SAUDIA AIRLINES

Saudi Arabia 2017 | AVIATION | B2B

As much of the economy gears up for privatization, Saudia is implementing a variety of strategies to ensure it remains ahead of the curve.

Ghassan Al Shible
GHASSAN AL SHIBLE
Chairman
Saudi Arabian Airlines
Saleh Al Jasser
SALEH AL JASSER
CEO
Saudi Arabian Airlines (SAUDIA)

What strategies are you pursuing to keep your leadership role in the industry?

GHASSAN AL SHIBLE We have to realize that the airline industry has a role that is much more than just transporting people from one place to another. Especially for a flag carrier, the role is to enhance the country's global presence and contribute to the economy. Not only in terms of economy and revenue, but in attracting people who will contribute to the economy of the country at large. Therefore, Saudia's role remains strategic rather than just business-oriented. However, major changes are coming. First, we are going to enhance the customer experience. We want to ensure clients have a pleasant experience so they will return. Saudia has also embarked on a major overhaul of its fleet, introducing new aircraft and retiring old ones, as well as upgrading the aircraft. We have a target of 200 aircraft by 2020, from a current fleet size of 138. Our fleet will be the youngest in the region, which translates into comfort and safety for our customers. The third aspect we are looking at is operational efficiency in terms of costs and productivity. That means establishing a new culture within Saudia Airlines to make sure it is driven by productivity and meritocracy rather than just seniority. We want to create an agile airline that can respond to the changing environment of today's aviation sector.

SALEH AL-JASSER SAUDIA is the national carrier of Saudi Arabia and currently in its 72nd year of operations. As such, it holds a unique position. We launched a five-year strategy that will transform SAUDIA into a commercial, competitive entity relying on its own resources. We have already started to implement this, adapting elements of growth as well as improving productivity and efficiency, services, and overall customer experience. We are also adapting and redesigning products to cater for the needs and wants of the specific customer segments we have identified. To support this, we have launched a number of enabling initiatives. While we are the face of the country in each of our destinations and have strategic objectives to satisfy in this regard, we are fully committed to being a sustainable and thriving business entity; the initiatives we have launched in recent years cater to this precisely.

What has been your blueprint for privatization?

GAS The issue of privatization is critical. For it to be successful, we have to create a triple-win equation for all our stakeholders. This is a win for the entity being privatized, a win for the new partners, and a win for the public at large. If we put all those together it will be a win for the whole economy in general. That is not an easy equation to create in a highly competitive business, as the airline industry and its associated units are directly relevant. Saudia is going down the road of privatization, and there are a few entities from Saudia that have been privatized in the process. The rest of the units are in the process of being privatized. That said, there are two important prerequisites to press the button on privatization. The first is to make sure the entity are operating totally on commercial principles and ready to be privatized. The last thing we want to do is to privatize an entity that is not operating efficiently and therefore fails to satisfy the market. The other thing is timing. Market conditions are beyond the control of Saudia Airlines. We have to pick the proper time when market conditions are favorable.

SAJ Privatization is a journey that starts with a vision and this vision starts with specific objectives that go back 20 years. Our approach so far has been focused on privatizing the group's subsidiaries, which has been successful. As we go, we learn from what has been achieved and build on our successes, adapting to new changes, and reacting to the lessons we learn along the way. We have already listed two companies, while others went with strategic partnerships. Privatization goes through a number of stages, starting with corporatization, governance, and then operational improvements. Ultimately, we reach an IPO if the company is in the right condition and the market conditions are favorable. Of those listed, one has already passed the stage of strategic partnership and is ready for listing. Another two have undergone corporatization, governance, and business improvement. The next step is to do the same for the Prince Sultan Aviation Academy (PSAA) and our real estate unit, Saudi Airlines Real Estate Development (SARED).