LONDON – Saudi Arabia, an oil-rich Arabian Peninsula in the Middle East has decided to boost its airport capacity to cater more than 330 million passengers by 2030, with the vast incline from the 100 million passengers it handles today.
The Kingdom has stated that the new national carrier of Saudi Arabia will be the key move to boost regional aviation activity and thus establish themselves as a regional aviation hub.
The Kingdom has prioritised its income diversification from predominantly oil wealth and have stated that the country is looking to cater more than 250 destinations across the globe, joining the list of rival Middle Eastern carries.
The New Dual Hub Strategy
As the kingdom is crafting its new dual hub strategy with emphasis on capturing sizable share in the regional air transportation activity, it is giving an equal opportunity for Saudia Airlines and the new carrier to grow and prosper at the same time.
As per the dual-hub strategy, the current flag carrier of the Kingdom, Saudia Airline will retain its presence in Jeddah, and the new airline will be based in Capital of the Kingdom Riyadh.
Speaking on this move, Mohammed Alkhuraisi, Head of Strategy at the Saudi Arabian General Authority for Civil Aviation (GACA) said:
“The pie is so big, and the required growth is so significant that it could be challenging for one airline to absorb all of that growth.”
“We are asking Saudia to transform and build a true hub out of Jeddah, the gateway to the two holy mosques and the Red Sea line, while Riyadh is the business hub, and it requires different products.”
This will offer both the carriers to compete, capture and capitalise on the equal market share and thus prosper in a harmonious manner.
With the new regime focusing its attention to open its doors for the tourism purposes for the first time ever, the Kingdom is speculating the surge in tourist arrivals and would need both the carriers to operate inbound and outbound flows from its major cities of Jeddah and Riyadh.
With Saudia’s economic and commercial performance being put back on track after horrific pandemic years, the airline is expected to achieve that target to return to profitability by early 2023.
Speaking on this factor, the CEO of Saudia Mr. Ibrahim Koshy in an industry event held last week.
PIF or Public Investment Fund, the sovereign wealth fund of the Saudi Arabia is shaping new airline in the Kingdom.
The major factor contributing for the new airline as the increasing tourism and major shift in the regional tourism and aviation activity that is being foreseen by the thinktanks in the Saudi Arabia.
Speaking on this part, Mr. Mohammed Alkhuraisi stated that, “The plans of the new airline in terms of operationalization, incorporating the company, naming and launch date are all within PIF jurisdiction – as far as we know, the plans are moving, but the details are with PIF.”
Bigger Picture
With many new reforms and changes that being brought to the Kingdom by its new ruler, the country has set its course on path to new inclusive and openness towards the regional and global participation.
Similarly, the Kingdom has also pledged to increase its traffic by 30 million by 2030, with an ever-growing emphasis on the transit passengers, which contributes to only 3 million as of today.
Mr. Mohammed Alkhuraisi stated that “That’s almost ten times the transit volume we had in 2019, but our main focus is to increase the number of arrivals that come to the Kingdom.”
The Kingdom has made its plans to open its boarders for the international tourist for the first time ever, making tourism sector one its new source of national income.
The Kingdom has aimed to welcome more than 100 million tourists by 2030 and is making large investments in its tourist sector with its ‘giga-projects’ including an investment of around US$500 billion into Nemo, a futuristic city designed to be sustainable and another ambitious project worth US$10 billion in an entertainment project named Qiddiyah Project, along with its Red Sea Project that will future more than 90 islands.
Concluding on this notes, Mr. Mohammed Alkhuraisi said that “Saudi Arabia’s successful aviation and tourism sector will have a spill over effect on Qatar, UAE, Turkey and the whole region. We need to ensure the industry has the capacity that we lost during COVID, so we are working with all the carriers and airports – we are making sure that we have everything from a regulatory point of view.”
Managing Director of a leading aviation consulting firm, Mr. Linus Benjamin Bauer from Bauer Aviation Advisory said that “With the new national carrier, Saudi Arabia plans to target international transit passenger traffic, going head-to-head with regional giants like Emirates, Qatar Airways and Turkish Airlines, and opening up a new front in simmering regional competition.”
“The Kingdom’s large population generates direct traffic that could cushion losses as the new national carrier targets international transit traffic – in addition to international direct flights to and from the Kingdom.”
