Over the next five years, Arabian Aircraft Services (Arabasco), the Saudi Arabian private aviation services group, aims to build maintenance, repair and overhaul (MRO) work to the point that it represents 50 percent of its business. Also by 2020, the Jeddah-base company wants to expand its fleet of managed aircraft to 25, general manager Hashem Jamalallail told AIN in a recent exclusive interview.

“MRO is almost 30 percent of our business today. We are hoping to make it 50 percent. We have a lot of ad hoc work, such as AOG support, and many clients coming to Jeddah,” Jamalallail said.

Right now, he continued, “Our main function here is the FBO, ground handling for private aircraft, and a limited MRO function for various aircraft types.” To expand its MRO offering, Arabasco is asking Saudi Arabia’s General Authority for Civil Aviation (GACA) to authorize construction of a larger hangar to accommodate BBJ-size aircraft. The existing hangar cannot accommodate aircraft larger than the Global 6000.

Arabasco is a certified service center for the Challenger 604 and 605 and the Hawker line, representing a total of 17 aircraft types. It also has limited FAA maintenance ratings covering Airbus and Boeing aircraft, and performs avionics work on Honeywell and Rockwell Collins systems, including retrofits.

The Saudi Landscape

As the nation’s business capital, Jeddah has always been Saudi Arabia’s center for both commercial and private aviation. According to Jamalallail, last year Jeddah logged 22,000 private and business aircraft movements, with flights to the capital, Riyadh, accounting for half the total. Arabasco says its FBOs handle around 80 percent of traffic in the Saudi market. Jamalallail estimates that some 160 aircraft are operating in the country today, and the company counts 140 aircraft owners and operators among its customer base.

If they are not registered with the GACA, most of the country’s private jets are registered in the U.S., the Cayman Islands, Bermuda or the Isle of Man. Barely any are registered in mainland Europe. “Most of the existing aircraft are based here,” said Jamalallail.

Arabasco has four FBOs (at Jeddah, Riyadh, Medina and Yanbu) as well as representation in Dammam. “We don’t have much movement in Dammam at the moment. If we need to establish ourselves there, we will do so,” he explained. “Medina is improving right now. It’s growing. We are satisfied with the situation in Riyadh. We noticed huge growth [there] in the last five years.”

Arabasco is facing competition from new FBOs entering the market. Saudia Private Aviation and Jet Aviation also operate at Jeddah’s private aviation terminal. “The Saudi private aviation market represents 60 to 65 percent of the region’s business,” said Jamalallail. “Most of the region depends on the Saudi market.”

FBOs do not yet exist at Saudi Arabia’s regional airports, believed to number more than 23. “There are no FBOs. We use the VIP halls. There are VIP lounges in every airport,” the Arabasco executive explained.

To put the volume of Saudi business aviation into perspective, Arabasco points out that its Jeddah facility handled more movements last year than all the Dubai FBOs combined. Dubai has made clear its intentions to expand the sector, partly through the extra capacity and relatively free competitive situation between handlers at the new Dubai World Central airport.

For the past 10 years Arabasco has operated United Gulf Aircraft Fueling, which provides fuel to airlines and private operators at multiple locations in a joint venture with the UAE’s Emirates National Oil.

In response to criticism that flag carrier Saudi Arabian Airlines (SAA) benefits unfairly from fuel subsidies, the government recently decreed that state-backed energy group Aramco would cut fuel prices. “Aramco announces its posted price every month for private and international carriers, which pay the same rate,” explained Jamalallail. “SAA pays less than that. Nobody knows exactly what it is paying.”

Charter and Management

Despite earlier problems, including securing payment for services, aircraft management is growing in Saudi Arabia, according to Arabasco. “We have seven aircraft on our AOC and we expect an additional five or six by year-end,” said Jamalallail. “Most of them are Boeing 737s and Airbus A320s,” configured for corporate operations. “The company is hoping to raise that number to 20 to 25 by 2020, and will position aircraft where customers want, including outside Saudi Arabia.

In 2012 Arabasco pulled out of the aircraft management sector for more than two years because of problems with late payments from owners; it returned to the sector in October. “The main reason we got out of management was cash. We were not collecting money on time. We stopped management services until we rectified our contracts with aircraft owners, who were not paying on time for charter, management and fuel.”

Acknowledging the difficulties posed by the so-called gray market for charter flights not conducted under commercial operating rules, Jamalallail said that GACA officials are working to end this anti-competitive practice. “It is a problem in the Kingdom,” he told AIN. “Only the GACA can eliminate it. We flag culprits.”