Saudi Arabian Airlines

Saudi Arabian Airlines is the airline of Saudi Arabia, which operates in the field of national and international air traffic. The company’s aircraft flies to more than 120 destinations, including the Middle East, Europe, North America, and Asia. Saudi Arabian Airlines was the country’s largest commercial operator. However, globalization and the rapid growth of competition have led to the fact that companies such as Emirates Airlines and Etihad Airways moved Saudi Arabian Airlines to third place in the ranking of airlines in the Middle East. Providing air travel services, the company keeps a balance between price and quality, making it one of the best airlines in Saudi Arabia. The country has a large number of airports, which greatly simplifies the development of air transportation. However, paying attention to its story, Saudi Arabian Airlines has gone a long way to success and fine reputation. The current paper describes the history of the airline, its corporate structure, and management philosophy, current characteristics, company’s events, and news, as well as personal insight.

History

Saudi Arabian Airlines was the first airline in Saudi Arabia. Its story began after Franklin D. Roosevelt gave the King of Saudi Arabia Douglas DC-3 aircraft in 1945. A year later, the government founded the airline, which was called Saudi Arabian Airlines. Initially, it was fully owned by the state and controlled by the Ministry of Defense (den Daas). American airline Trans World Airlines played the role of the head of operations. The airport Jeddah-Kandara became the main base of the airline. The first route, which the airline held, was a pilgrimage to carry Hajj pilgrims from Lydda to Jeddah.

The company was working to expand its activities and complete the list of flights. In 1947, it established a route between Jeddah and Riyadh. A bit later, Saudi Arabia had the opportunity to make flights to Cairo, which was the first international flight of Saudi Arabian Airlines. Moreover, a route to Beirut was launched. In 1949, the airline bought five Bristol 170 aircraft, thus taking an opportunity to develop further route networks of both passenger and cargo traffic (“Saudia”).

The second half of the 20th century was marked by a rather slow development of the company. Nevertheless, it is possible to say that this growth was stable. For example, the airline has opened several new routes (to Istanbul, Kuwait, Port Sudan, and others). It has also bought fifteen aircraft: five DC-4 and ten Convair 340 (images of both can be seen in Appendix A). The year 1959 marked the opening of the center for repair and maintenance of aircraft. Also, this year gave great results in the establishment of contacts between Jeddah and Riyadh, and air flights between these two cities have become regular and stable. Three years later, in 1962, the company bought two Boeings 720 (“Saudia”). The purchase made the company the second largest airline in the Middle East. In February 1963, the King of Saudi Arabia signed a memorandum, according to which the company became independent from the state. Thereafter, Saudi Arabian Airlines continued its policy of expansion, buying new aircraft (den Daas). For example, in 1964, the company bought new DC-6 and Boeing 707, which allowed to open new flights to Frankfurt, London, Tunis, and Tehran, among others.

The 1970s were critical in terms of recognition of the company’s brand. The management has decided to change the logo and color design of the aircraft (the first logo can be seen in Appendix B). Moreover, in 1972, the headquarters also changed the company’s name to Saudia (“Saudia”). However, this change did not cause any problems; on the contrary, the company has continued to grow. New aircraft of the latest models were purchased constantly, which replaced the outdated ones. At the end of the 1970s, the company worked on the establishment of air routes to European countries to be able to freight traffic, which required new planes, so Saudia bought Lockheed L-1011 and Fairchild FH-27.

The 1980s were marked by the rapid growth of the company. Saudia continued its policy of expanding activity, which gave impressive results (den Daas). A large number of new routes were opened to such cities as Brussels, Nice, Bangkok, Madrid, Amsterdam, and many others. The company also opened its catering department Saudia Catering (“Saudia”). The business class service called Horizon Class was organized in several planes. The airline’s fleet has continued to grow; the company bought Airbus A300 and Boeing 747, as well as Cessna Citation.

Further, 1990 marked another change of logo and aircraft coloring (the second logo can be seen in Appendix B). The company returned to the former name of Saudi Arabian Airlines, most of the aircraft were painted in yellow color, and their backs were blue. In addition, a new dress code for flight attendants has been introduced. The company continued to buy new aircraft (Boeing 777, MD-11, MD-90) and open new routes (“Saudia”). In 1990, the company opened flights to Orlando, Washington, Milan, and many other cities that were previously inaccessible.

In 2000, the government of Saudi Arabia signed a contract that regulated market research for privatization of the company. To this end, the company’s management held a number of important events. For instance, the work of non-core division was discontinued, and the Flight Academy in Jeddah became independent from the organization. In 2012, the company changed its logo (the last logo can be seen in Appendix B) and name to Saudia since it was part of a rebranding campaign when combined with the SkyTeam alliance (“Saudia”). Today, Saudia is a popular flagship airline.

