Sama Airlines

[ShinjukuHustler]

Alot of rumours about these guys coming back and taking another shot at it, possibly with a different name. Preparations supposed to begin Jan 2011.

Any ideas if A320 or NG??

[mutt]

The route structure awarded to the 3rd airline in Saudi includes a lot of routes with extremely light loads, neither of the aircraft that you mentioned can be profitable on these routes. So SAMA 2 will need a better business plan that caters for low loads, fare caps and high fuel costs.

Mutt

[ShinjukuHustler]

routes

Any CAA that insists on carrier operating a public service route should provide some incentive. Flying domestically in KSA will never be proiftable as long as the populace is spoiled (there is no other word for it) by cheap fares on Saudi Airlines and a fare cap that means you wont make a dime even with 100% load factor.

Basing it in OEDF also puts them at a disadvantage due to the limited cachement area.

It will be interesting to see how (if) this will go ahead.

I mentioned 320/NG as this is what will be needed if they want to reach Indian subcon, Turkey and Eastern Europe.


Hustle On

[arba]

same joke ?

SAMA 2 ..eh!

[bear11]

Hi Mutt, I thought the original game plan when the AOCs were issued was that you needed deep pockets to make it a few years doing the necessary on the thin capped local routes before you were awarded the prize of international flights where you could finally make your Dollars; at least that's what one of the guys who was advising an unsuccessful bidder at the time told me. Admittedly, buying a bunch of clapped-out Classics wasn't exactly forward thinking for phase 2, apart from the consultants, maintenance and other fees.

So, what went wrong? Or are you saying NAS wasn't given as heavy a local load as nr 2 airline, and/or they have deeper pockets? How do the tea leaves look to you now?

[mutt]

Bear you are correct, if you look back at my posts a couple of years ago, i did ask how SAMA were going to make money prior to going international..... It was obvious to us that they were going to need deeeeep pockets.... as did NAS, but NAS sold a major percentage of their shares to Kingdom Holding about 2 years ago.... so they got the required deep pockets. NAS also dropped most of their uneconomic routes last year.

SAMA 2 need a new management team, and they should also dump their foreign consultants Unless of course the consultants work on the premise that they will get paid in 2 years based on the airlines profits

Finally, a single fleet type wont satisfy the requirements of Phase 1 an d 2....take note that even the flag carrier got a regional aircraft which they would have introduced in 1998 if given the choice........

Mutt

[ShinjukuHustler]

Couldn't agree more with Mutt on the consultant thing. For the first couple of years of its short existence Sama was crawling with so called consultants who brought very little value whatsoever. A consultant could be described as someone who has achieved a certain level of experience in a particular subject matter or field and can then give advice or consult on said topic; the army of revman, pricing, res system, marketing and other consultant types at Sama did not fit this description and simply took the money and ran. Experts in not very much at all.

Deep pockets were not something that Sama had but as Mutt has said, Nas was able to find a wealthy benefactor and therefore have managed to avoid going the same way as Sama, which they surely would have. Nas is not without their troubles. They have had an inordinate number of CEO's for such a small airline with a short operating history and the level in in-fighting and politics there is dizzying.

Both companies, at numerous points in their histories, have faced serious cash flow issues to the point of not being able to pay salaries on time. Sama is probably more guilty of this than NAS.

The figure quoted of a 2billon USD operating loss at Sama is testament to the unstable start, poor aircraft choice and uneven playing field that it had to operate on. I'm sure Nas has fared no better but their losses may never be known. All that is known is that the losses at Nas over the years must be substantial; they couldn't be anything but.

It will be very interesting to see how this plays out.

Hustle On.

[On gLiDsLoP]

I disagree with your reading an analysis about NAS, only part of it was true in the past. NAS made their frist profit in the 3rd quarter of 2010, which means that they are working on the right track, plus that they are launching more route to India with a good PLF and HAJ flights which are very profitable lines.

Recently, NAS made many corrective actions and cost cutting and start to change from being an airline selling low fare tickets to a real LCC concept.

[bizdev]

Consultants

Just a point about the consultants. My understanding is that they were from a consultancy called Mango (check out their website). The name 'Mango' was created as all of the consultants were from the MANagement team that set up and ran the BA low cost carrier GO - hence MAN GO. These guys were experts in their respective field as demonstrated by the success of GO which was eventually sold to easyJet at a great profit.

I dont know the ins and outs of the Sama operation other than their Licence severly restricted them in what they could or couldnt do, plus what they were required to do (public service routes). Also I believe they did not get fuel subsidies that were enjoyed by Saudia. I doubt that the failure was down to the consultants - they are an easy target.

I am somewhat suprised that it did go bust though as the Chairman was a high ranking Saudi prince (name I cannot remember) whose father I believe is governor of the region which includes Mecca (or is it Jeddah) i.e. a person with influence.

I do agree though that flying Classics in that harsh environment was always going to be a challenge. Mind you, I have only been to KAS about 4 times but on each occasion the airports in JED and RUH have been bursting at the seams even at 03.00 in the morning so there must be good business to be had?

bizdev

[Desert_Highlander]

Consultants

I beg to differ, Bizdev.
The consultants are pretty much the ones to blame. They chose the type of aircraft which would be operated by the company. Also they didn't have any strategical planing about what and where they would like the company to be in the near or far future, consistently changind their minds along the way, playing with numbers to paint a better picture of the "business" as well as the real situation of the company.
As far as I know they all left the company with a substantial amount of money, differently from the employees who still have money to receive.

Regards.

[mutt]

plus what they were required to do (public service routes). Also I believe they did not get fuel subsidies that were enjoyed by Saudia

But none of this was a surprise? Also the load factors were known for the northern route structure, so the consultants could easily ascertain the prospective market and obtain the most suitable and economic aircraft.... As for the flag carrier, you do realize that they were stopped from competing on routes with SAMA, so they couldn't be classed as unfair competition

The consultants sold the owners a promise that they could never deliver

Mutt

[On gLiDsLoP]

SAMA is coming back under new name of ( ALFAISALIAH AIRLINES ) owned by (Al Faisaliah Group) which owned by father and uncles of SAMA Chairman of the Board of Directors prince Bander bin Khalid.

Now they are forming admin team for the renewed company and planing to have fleet of A320s.

[PAPATIGER]

Dear All,
reading carefully, all of yours comments, I must to agree with one thing, that from very beginning, things are posted on very fragile and poor legs.
Especially with maintenance side, which is in any Airline, biggest money eater.
Unfortunately,by my opinion, when people who knows what are they doing, take over, loses were so big that reinforcement of the company was "MISSION IMPOSSIBLE".
Regarding fleet, yes it was not so new, but unfortunately, all the blame can goes to people who brought those planes at very begining, because after take over from SR Technics, by SAMA it self, punctuality rise almost to 90%,(from 16% in first year of operation),which is shows that those plains can be utilized nicely.
Unfortunately damages done in First year was hidden and so big, which brings to the shu-down of the operation.
Also, second thing is that was too many office people with huge sallarie's, but
without any knowledge for those positions, and that was also huge blow for company money bag.

Hopefully, if they start again that they won't make same mistakes like in past, and I hope that most of good people will be back to work

[mutt]

Hopefully, if they start again that they won't make same mistakes like in past

Unfortunately the fact remains that the passenger loads on the routes available to the 3rd carrier are extremely low. SAMA2 cannot operate these routes and make money, therefore they must have an interesting business plan !

Mutt