Sama reduces domestic flights

Saudi Arabia's low cost carrier, Sama Airlines, will suspend flights to Madinah and cut the number of flights to Dammam to tackle the impact of the rise in fuel costs over the past few months.

The company's accumulated losses totalled more than SR40 million (Dh39.29bn) in one year of operation, according to Sama Airline's CEO, Andrew Cowen.

"Flying domestic routes has led to Sama incurring significant losses. This is because it cannot pass on the fuel price rises, for which we pay full market rate compared to the subsidised rate that Saudia gets, which represents five times cost difference," he said, adding that fuel accounts for 40 per cent of Sama's total costs.

Cowen said though the airline was regularly filling more than 80 per cent of its seats, it was not able to charge fares that covered the cost of operating to Madinah. "Another example is the Dammam to Riyadh route. Sama loses approximately SR40,000 on every flight between these two key cities, despite respectable passenger numbers. To reduce these losses, we have had to halve our number of services between Dammam and Riyadh," he pointed out.

"Our shareholders are fully supportive and recently decided to strengthen the company further with an additional SR200m of financing. Sama cannot afford to continue to bear these sorts of losses on domestic routes. Thus Sama's board of directors has instructed the management team to evaluate suspension of all domestic flying until the situation improves and a reasonable return can be made," he added.

With regards to its international routes, Cowen said Sama's new routes have performed well and that it expects the good performance to continue.

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