SaudiGulf, based in the eastern city of Dammam, received regulatory approval from Saudi Arabia's General Authority of Civil Aviation (GACA) on June 9 and was granted its air operator certificate in a formal ceremony in Riyadh on Wednesday night. Previously, only national carrier Saudi Arabian Airlines and budget operator National Air Services were allowed to serve a domestic market of about 27 million people.
Foreign carriers could fly in and out of Saudi Arabia, but not within the country.
The Saudi authorities began accepting applications to allow other airlines to operate internal flights in 2012. SaudiGulf, owned by the Abdel Hadi Al-Qahtani & Sons group, had initially planned to start operating internal flights in 2014.
The new airline will begin domestic flights on September 1 using four Airbus A320 aircraft and expects to start international flights to Dubai from Dammam by the end of the year, according to the statement.
It plans to add six new aircraft to the fleet in the first quarter of 2017 and more the following year, reaching a fleet size of 26 planes within the next three years.
Qatar Airways, through its subsidiary for the Saudi market, Al Maha Airways, also received an initial carrier licence in 2012 but has yet to be given final approval to operate flights in the kingdom.