Despite boasting one of the region's oldest and largest carriers in Saudi Arabian Airlines (Saudia), the kingdom does not compete in the long-haul market in the same way as its peers. It is not a conventional tourist destination but the market for international travel is strong as the country has a captive pilgrim market for its holy sites.

Equally, though it has the largest economy in the region, the difficulties foreign businessmen face in obtaining visas have meant business traffic is not fulfilling its potential. This last point has been raised many times in parliament and has finally forced an initiative to ease visa restrictions. Abdulaziz Alhazmi, executive vice-president of marketing at Saudia, agrees that the company has a particular role within the Middle East market, but emphasises that Saudia still sees itself as an international competitor. 'Saudia not only has the responsibility of serving the religious traffic, which is growing at a very high rate, but also has to serve the domestic network, which is growing at about 9-10 per cent a year,' he says. 'Certainly in this market segment, Saudia is different in the region. However, the company still has a great interest in the international market, and still considers Emirates, Etihad and the other Gulf carriers as its competitors.' With the launch of two low-cost carriers - NAS and Sama - in the past 12 months and the prospect of two more being licensed in the coming years, Saudi Arabia has one of the most flourishing short-haul markets in the region. Rather than fearing these new entrants to the market, however, Saudia has welcomed them with open arms as they will ease the national carrier's overburdened infrastructure. New capacity in the system is sorely needed. Saudia is not being complacent, however. The airline is pushing ahead with plans to launch its own low-cost operation, reshuffling its fleet to use its aircraft more efficiently. In the past, the company has found itself using medium or even long-haul aircraft on short regional trips. With a dedicated low-cost business in the future, such anomalies should be a thing of the past. 'We are well aware of the need to cope with the changing environment, especially with the lost-cost carriers in the country,' says Alhazmi. 'The plan to start up our own low-cost carrier covering domestic and regional markets is shaping up well. We are still in talks to acquire the necessary expertise and to buy or lease the right type and size of fleet.' Likewise, though it has been subject to several delays, the privatisation of the national airline is steadily moving ahead. The company's catering business was sold off earlier this year and bidding for the cargo arm is approaching a conclusion, with a final decision likely in January. Saudi Arabia's young and rapidly growing population, coupled with a steady process of liberalisation and the security of the country's captive pilgrim market, suggest exciting times for the kingdom's aviation market. Even in a notoriously cyclical and volatile industry, it seems set to pick a huge proportion of the region's burgeoning passenger traffic, and for its airlines to establish themselves as genuine regional competitors.