MEBAA Convention News

New SPA CEO Conducts Rationalization Exercise

 - December 5, 2018, 4:00 AM
Photo: David McIntosh

Saudia Private Aviation (SPA, Booth A12) is under new management, as the kingdom’s business-aviation industry experiences a transition period due to a year-long government crackdown on corruption and faces a malaise as the superior products of regional scheduled operators jeopardize bizav industry economics.

Dr. Fahad I. Aljarboa told AIN he took the position of acting CEO at the end of Ramadan in June, and that a search is under way for a new company head. “I am acting CEO now. I [also] hold my post as vice president of marketing and product management, Saudi Arabian Airlines. I took over from [former CEO] Faisal Kayal…at the beginning of June,” he said, speaking on the sidelines of the MEBAA Jeddah event September 4.

Aljarboa said he was working on both posts at the moment and that options existed for him to stay permanently at SPA or return to his Saudi Arabian Airlines position. He is certain to be very busy.

He takes over at a time when Saudi bizav “flag carrier” SPA appears to be struggling to act as the shop window for private aviation in the kingdom. Although its FBO at Jeddah International Airport is impressive, Aljarboa said that FBOs in Dammam and Riyadh still required extra interior work, which might be completed this year. Insiders have suggested to AIN that SPA did not have the right aircraft to serve the market.

“We are looking at ground handling. The charter business will continue. We are looking at how we can improve performance and at consolidating our operations. We will continue to [optimize] our FBO in Jeddah. A main driver of our business is ground handling. We have a mega-contract with the military, the Saudi Royal Air Force,” he said.

Aljarboa said that the planned "Neom" tourism, technology, and economic zone near Tabuk, in north-west Saudi Arabia, as well as religious tourism, had proved a temporary boon this year.

“We are present in Neom, the new city on the Red Sea. We handled more than 300 flights [there] in 25 days. On the charter business, in the hajj season [in late August], we had tremendous business. As a ground handler, we handled over 11,000 people and flew over 2,500 VIP passengers on charter in a period of 10 days,” he said.

SPA’s fleet was static for around five years, with three Falcon 7Xs, a Falcon 900, and six Hawker 400XPs, but Al Jerboa informed AIN in October that SPA had successfully sold two Falcons, without specifying further. “We have four [Falcons]. We are in the process of selling them, because of the economics. We are in the process of exploring other options,” he said.

A U.S. data service informed AIN in October that the third 7X, as well as one Hawker, were also available for sale.

AlJarboa would not say which other OEMs the company was studying on fleet renewal but hinted that leasing aircraft instead of owning them is an option. “We are looking at the requirements of the market. We are looking at options. We don’t have to own. We have to be competitive.”

Aljarboa also said that the VVIP operator Al Bayraq’s Airbus A319 service, which operates six times a day between Riyadh and Jeddah through SPA’s FBO network, was experiencing wavering demand. SPA built its business on the sale of so-called “block hours,” where customers commit to flying a set number of hours in a given period. SPA’s main hub is in Jeddah, while it also operates FBOs in Medinah, Riyadh, and Dammam.

“You need to have more block hours to spread the cost. But the demand is not there. There are too many flights. You wear down the engines—and the aircraft. Then your maintenance costs go up. And then you have to increase your rates to recover. Again, [I go] back to the economics. My job is to make the right decisions. If it means cutting down one line of business and growing another, I will do it.”

He said the company’s lines of business needed to be reassessed. “We are exploring. To be in the private charter business, you have to be somehow associated with aircraft management. In Saudi Arabia, I think the environment is not conducive, not encouraging, to own your own airplane when there are no facilities,” he said, referring to the dearth of hangarage in the kingdom.

“One of the areas which we are serious about developing is aircraft management. We have to have facilities that encourage high-net-worth individuals to buy aircraft and to second them to us to manage. Otherwise, why would someone invest $20-30-40 million on something that will be left under the sun in harsh weather?” he asked.

“High-net-worth owners will park their aircraft in Dubai or Bahrain because they have the facilities. To bring costs down, you have to have enough demand to spread the costs. It is our job in commercial to address the economics of private aviation: where we can invest more, where we can consolidate,” he said.

“In order to do this, we have spoken to aircraft owners about protecting them from the weather elements. Nobody is willing to sacrifice a $30 million aircraft. [It is a question of] making the regulations more inviting, relaxing some of them. We have to address the requirements.”