Saudi Arabia: Building a world-class airline and aviation sector
Vision 2030 seeks to diversify the country’s economy away from oil, and aviation will play a major role in this.
Consequently, Saudi has high hopes for its national airline and aviation sector. The Kingdom’s ongoing Saudi International Airshow (SIA) at Riyadh’s Al-Thumamah Airport is a clear indicator of the country’s commitment to growing both.
As part of Vision 2030, the General Authority of Civil Aviation of Saudi Arabia (“GACA”) has announced plans to privatize all 27 existing Saudi airports, as well as the new airports that are scheduled for completion by 2020, Al Tamimi law firm notes on their site.
To build a formidable aviation sector, you need capital, investors and a lot of skilled workforce. This is where SIA, which made its debut this year, comes in.
“It is hoped the airshow [..] attract investment and build bridges between the Saudi aviation and aerospace industries, providing the perfect platform to connect networking professionals, companies and investors from across the region,” Arab News said.
More than 265 exhibitors from around the world, as well as 1,500 international trade figures, including representatives of international companies and aviation bodies, are participating in the three-day event.
In January, Boeing signed an MoU with the National Industrial Development and Logistics Program (NIDLP), the Saudi Industrial Investments Company (Dussur) and Saudi Arabian Mining Company (Maaden) to support the Saudi aerospace industry under the Vision 2030 umbrella.
“Saudi Arabia represents 30% of the aircraft registered in the Middle East and… is one of the largest private jet & GA [general aviation] markets in the Middle East. The rapidly growing economies of the GCC are helping to cement business aviation as a cornerstone of the Middle East Aerospace Industry for years to come. The Middle East regional fleet [is expected] to triple [in size] by 2036,” the organisers said.
“Saudi Arabia has had one of the most highly regulated aviation markets in the world and limited foreign involvement. But rising population and affluence has led to a demand for more services and GACA [Saudi General Authority of Civil Aviation] expects annual passenger traffic to soar from 65 million in 2012 to 100 million by 2020, including almost a doubling of domestic traffic alone to 28.5 million,” they added.
Putting Saudia on par with regional airlines
Emirates and Etihad have long-held the spotlight in the region. Saudia, founded in 1945 and one of the oldest airlines in the Middle East, has languished in the shadow of its younger competitors.
Saudi Arabia is working to change this, and this is reflected in Saudia’s mission statement: “To enhance the reputation of Saudia and improve its image within the Kingdom and abroad ”
“Our brothers in the UAE and Qatar have worked so well to transform aviation in the Middle East … Saudi aviation companies should have a much greater share in the Middle East aviation market,” Crown Prince Mohammad Bin Salman said in an interview with Saudi state television in 2017, CNN reported.
GCC countries like the UAE have had a head start in positioning themselves internationally as unique touristic destinations, and this has served their airlines well over the years.
Saudi, on the other hand, is just recently kick-starting its touristic and entertainment offerings, unbanning theatres for the first time just a couple years ago. Shedding its conservative image has been on the agenda ever since Vision 2030 come into existence.
Citing the Kingdom’s conservative image, Saj Ahmad, Chief Analyst at StrategicAero Research, said: “Saudia will struggle to pull passengers away from the likes of Emirates/Etihad, [considering] the fact that the UAE airlines have a broader network too. Saudia’s plans, while grand – will struggle in the long term.”
Hajj pilgrimage contributes significantly to Saudia’s sales every year, and is a major part of its offering.
“[Saudi Arabia] is aiming to attract 30 million religious pilgrims a year by 2030, up from 8 million in 2016,” CNN reported. “It said it will start issuing tourist visas for the first time. It also plans to build two new airports and renovate three existing ones.”
This week, Saudia announced that it is expanding its code-sharing deal with Etihad, having struck the partnership in November.
Also, Saudi CEO Jaan Albrecht told Air Transport World the carrier is evaluating a major widebody order within the next six months—which could be either an Airbus A350 or Boeing 787—and is considering new long-haul routes to North America.