By the second half of 2019, Saudi Arabia will appoint a new private-sector operator for the King Abdul Aziz International Airport in Jeddah following the official inauguration of the new airport terminal. In February 2018, Saudi Arabia’s General Authority of Civil Aviation (GACA) had terminated an agreement to allow a consortium, consisting of Singapore’s Changi Airports International and Saudi naval Support company to manage the airport.
The appointment of a new operator is aimed to increase the involvement of the private sector in aviation sector. Abdul Hakim Al-Bader, assistant to the General Authority of Civil Aviation (GACA) president for safety, security and transport, stated that the privatisation of the airport doesn’t mean that Saudi Arabia is selling it to the private sector, but only opening the door for the private sector to invest in the airport and operate it. The new Jeddah airport is expected to boost economic development, operating 46 gates and will be a “world-class resource” as well as “a projection of the kingdom’s ambition to the world”.
Market Overview
Aviation is projected to play an essential role in the diversification and expansion of the Kingdom’s economy. The Kingdom has long recognized the aviation sector as a means to drive economic growth and talent development, while elevating the Kingdom’s position on the regional and global stage, looking ahead the Saudi Vision 2030. This includes increasing capacity to welcome around 30 million Muslim pilgrims annually, developing sophisticated digital infrastructure to enable seamless passenger transit, privatizing Saudi airports and enhancing passenger airport experience through SMART Airport and increasing workforce productivity with mobility access to data and self-service.
The world is anticipating a significant growth in the number of air passengers worldwide and a hike of global tourism industry. the International; Air Transport Association (IATA) estimated that passenger demand worldwide will reach 7.2 billion air travellers in 2035. Furthermore, airlines in the Middle East, including Saudi Arabia, will add substantial capacity to the market, with the estimation of 2,350 aircrafts to be delivered by Airbus and 3,350 by Boeing.
Saudi Airports
Currently there are 27 airports in Saudi Arabia, six are international, eight are regional and 13 are domestic. The Saudi government has approved an expansion plan to upgrade the existing airports as well as the construction of new airports in order to improve the infrastructure of airport facilities.
The planned expansion includes the redevelopment of the airports in Abha, Arar, Al Ahsa, Al Qassim, Hail and Jizan, new terminals at the King Khalid International Airport in Riyadh and the new King Abdulaziz International Airport in Jeddah. The government also planned to develop new airports in Al-Qunfudah, Farasan Island and Taif, Riyadh North (Al Ghat, Al Majmaah and Zulfi) and Riyadh South (Al Aflaj, Al Hariq, Al Kharj and Howtat Bani Tamim).
Local Airlines
Saudi Arabian Airlines, also known as Saudia, is the current market leader, as the group accounts for more than 705 of domestic capacity. Saudia is based in Jeddah, but also has a major hub with almost the same capacity in Riyadh. Saudia is the third largest airline in the Middle East, with almost 200 aircrafts operating on 89 routes, including 62 international destinations across four continents. The airline has been renovating its fleet and has announced plans to increase the number of aircrafts and routes by year 2020.
Flynas, a low-cost carrier founded in 2007, is the second largest airline in the Kingdom. The airline has around 31 aircrafts flying to a total of 23 destinations in the region. Flynas has also announced that it had reached an agreement with Airbus for a total of 80 new aircrafts to be delivered between 2018-2026.
Both Saudia and Flynas enjoyed a duopoly in saudi Arabia until other local airlines, such as Nesma Airlines and SaudiGulf Airlines launched operations in 2016. Nesma is based in the small city of Ha’il, operating 12 routes with 10 aircrafts within the Kingdom, and between Saudi as well as Egypt. On the other hand, SaudiGulf has four aircrafts and plans to expand internationally, including routes for Pakistan and the United Arab Emirates (UAE).
