Dubai - Oman is considering setting up a new regional airline that could take over domestic operations from state carrier Oman Air, two sources familiar with the matter told Reuters.
A request for proposal was issued this month by state entity Oman Aviation Group for a feasibility study into operating the new airline, 'Oman Link,' the sources said.
Setting up a new airline for domestic flights would allow Oman Air to focus on its international network where it competes with large Gulf carriers Emirates, Qatar Airways, and Etihad Airways.
The new airline could partner with Oman Air with both carriers connecting passengers to each other but would have its own independent management, the sources said on the condition of anonymity because the details are private.
Proposals are to be submitted by Nov. 11, one of the sources said.
The new airline would use regional jets for domestic flights and potentially later to other cities in the region where there is not enough demand to fill the larger single aisle jets used by other airlines in Oman.
Oman Aviation Group and its unit Oman Air did not respond to separate emailed requests for comment.
Oman Air operates flights to four airports in the country, including the main Muscat International, according to its website.
The airline uses 166-seat Boeing 737 jets and 71-seat Embraer E175 aircraft on domestic and regional flights.
Both aircraft types are too costly to consistently operate domestic routes at a profit, according to industry sources.
Oman has been restructuring its aviation sector in recent years. Oman Aviation Group was formed in 2018 and includes Oman Air, Oman Airports and Oman Aviation Services.
A budget, second airline, Salam Air, was launched in 2017.
It is owned by Omani government pension funds and the Muscat municipality.
Last week, Eithad and Air Arabia said they were jointly setting up a low cost carrier in Abu Dhabi.