Direct domestic flights are dull but critical

Alamy

The regional and global aviation industry was handed many a lesson in the pandemic.

One early instructive insight was the value of having a sizeable domestic market to act as a buffer against shocks. 

The ability to carry on operating services without having to worry about unilateral decisions on border controls was shown to be a considerable advantage in those testing times. 

Countries like the US, Turkey, China and Russia certainly gained a head start thanks to their large domestic markets. Even though at-home routes are not particularly attractive and may be loss-making, they can and do generate cash. 

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One lesson for every airline in March 2020 when the world closed down was: (aviation) cash is king. 

In this respect the countries of the Middle East, and in particular Saudi Arabia, may be missing a trick. With nearly 32 million scheduled airline seats operated on domestic routes in 2023, Saudi Arabia ranks as the 18^th largest in the world, just behind Thailand and ahead of South Korea.

The Saudi domestic market is also the largest within the Middle East. The kingdom’s only significant competition comes from Iran, with 11 million seats per annum, and then Oman with 1.5 million. 

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Aside from Saudi Arabia, Oman (specifically Muscat to Salalah) and Iran, the need for domestic flights is perhaps limited. Such services are characterised by large geographic distances and limited alternate modes of transport such as rail or high-speed roads.

The UAE, for example, has no requirement on those counts – even when it rains. 

Unserved demand in Saudi Arabia

While much of the attention in Saudi Arabia has centred on connecting the country to the rest of the world, limited focus has been placed on connecting domestic cities to each other without having to transit via one of the big three airports.

The map below shows the network of domestic flights that are operated in Saudi Arabia that do not operate to or from one of the big three airports. 

In total for May they add up to around 160 flights of 1,650 operated. This means less than 10 percent of domestic services in Saudi Arabia connect secondary airports and cities to other secondary airports and cities in the kingdom.

The map also highlights that those services that do operate along a “western corridor” up and down the Red Sea coast. So large cities such as Najran, Hail and Gassim can only be reached via one of the big three airports. 

Adding more frustration to the limited number of such services is the fact that many are operated on a less-than-daily basis and with no consistency of arrival or departure times.

OAG Schedules Analyser

From an external perspective and comparing other market developments around the globe, Saudi Arabia seems to be obsessed with operating large single aisle aircraft types such as the A320.

Aircraft such as these are ideal for a mix of domestic and international routes between large cities with established air services.

However, they are inappropriate when it comes to developing new domestic routes. Here, aircraft such as the ATR72 are both appropriately sized for the market and sufficiently robust to operate in harsh climates. 

Maximising domestic connectivity may not be glamorous but its economic and social impact cannot be underestimated.

It may well be true that making money on domestic networks is challenging but it is no harder than a new airline taking on an established player like Emirates in a head-to-head battle for traffic or opening a new international route with no brand awareness. 

The Saudi Air Connectivity Programme, which is explicitly charged with developing new routes, could proactively look to establish domestic connectivity services, perhaps structured as Public Service Obligation routes to benefit local communities.

And if that is possible, the authorities can then insist on the use of smaller right-sized aircraft to match demand to capacity. These are lessons worth learning.

John Grant is partner at UK consultancy Midas Aviation