Sama; Another Sad Story of Saudi Aviation Industry

[picapp align=”left” wrap=”true” link=”term=airlines&iid=292693″ src=”http://view1.picapp.com/pictures.photo/image/292693/airplane-over-runway/airplane-over-runway.jpg?size=500&imageId=292693″ width=”234″ height=”350″ /]The Saudi low budget Sama Airlines is suspending its operations in the Kingdom starting today until further notice.

Should this be a surprise? I would say: No, it was expected!

The whole scene of civil aviation industry in Saudi does not look that good. Whether we are talking airports or airliners, It is a mess, to say the least!

Operating an airlines is a tough business, no doubt about it. Lots of head to head competition and very turbulent business environment. And when you are working in a messy market like the one both Sama and Nas had stepped in, the situation becomes even harder.

I am not sure what kind of business plans they had both studied to reach the decision that the Saudi market is an attractive investment opportunity. Maybe by only looking at the status of Saudia and how almost all Saudis agree that it suck! the idea of having a second airlines should’ve looked appealing. The fact of the matter is that Saudia is a company both owned and supported by the government. And what makes it even worse for commercial activities in such market is when the regulator (GACA in this situation) does not provide any guarantees to protect the fairness of competition. Maybe the new comers received some promises, but businesses are not usually built on promises, they are built on facts, at least when it comes to the market environment.

Now both of the companies are waiting for the promises to be fulfilled especially for fueling prices. It could be a tactic played by Sama to get the attention of higher authorities although it is a hugely damaging move to the company name (especially that Nas did not play along, if it was a tactic!!)

It is another sad story added to the book of sad stories of Saudi airlines business!!

Read Full Post »

Our Rain is Different

I believe that no one can bet on how many times we should be reminded about how serious flaws we have in projects management and contingency plans?

Just few months after what happened in Jeddah, few weeks after what happened in the Southern region of the country, the capital is joining the party just to confirm, there is no difference!

Rain draining systems are not sufficient, major city tunnels are easily flooded, and response to such emergency situations is slow to say the least!!

Thanks to Allah we haven’t heard much of stories about human casualties similar to what had happened in Jeddah and Southern region; although the overall situation will take some time to clear up.

Here are some videos, to feel the situation …

 

Read Full Post »

The Arrogant Dubai

[picapp align=”center” wrap=”false” link=”term=dubai&iid=5064866″ src=”c/7/4/f/United_Arab_Emirates_a5e9.jpg?adImageId=8117897&imageId=5064866″ width=”500″ height=”333″ /]

 

No unbiased observer would be able to dismiss the fact that Dubai has been able to create many wonders. And by wonders I do not mean its remarkable skyscrapers, huge malls, and its trademark palm islands; however part of its overall image, what I mean by wonders lays in its revolutionized business models that granted the small city in the aggressive desert a global position.

 Examples of such innovative in times and well adapted business models in other times can be found in its numerous world-class free zones (e.g. knowledge city, Media and Internet city, etc …), in its laws flexibility that permit a 100% foreign ownership, in its extremely flexible taxes policies (e.g. no import or re-export taxes and no corporate taxes for the first 15-50 years of operation,) and in its legendary logistics services in air and sea ports. These are only examples of the real competitive advantages that Dubai has been able to create in the past 10-20 years.

However, it seems that its unprecedented success has blurred the vision of its officials and led them to think that they are the modern alchemists who can turn anything into gold.

The debt crisis Dubai is going through these days is nothing but another episode of the series of greed and uncalculated risk that led the whole world to the economical crisis at the first place. Corporate investors, banks, and even individuals believed beyond doubt in the current financial systems and in their dreams of ‘building bigger’ and ‘having more.’ And suddenly, the dreams just turned into nightmares.

 One of the most basic studies that should be carried out before providing long term financing is studying the capacity of the company requesting the debt; How much does it owe other financial institutions, how many projects is it already engaged in and how is it planning to pay back its debts. It seems that nobody asked these questions or discussed them with Dubai World. Dubai World kept inflating its bubble and international banks provided the required tools till they reach the moment when the bubble is just about to explode. It is the moment of truth for both; for Dubai World that kept taking a debt after another to finance projects with no real added values, and for the banks that kept providing with proper risk calculations.

Before concluding this post I just want to comment on how Dubai officials are dealing with this crisis. I believe in such situations, the leadership behavior carries a great weight on stabilizing the matter at hands or adding more fuel to the already burning situation. I am afraid that Dubai officials are from the latter category. They keep coming out and trying to act as there is nothing serious going on. Not only that, but they talk with unmistakable tone of arrogance and aggressive words towards others whom they like to call: people who are envious of Dubai!!

I am not sure such level of communication is suitable to address a global fear caused by your own behavior. When the economical meltdown started about a year ago, I remember one of Dubai World big officials when asked about the possibility of Dubai sinking down because of the events; he stated that: ‘our company will never fail because we are MEN!!!!!!!!’ This is a direct quote, and believe me I do not know what is the relation between being a man and bypassing such an economical situation.

Of course I am not suggesting panicking on TV and press releases, but I am supporting being logic, consistent, clear, and courageous enough to face the situation and addressing it in the proper manners especially that your are working under a global spot light and not only talking to some poor investor who owns 5 stocks in your company and does not really know what a stock is!!!

Read Full Post »

Jeddah; Project Management Failures

After a compulsory absence from this blog for about two weeks; I am back. I was in China for a business trip and as surprising as might sounds, all social networking sites are censored out in China. No blogs, no Facebook, no Twitter, and no Youtube.

Anyway, leave all this for other posts; I am planning to write about this trip and about what we can learn from China. In the matter of fact, I was planning to start blogging about China right away, but I changed my mind after seeing what is happening in my beloved city; Jeddah. Although I got a glimpse of the news, I did not expect the situation to be that bad … that devastating!

If anybody wishes to write a management book about project management failures, he will find plenty of examples in this aged bride of the red sea; Jeddah. Project management failures, this is my only explanation to what happened in Jeddah this past week.

Millions and millions of riyals have been spent on projects that promised state of the art infrastructure to the long time forgotten city and guess what; those projects could not stand four hours of rain!

If you are a resident of this city, or ever been there in the last five years, you have all the right to wonder and ask; what are those companies digging out each and every street in the city doing? Where is the long time promised water draining system that every now and then one of those city officials comes out and smile in the front of camera flashes to state that we finished 60%, 70%, 80% of the system!! So can you please tell me how an 80% completed project to drain water floods could not stand a shower of water? And hey, how come a project that took five years and millions of riyals to complete like King Abduallah road turn to be a swimming pool of death?

I believe that the situation is self-explanatory. Most, if not all, projects carried out in this city are big … big failures. Most of them are over budgeted, usually passes any reasonable time constraints, completed in poor quality, and it is clear that they do not know anything about contingency planning! Now these are the corners of project management and, forgive the language, our city planners sucks at all of them!

Now thanks God we are not on the way of any tsunami or typhoon … otherwise, a city named Jeddah would become a history by now …  Having said that, watching the below videos gives you the impression that a tsunami has just passed from here … what a poor city!

 

Read Full Post »