Panama Jack
23rd Aug 2010, 14:12
It is always sad to see another airline go and colleagues lose their jobs. I hope that they will quickly find new work elsewhere and that the economic impact to them will be minimal.
I have less sympathy for the investors of the airline, though. I have heard them over the last couple of years criticize the Saudi regulatory requirements that cause heavy losses (domestic public-obligation routes). However, had SAMA investors done a proper business case study, this obligation would have clearly been evident to them early on in the project. I suppose that näievity or perhaps even illogical optimism blinded this feasability study.
A hard lesson . . . taught.
http://www.airlineupdate.com/images/airline_images/airlines_saudiarabia/aircraft/sama%20737-3m8.jpg
DATE:23/08/10
SOURCE:Air Transport Intelligence newsSaudi Arabia's Sama to suspend all operations
By David Kaminski-Morrow
Saudi Arabia budget carrier Sama is to suspend all flight operations from tomorrow, after heavily criticising the restrictive operating regime under which it has racked up heavy losses.
Privately-owned Sama uses a fleet of Boeing 737-300 aircraft and has been trying to develop a network of domestic and international services within the Middle East.
But the carrier, which has been flying for three years, has been frustrated over the difficulties of trying to operate profitably given the regulatory restrictions on air transport within the kingdom.
"The decision to stop flying was not taken lightly," says Sama chief Bruce Ashby, who says the company "remains hopeful" that - even at this late stage - the suspension will be temporary.
But he adds: "We have spent many months seeking alternatives and now this is the only option remaining to us."
Sama has long complained about the regulatory situation in Saudi Arabia. It was forced to fly loss-making public-obligation routes as part of its operating mandate but delays to regulatory reform on the price of fuel, domestic fare caps, and subsidies meant the airline had to cover mounting costs itself.
At the beginning of the year Sama stated that the failure to overhaul the regulatory structure - which, it said, unfairly assisted flag-carrier Saudi Arabian Airlines by providing large domestic fuel discounts - meant it would have to stop operating the public-service routes.
Ashby says that the airline has waited too long for a comprehensive aviation policy and a "significant aviation relief package" to rectify the situation and cover some of its losses.
While the airline found "more than one" potential equity investor prepared to provide a capital injection, he says, the airline has run out of time.
"Although revenues were up sharply during the summer peak season, it has not been enough to offset the heavy losses we suffered during the winter," says Ashby.
"We deeply regret any inconvenience caused to our customers but we must do what is necessary to preserve the integrity of our operations."
Sama's fleet comprises half a dozen 737-300s leased from companies including GECAS and Aircastle.
I have less sympathy for the investors of the airline, though. I have heard them over the last couple of years criticize the Saudi regulatory requirements that cause heavy losses (domestic public-obligation routes). However, had SAMA investors done a proper business case study, this obligation would have clearly been evident to them early on in the project. I suppose that näievity or perhaps even illogical optimism blinded this feasability study.
A hard lesson . . . taught.
http://www.airlineupdate.com/images/airline_images/airlines_saudiarabia/aircraft/sama%20737-3m8.jpg
DATE:23/08/10
SOURCE:Air Transport Intelligence newsSaudi Arabia's Sama to suspend all operations
By David Kaminski-Morrow
Saudi Arabia budget carrier Sama is to suspend all flight operations from tomorrow, after heavily criticising the restrictive operating regime under which it has racked up heavy losses.
Privately-owned Sama uses a fleet of Boeing 737-300 aircraft and has been trying to develop a network of domestic and international services within the Middle East.
But the carrier, which has been flying for three years, has been frustrated over the difficulties of trying to operate profitably given the regulatory restrictions on air transport within the kingdom.
"The decision to stop flying was not taken lightly," says Sama chief Bruce Ashby, who says the company "remains hopeful" that - even at this late stage - the suspension will be temporary.
But he adds: "We have spent many months seeking alternatives and now this is the only option remaining to us."
Sama has long complained about the regulatory situation in Saudi Arabia. It was forced to fly loss-making public-obligation routes as part of its operating mandate but delays to regulatory reform on the price of fuel, domestic fare caps, and subsidies meant the airline had to cover mounting costs itself.
At the beginning of the year Sama stated that the failure to overhaul the regulatory structure - which, it said, unfairly assisted flag-carrier Saudi Arabian Airlines by providing large domestic fuel discounts - meant it would have to stop operating the public-service routes.
Ashby says that the airline has waited too long for a comprehensive aviation policy and a "significant aviation relief package" to rectify the situation and cover some of its losses.
While the airline found "more than one" potential equity investor prepared to provide a capital injection, he says, the airline has run out of time.
"Although revenues were up sharply during the summer peak season, it has not been enough to offset the heavy losses we suffered during the winter," says Ashby.
"We deeply regret any inconvenience caused to our customers but we must do what is necessary to preserve the integrity of our operations."
Sama's fleet comprises half a dozen 737-300s leased from companies including GECAS and Aircastle.