newly available low-cost license from GACA. The opening up of the Saudi market is part of a region-wide push to expand its fledging low-cost industry, which now only includes Sharjah-based Air Arabia and Kuwait's Jazeera Airways.

"The Middle East travel market is expanding at a rapid pace and Saudi Arabia continues to be a key player within it," says NAS chairman Ayed Al Jeaid. He adds the Saudi government is seeking to open up its airline industry and NAS is "gearing up to win one of the (newly available) licenses and start low-cost carrier operations".

NAS and easyJet stress talks between the two are still preliminary. EasyJet, which has never before considered franchising its brand overseas, says its decision "will be made in conjunction with NAS and will depend on the progress of its application for a licence, the completion of an agreement in a form satisfactory to the board of easyJet and the delivery of significant shareholder value." ■

Source: Airline Business