New Saudia firm for ground services within 6 months 

(MENAFN - Arab News) Saudi Arabian Airlines will establish a private company within six months to provide ground and passenger services at the Kingdom's airports, said Khaled Al-Molhem, the airline's director general. "The employees of the new company will replace Saudi Arabian Airlines staff at airports," he said.

He said the new company would be established with the support of National Handling Services and Attar Travel Company, adding that it would serve not only the national carrier but also other airlines operating in the Kingdom.

According to a report carried by Al-Eqtisadiah business daily, the new company would provide services related to completing travel procedures of passengers at airport terminals, handle their incoming and outgoing baggage and carry out aircraft cleaning services in all Saudi airports.

The establishment of the new ground service company comes as part of the airline's ambitious privatization program. The airline has already ordered for 70 Airbus and Boeing aircraft worth SR20 billion to modernize its fleet. It received four A320s from its French manufactures this month. The remaining Airbus planes will reach the Kingdom by the end of 2011.

The Saudia chief said there was no political pressure on the airline to purchase Airbus planes, adding that Airbus was selected considering its advanced technical features and quick availability. "We have to wait four years to get the same number of planes from Boeing," he pointed out. "We have also found Airbus more economical as we needed planes having 90 to 200 seats to operate on certain national and international routes." He said the new Airbus planes would replace MD90s, which require about SR16 million for annual maintenance.

Saudia, which is the 15th largest airline in the world, has already privatized its catering and cargo sectors establishing new companies to handle them. "The privatization program will strengthen the company and improve its services," Al-Molhem said, adding that it would also create more jobs.

He said Saudia has been playing a bigger role in the Kingdom compared to other regional airlines. "We are serving five international airports in Riyadh, Jeddah, Dammam, Madinah and Abha and 26 domestic airports," he said and described Saudi travel market as one of the best in the world. Last year the market recorded a five percent growth in the domestic sector and eight percent in the international sector.

Al-Molhem hinted at the need to liberalize the airline's domestic fares, which remained unchanged for the last 15 years while the operating cost was increasing by five percent annually. He said prices of aircraft rose from SR20 million to SR160 million. Last year Saudia carried 10 million passengers to its domestic destinations. The government has stopped providing financial assistance to the airline since 2001.

He said privatization would also create more investment opportunities to the private sector. The airline intends to offer 30 percent of its catering unit through an initial public offering in nine months. The airline's catering unit was the first to go as Saudia sold 49 percent of it in January 2008, followed by the cargo unit which is now 30 percent owned by Tarabut Air Freight Service.

By P.K. Abdul Ghafour