International airline routes, bilateral and multilateral agreements are governed by the Freedoms Of The Air, as outlined under the 1944 Convention on International Civil Aviation. Within these Nine Freedoms Of The Air it is rare for a foreign carrier to be allowed to operate domestic routes within a foreign nation, especially, without the flight originating or terminating in another country. With the exception of the European Union (EU), where flights between EU nations are essentially considered domestic flights, “stand alone cabotage,” or Ninth Freedom, flights, are unusual … but Saudi Arabia, a normally insular and conservative country is opening up its domestic routes to foreign airlines.
This past April the Saudi Shoura Council sought to create service to a number of destinations with either irregular service or no service at all, after Saudi Arabian Airlines adjusted its network and schedules to become a profitable business, prior to being privatized. The Shoura Council’s investigation of allowing foreign airlines, from neighboring Gulf nations, was initially a threat to Saudi Arabian Airlines, however with the national flag carrier sticking by its network and schedule choices, the Saudi General Authority for Civil Aviation (GACA) has announced it will grant permission to foreign airlines to apply for the route authority to operate domestic flights by the end of January 2012.
The GACA’s announcement comes just six weeks after Saudi Arabia separated civil aviation from the Ministry of Defense, establishing the GACA as an independent regulatory agency.
As Saudi Arabian Airlines, and the National Air Service, a private Saudi airline, determine their next moves, attracting carriers to operate domestic routes within Saudi Arabia may not be easy, with the government instituting fixed price caps on domestic flights. Fixed price caps on domestic routes slash potential profit margins for private and foreign airlines, a factor that is magnified by Saudi Arabian Airlines’ fuel being subsidized by the Government.
Should Saudi Arabian Airlines seek to challenge new comers, even on routes they have no intention of sustaining, the airline’s access to subsidized fuel gives them a significant advantage in chasing other carriers from their home turf … essentially undoing everything the Shoura Council and GACA hope to achieve by allowing foreign carriers to operate domestically within the Kingdom of Saudi Arabia.