First Casualty Of Mideast Low Cost Airline Craze?

Sama not supported enough to survive as a low cost operation.
COMMENT, Business Trends


While it’s still possible that Sama can still secure much needed financing, the reality is that the airline was never given the support it needed to make it as a true low cost operation.

The likes of Jazeera Airways, Air Arabia and FlyDubai dominate the scene because of the monetary backing they have – without that, they too would have followed in the fate that Sama seems all too close to embracing – closure.

The losses the airline has accrued are one thing, the other, more debilitating problem is that of the money loaned from the Saudi Government shows no sign of ever being repaid. Given the more open nature of air travel policies in the GCC region, Saudi Arabia still has much change to experience and without that, airlines like Sama simply will not be able to compete effectively.

It is possible that Sama will curtail its operations if it can convince creditors that the business is still viable, but in the absence of finance, it will be difficult to form a smaller business left largely at the mercy of Saudi Arabian Airlines, an entity that the Saudi Government will simply not allow to be wounded from below by lower cost airlines.

The rise of low cost airlines in the region has been paced by the growth of traffic flooding into and through the likes of the United Arab Emirates. Everyone thinks they can do the same, but the fundamental difference is that the UAE is still a lot more leisure and business travel friendly in contrast to Saudi Arabia – so it’s not a complete surprise the latter country has a small number of airlines, let alone dedicated low cost carriers.

Neither is it a surprise then that Sama has been struggling since it came into being – indeed, that it has lasted this long is startling.

Sama may yet survive to fight another day, but the GCC region is one still fraught with regulatory nooses that have proved damaging for business longevity. Until that changes, the chances of a true, low cost Saudi-based airline will remain a distant prospect.

This column was written by FBE Aerospace analyst Saj Ahmad, the views expressed are his own.

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