Corporate Structure and Management Philosophy

The corporate structure of Saudia can be described as follows. The company is managed by the Director General. It consists of seven departments, each of which performs a separate function. The first department is Arab & International Affairs that comprises the following units: Governmental Affairs, International Affairs, Tariffs & Data, Arab Affairs, and AACO Affairs. The next one is Finance and Administration Department. It consists of Finance, Corporate Administration, Personnel, and Legal units. The third department is Marketing Department, which is divided into International Regions, Domestic Areas, and Sales & Service. The fourth department is Operations. It consists of Technical Services, Material Management, Flight Operations, Safety, and Communication. Further, there are Public Relations Department, Planning and Research Department, and Accounting Department. In 2015, the company had approximately 25,000 employees (“Saudi Arabian Airlines”). This number is constantly increasing due to the steady development, the purchase of new aircraft, and the establishment of new routes.

The corporate culture of the company is represented by the ̎Caring Employer,̎ according to which, any member of the organization is a key element of corporate culture and human resource is the most valuable asset (“Working for Saudi Arabian Airlines”). In addition, corporate culture provides for a ban on the supply of alcoholic beverages and pork on board of the aircraft in accordance with Islamic laws. According to the company, since its opening, it has worked to improve the safety, efficiency and customer satisfaction, which is also one of the fundamental principles of the corporate culture.

Current Characteristics

As mentioned earlier, Saudia always replenishes its fleet with the most modern aircraft. At the same time, it collaborates with world leaders in aircraft manufacturing, signs long-term contracts, and uses only the latest developments. To date, the company’s fleet consists of 119 aircraft, including 62 Airbus, 48 Boeing, and 11 Embraer (“Overview”). The company also signed a contract for the purchase of Boeing 787-10 upcoming new models. The airline owns smaller aircraft, for example, Beechcraft Bonanza in the amount of 6 pieces for training pilots, Dassault Falcon 7X for public transportation, and Hawker 400HR for the government use.

Saudia has code share agreements with many foreign companies. As of 2013, it had an agreement with companies such as Aeroflot, Korean Air, Alitalia, and Air France, among others. As mentioned earlier, Saudia flies to a large number of cities and countries around the world (“Saudia”). At the national level, the airline carries out flights to cities such as Al Ahsa, Al Ula, Al Jawf, Bisha, Gassim, Ha’il, Jeddah, Jizan, and others. The company has established hubs in several major cities, such as Dammam, Jeddah, Madinah, and Riyadh. Saudia also flies solely for freight shipments to the Netherlands (Amsterdam), Belgium (Brussels), Hong Kong, Nigeria (Kano and Lagos), and China (Shanghai) (“Saudia”). Seasonal flights are established to Turkey, Morocco, India, Algeria, and Indonesia. Overall, the company makes a large number of flights worldwide.

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The target market of the company is composed of people with average or above average incomes, which can be justified by the fact that the flights have a high cost compared to other airlines. Still, the ticket price can be considered average for a leading airline. Like all airlines, Saudia divides the space into several classes, including economy class, business class, and premium class. Each class has its value, and the quality of service is also changed accordingly. In addition, Saudia organizes charter flights during Muslim holidays and it is engaged in the organization of special flights. Turaif, Ankara, and Rabat are the most popular Saudi Arabian Airlines’ flights.

One of the latest innovations in the company is the integration of Hytera DMR systems. The company’s main airport will introduce a new system of communication between staff, which will be based on high-quality audio and video transmission. The new radio system will allow the exchange of information between all offices of the company in different countries, as well as between four international airports (“DMR Takes off with Saudia”). Due to a large number of terminals and stations that will be installed in the premises of offices and airports, the company’s staff will have the ability to communicate, which will accelerate the movement of passengers, baggage, and cargo shipping, as well as will have a positive impact on the quality of services provided.

Company’s Events/News

Ongoing work on conquering the market leads to both positive and negative consequences. For example, in 2015, Saudia was forced to pay a $1.6 million fine for the breach of the European legislation, which was caused by the breach in terms of carbon dioxide emissions. In 2012, the European Union adopted a norm, according to which airlines have to pay for carbon dioxide emissions if the plane was flying over the European Union (“Saudi Arabian Airlines Fined $1.6 Million”). This norm caused a wave of discontent among airlines around the world, and Saudi Arabia refused to pay such a tax. Consequently, in 2015, the company was fined. It has been the biggest penalty for carbon emissions imposed on airplanes in the recent years.

Next news is related to security. As already stated, the airline is constantly working to improve the safety and comfort of passengers. In 2015, the company was ranked ninth in the list of the top 10 safest airlines in the world It is necessary to pay attention to the fact that the average age of the airline’s aircraft is 10 years (“Saudi Arabian Airlines among Top 10 Carriers”). It can be assumed that such a result was achieved thanks to the constant renewal of the fleet. For example, in 2015, the company replaced 77 aircraft with new ones that were ordered from Boeing and Airbus.

