RIYADH: Facing the high cost of fuel, low-fare Saudi carrier Sama is considering the prospects of shutting down all of its domestic flights until situation in the aviation market of the Kingdom improves and a reasonable return can be ensured.
“Sama cannot afford to continue to bear losses on domestic routes,” said Andrew Cowen, Sama chief executive officer, here yesterday. “Our shareholders are fully supportive of Sama and recently decided to strengthen the company further with an additional SR200 million financing. The suspension of some domestic flights is not a decision we have taken lightly, but we have no choice.”
Cowen underscored the need for Sama to have access to the subsidized price of airline fuel that Saudi Arabian Airlines receives in order to compete on a level playing field. “Sama cannot pass on the fuel price increases, for which we pay full market rate compared to the subsidized rate that Saudia receives, which represents five times the cost difference.”
Sama served the city of Madinah from Dammam and Riyadh — lucrative routes during the Umrah peak seasons and the Haj — but the rising price of jet fuel has made these routes unprofitable.
Cowen said that Sama was regularly filling over 80 percent of its seats, but the carrier was not able to charge fares that covered the cost of operating to Madinah.
Next on the chopping block may be the Dammam/Riyadh route. Sama has decided to reduce the number of these flights by half.
Mohammed Qaiser, manager of Indian Airlines, said that Sama couldn’t overcome “the combination of rising jet fuel costs and overhead expenses. These two issues proved to be insurmountable for this new carrier, which is now making profits on its international routes.” But the main reason for its halting domestic operations, says Rashid Al-Hussein, an aviation industry veteran, was the price of fuel, “which is not subsidized for airlines in Saudi Arabia except Saudi Arabian Airlines.”
Cowen, speaking at an iftar party organized here yesterday, said Sama “will be forced to reduce domestic flights significantly and focus only on international routes” if the issue of fuel pricing isn’t resolved so that Sama pays the same price as Saudia. Referring to new international routes, Cowen said that Sama has launched flights from Dammam to Beirut and from Riyadh to Assiut. “We are planning new international routes in the coming months,” he said.
“Sama is a deeply committed Saudi company, dedicated to improving the choice of destinations and fares to the Saudi consumer,” said Cowen. “We also play a vital role in creating new job opportunities since 60 percent of Sama’s employees are Saudis, for whom we have committed extensive training and development.”
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