Qatar Airways to operate new airline based in Saudi Arabia

Qatar Airways wants to launch a new airline based in Saudi Arabia and is keen to invest in the kingdom's domestic aviation sector, it said on Tuesday.

Chief executive Akbar Al Baker has had talks with Prince Fahad bin Abdullah Al Saud about opportunities arising from the kingdom's newly launched aviation policy, the airline said on Tuesday.

Saudi Arabia said earlier this year it would approve new airline licenses in September, ending years of speculation about whether the country would allow foreign airlines to fly domestic routes.

Baker said Saudi represented a key growth market for Qatar Airways with an underserved market and need for greater domestic air services.

Excessive fuel charges in Saudi and the government's policy of controlling domestic air fares were hindering growth opportunities for airline operators, he said.

Baker said the airline was keen to invest in the Saudi domestic aviation market, and this was dependent on a rethink by the government of certain factors.

National carrier Saudi Airlines and budget airline National Air Services now serve a domestic market of around 27 million people, and have struggled to meet demand.

But with a price cap on domestic flights, private airlines have struggled with profit margins. In 2010, a third carrier, Sama Airlines, was forced to suspend operations.

(Reuters)