Saudi Arabia’s General Authority of Civil Aviation (Gaca) plans to issue a licence to a new Saudi airline and a ground service company in July this year, according to a local media report citing Abdul Hakim al-Badr, Gaca vice-president for air transport and security and safety.

It is likely the new airline is Flyadeal, a low-cost carrier owned by national carrier Saudi Arabian Airlines (Saudia).

Saudia announced its plans to launch Flyadeal in mid-2017.

It is not clear if and when the regulator will launch a tender for the ground service company.

In February, Qatar Airways said it has withdrawn its plan to offer domestic flights in Saudi Arabia due to a long delay in the approval process.

The Qatar Airways-backed Al-Maha Airways was one of two companies that obtained a preliminary licence in 2012 to operate domestic flights in Saudi Arabia.

The company’s application for an airline operator’s certificate (AOC), a requirement before it can begin commercial operations, has been pending for several years.

Al-Badr said Qatar Airways “decided to withdraw and did not contact Gaca after its withdrawal”.

The other airline, Qahtani-backed SaudiGulf, received its airline operator’s certificate from Gaca in June last year and commenced its first flight in late October 2016.

Al-Badr said the plan to privatise all airports in Saudi Arabia is on track, adding that all airports that receive flights from Saudi Arabia will be converted into international airports.

The government is also allocating Gaca a SR380m ($101m) annual budget as it transitions from an aviation agency that also operates airports to a full-fledged regulator with a supervisory role over the kingdom’s aviation sector.

Gaca plans to privatise all airports in the kingdom, with each to be owned and managed by an airport company.