On 19 May 2015, the company management stated that it would effectively work on the expansion of the fleet. Currently, Saudia’s fleet consists of 119 aircraft. However, it plans to expand the fleet to 200. The management plans to order 80 aircraft from Boeing and Airbus to add new national and international routes. It should be noted that at present, the airline has virtually no competitors in Saudi Arabia. The only minor competitor is Flynas that transported 6 million passengers in 2014. In comparison, Saudia transported 28 million people (“Saudi Airlines to Expand Fleet”). However, famous Qatar Airways received permission to work in Saudi Arabia, and it is possible that Saudia would not be able to withstand the onslaught of a strong competitor even if it buys additional 80 aircraft.

Further, there is evidence that the company has purchased the most innovative aircraft Airbus A330-300 Regional. This model is designed for regional and domestic flights, which is an excellent solution for Saudia. The demand for such flights has been steadily growing, and the company is forced to buy new planes to meet demand. The aircraft is the latest development of Airbus Company, which combines all the achievements of science and technology in the field of aviation. The plane accommodates 400 passengers, has 18-inch wide seats, and is very light, which is reflected in fuel economy (“Saudia-Saudi Arabian Airlines”). Studies show that the costs spent on the flight will be reduced by 25% due to the weight of the aircraft, which is 200 tons.

Another resounding achievement of the airline is the first direct flight from the West Coast of the United States to Riyadh. For this route, the airline uses Boeing 777-300ER, which is one of the largest aircraft today (“Saudia Flies Nonstop”). The flight lasts more than 16 hours, which is also a kind of record – such a flight is one of the longest flights in the commercial aviation. The airline plans to perform five flights per week, which is a worthy exponent. This flight will contribute to the development of diplomatic relations, labor force exchange, qualified personnel, and students.

Insight

Overall, Saudia is a successful company. Constant updates of the fleet and the organization of new flights have made this airline one of the most popular in the market. Also, through constant innovation, the company occupies a leading position in the ranking of the safest airlines in the world. All of this complements the cost of tickets, which can be confidently called average for a leading airline. Such ticket costs are made possible due to the low cost of gasoline in Saudi Arabia. The company provides a possible online booking and ticketing, which is convenient. Further, it is well known that the balance of seats in the cabin does not depend on the aircraft model and the airline. In Saudi Arabian Airlines, seat pitch in economy class starts from 32 inches (81 cm), which is quite comfortable.

The company has a great potential for development. First, the management of the airline can focus not only on fleet replenishment but also on the organization of new routes. Currently, the company has no flights to South America, Eastern and Central Europe, many Asian countries, Russia, Australia, and South Africa. Many of these regions have excellent opportunities for the organization of flights, which will be in demand. For example, citizens and residents of Eastern Europe, Russia, and South Africa can enjoy flights to carry out business trips. Australia is another developed country that will also be an interesting destination for Saudi Arabia.

In addition, it is possible to create the low-cost department. Many passengers prefer to save money on cheap flights, which is a great way for the further development of the airline. The purchasing of several budget models of aircraft, as well as the organization of flights to the required countries, will quickly recoup investments and create a new stable source of income. The next step that will increase the comfort of passengers during the flight is to improve the supply in the economy class. As the economy class traditionally includes a simple snack (for instance, croissant and juice), it is a significant disadvantage for passengers. Therefore, the company can think about spending more on food in the budgetary field. For example, it is possible to complement the menu with potatoes, spaghetti, or other semi-finished products. A small portion of dinner will not be expensive, but if Saudia makes this improvement, it will find many customers for years to come.

The last step for improvement that is possible to recommend to Saudia is to provide hotels for passengers whose flight was canceled shortly before the departure. For example, if people are not able to fly from the United Sates due to rough weather conditions and forced to spend the night at the airport, the airline can provide them with free accommodation, hotels or hostels. This innovation will increase the demand for the services of the company and improve its reputation in the eyes of customers. Moreover, the flights are canceled not too often, so it will not be costly for the airline to provide passengers a place to sleep.

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Conclusion

To summarize, it should be said that Saudi Arabia Airlines is a company with years of experience, which started its operation more than 70 years ago. During this time, the company has changed its logo, aircraft design, and name several times. All these changes are the result of the experiments, which were both successful and unsuccessful. The company was the first airline in Saudi Arabia, which was founded during the time of the beginning of the development of the country. The airline has long been under the ownership of the state, and the rapid development of the economy has led to the fact that Saudia was able to continually replenish the fleet and establish new routes. The company has long been cooperating with Boeing and Airbus, who are leaders in the field of aircraft construction. Today, Saudia owns 119 aircraft, many of which are for international traveling. Cooperation with leaders, as well as the continuous improvement of the fleet and the establishment of new routes, has meant that the company has broken several records and has become one of the safest airlines in the world. It should be noted that the upcoming competition with Qatar Airways at the local level could pose a serious problem to Saudia. However, it is arguable that Saudia, which is a company with years of experience and a huge number of experienced staff, will not allow Qatar Airways to capture the market. Safety of flights, comfort, and average cost of tickets are the competitive advantages of the company that contributed to its success.