Sama may shut down domestic flights

High fuel prices may force Sama, the new Saudi budget airline, to shut down after only 18 months in operation. "Sama's Board of Directors has instructed the management team to evaluate suspension of all domestic flying until the situation improves and a reasonable return can be made," Andrew Cowan, the chief executive of Sama, told reporters in Riyadh this week. "This is not a decision we have taken lightly but we have no choice," Mr Cowan said.

The young low cost carrier is one of two budget airlines along with NAS Air that launched last year in a partial liberalisation of the Saudi aviation sector. As part of its operating license Sama has been required to fly an extensive domestic network and observe a fare cap as public service obligations, even as fuel prices reached record levels this year. It currently flies to Dammam, Riyadh, Jeddah, Abha, Jizan, Hail, Arar, Jouf, Tabouk, and Rafha and Bisha, as well as several international routes including to Abu Dhabi and Sharjah, which the airline said are more profitable and would not be affected.

Sama has 600 employees and operates a fleet of six Boeing 737-300 aircraft. It was founded in 2005 by Investment Enterprises, chaired by Prince Bandar bin Khalid al Faisal, and is supported by 30 Saudi private and institutional investors. Its shareholders recently injected another 200 million riyals as an emergency measure. igale@thenational.ae