RIYADH, June 16: Ending decades of monopoly of the Saudi Arabian Airlines (Saudia) on the domestic air routes, Saudi Arabia has announced the opening of its vast domestic aviation sector for competition among national companies.

The Supreme Economic Council (SEC), the country’s highest economic decision-making body took the decision in its meeting held with Crown Prince Abdullah in chair.

The SEC also approved a capital market law, opening the way for setting up a full-fledged stock exchange market.

The opening of the Saudi aviation sector comes amid complaints by passengers that the Saudi national carrier was not operating enough domestic flights and counter-claims by the airline that it was incurring losses in the domestic market. Saudi Arabian Airlines operates a fleet of some 120 planes to a number of world destinations and makes most of its earnings from international flights. It earns more than SR1.8 billion annually from these international flights.

With the opening up of the domestic air travel sector to national companies, fares are also expected to go up, industry analysts projected. To offset the higher fare, industry experts told the press here that the new players on the domestic aviation horizon would have to ensure on-time performance and better service to the passengers.

Saudia operates to 26 airports in the kingdom at heavily subsidized fares, which adversely impact its overall revenues.

Last December the Saudi cabinet voted in favour of a law to set up an independent stock market commission to oversee a new legal framework for all capital related activities. The Saudi financial market is regarded as the biggest in the Arab world and its constituent companies are believed to be collectively of a net worth of some $47 billion. But only 68 firms are listed and in the past decade there have been just 13 new listings on the Saudi bourse. All but 27 per cent of the shares on the market are owned by the government or wealthy individuals and families. Just 20 industrial firms are listed. The Saudi telecom was partially floated in February and it drew a record response from the general public.