Saudi Arabia's General Authority for Civil Aviation (GACA) has awarded carrier licences to Gulf Air and Qatar Airways, the Saudi state news agency (SPA) reported on Friday, the first foreign airlines to win such a license in the kingdom. The licence, which 14 companies had applied for, is to operate both local and international flights, GACA has previously said. Until now only the national carrier Saudi Airlines and budget airline National Air Services (NAS) have serviced a domestic market of around 27 million people.

With Saudi Arabia's price cap on domestic flights, private airlines have struggled with their profit margins. Saudi Airlines, which is undergoing a slow privatisation process, receives fuel at subsidised prices unlike private carriers, allowing it to offset the limits of the ticket cost ceiling.

Copyright Reuters, 2012