What has changed for Saudia Private Aviation (SPA) over the last year?

Diversification is one thing that has become a focus, just like in any other industry. Private aviation and the general aviation sector are still considered to be young industries in Saudi Arabia, and therefore a lot of development has taken place over the past five years. This is part of the life cycle of the industry and is needed to reach a more mature stage. Saudia Private Aviation (SPA) is the investment arm of Saudi Arabian Airlines in the private aviation sector. We feel our responsibility as the largest player in the market is to try and contribute more to the restructuring of the sector in the Kingdom. Our starting point was as part of the overall 2020 transformation vision of Saudi Arabian Airlines. Out of that we have developed our five-year strategic plan which basically revolves around the integrated private aviation business model. For us, “integrated" means four plus one, meaning five lines of business. The first arm is the charter business that we have been operating for over 30 years. We have 10 aircraft of our own, both Hawker and Falcon. We have expanded into aircraft management, which we were not involved in before. Collectively with our partner, PrivatAir Saudi Arabia, we have more than 14 aircraft under management, and SPA has more than 48 additional aircraft under management. Another arm is our ground handling business for private aircraft and we took this from scratch. We have adopted the industry's best practices and processes, and today this business is one of SPA's main revenue sources. We believe this is a good business line to test the market. We have double-digit market share growth, which shows the potential here. We are also considering expanding in the area of maintenance, repair, and overhaul (MRO). We are doing some analysis on this and looking at strategic joint ventures for knowledge transfer in the MRO field. We are in negotiations with several highly rated international companies regarding this. The fifth revenue stream is Saudia ALBAYRAQ and we are proud of this. Saudia ALBAYRAQ is a new service that is part of our diversification strategy. It creates a new segment between private aircraft ownership and first class air travel. Saudia ALBAYRAQ is jointly operated by us and Saudi Arabian Airlines. It complements Saudi Arabian Airlines' new business model as it has shifted from having three classes, first, business, and economy, into a two-class airline. Saudia ALBAYRAQ supplements this with a first-class product. The service flies between Jeddah and Riyadh, which are two key cities that facilitate a lot of the Kingdom's economy. We started Saudia ALBAYRAQ in June 2016 and are noticing significant growth month-on-month. We provide 12 flights per day each way between Jeddah and Riyadh at three-hour intervals, starting at six o'clock in the morning. You can book seats through our website. We consider this route to be Phase I, and eventually we would like to fly to Dammam and possibly Dubai as well.
What accounts for the significant growth SPA has seen in its ground handling business? What strategies are you using to encourage owners of private aircraft to use your ground handling services?

The new airline Sky Prime Private Aviation is one of our customers. Our client list covers most of the major operators within Saudi Arabia, for example Saudi Aramco and many high-net-worth individuals who are owners of their own aircraft. In terms of strategy we segregate the market into three categories because different operators have different needs. So our market segments are local operators, international operators within the Middle East region, and international operators from outside the region. Our priority is to focus on the first two segments of local and regional operators. Our simple philosophy is to develop good processes and a good service and the customers will come. This is exactly what we have been doing. We have adopted state-of-the-art infrastructure in terms of ground handling systems and software. We have changed our equipment to the latest available. The average age of our ground handling equipment is six months. We are keen to invest in this business because we see its potential. Ground handling services are now one of our major revenue drivers. Additionally, the whole aviation industry is becoming much more mature and the Saudi General Authority of Civil Aviation (GACA) has recently updated its regulations. With the new regulations they have to comply with standards that apply the same level and restrictions as for commercial airliners. The structure encourages private owners to go to a professional company, like SPA, which is qualified to do the job. We have been preparing ourselves for this change. We are one of the first companies with a system that allows owners to go online and review all the work that has been done on their aircraft along with a cost breakdown. SPA is considered to be a worldwide leader in implementing this type of system. This is part of our vision to elevate the aircraft management business within Saudi Arabia.
How does SPA fit into the overall aviation sector and the reforms in the National Transformation Plan?

The whole essence of the 2030 Vision is basically about privatization to increase performance and efficiency in Saudi Arabia's government sectors. SPA and Saudi Arabian Airlines are just a reflection of this vision. A few years back we would have spoken in an entirely different tone, but now with the emphasis on privatization we have changed the way we think and behave, as well as our efficiency and diversification of revenue. Considering what we have seen before and after privatization and how the company transformed, we would definitely like to see all the other government entities and sectors go through the same transformation that SPA and some of the other subsidiaries of Saudi Arabian Airlines have been through. It has delivered good results to the customers, and it has improved the process and KPIs. At the end of the day, if you can manage your business in a commercial way there is a financial gain right away. To sum it up, Vision 2030 is more about efficiency and in order to achieve efficiency you need privatization. Saudi Arabian Airlines was one of the targeted entities for privatization. Therefore, SPA is one of the companies that has recently been through the privatization process with 30% of the business being sold to private investors. We have seen the change this has brought to the whole culture of the organization. We have been working on this transaction for the last couple of years and completed the process in July 2016.