State-backed carrier Saudi Airlines (Saudia) is launching a low-cost airline, Flyadeal, which it says should begin operations by mid-2017.

To be headquartered in Jeddah, the low-cost airline will serve both domestic and international destinations, according to a local media report citing Saudia’s Director General Saleh al-Jasser.

The new carrier, cited Al-Jasser, is one of the strategic initiatives being implemented in line with the kingdom’s national transformation plan.

Saudi Arabia’s first budget airline, Flynas, achieved its first year of profitability in 2015, following a loss-making eight-year period since it was founded. As a result it has put forward plans to procure some 100 aircraft to replace and expand its 26 fleet.

Two other budget airlines, Al-Maha Airways, backed by the Qatari-owned airline, and SaudiGulf Air, owned by the local Al-Qahtani group, are still awaiting to receive their airline operator certificate (AOC) from the General Authority of Civil Aviation (Gaca), three years since they won a licence to operate airlines that will cater to domestic and international flights.

SaudiGulf Air received its first Airbus A320 in November 2015, while Al-Maha Airways is now flying the A320s it received in early 2015 between Doha and Dubai while awaiting Gaca’s final approval.

The authority has not specified a date for the release of the two airlines’ AOCs, although both carriers had expected to launch flights in the last quarter of 2015. The regulator has cited that the delay is due to technical factors.

Passenger traffic in Saudi Arabia’s airports rose 10 per cent in 2015.