Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS) recently announced plans to launch a second national airline as part of a broader strategy to turn the kingdom into a global logistics hub as it seeks to diversify from oil.
MBS has been spearheading a push for Saudi to boost non-oil revenues to about $12 billion by 2030.
Making the kingdom a global logistics hub, which includes the development of ports, rail, and road networks, would increase the transport and logistics sector’s contribution to gross domestic product to 10% from 6%, state news agency SPA said.
“The comprehensive strategy aims to position Saudi Arabia as a global logistics hub connecting the three continents,” MBS was quoted as saying in the SPA report.
The addition of another airline would increase the number of international destinations from Saudi to more than 250 and double air cargo capacity to more than 4.5 million tons, the SPA report said.
One of the notable goals of Vision 2030 is to attract 100 million yearly tourists by 2030, 6 times the number that visited in 2019. This includes 30 million religious tourists each year, who in 2018 brought in around $20 bn to the economy.
The New airport would be funded by Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), which has an estimated value of around $430 bn.
Riyadh is already home to King Khalid International Airport, Saudi Arabia’s second-busiest airport behind Jeddah’s King Abdulaziz International Airport. The airport handled around 28 million travelers in 2019.
Competition between gulf states heating up
Riyadh has already moved to compete with the UAE, the region’s business, trade, and tourism hub. The Saudi government has said that starting 2024 it would stop giving contracts to firms that do not set up regional headquarters in the kingdom.
Saudi’s recent plans target international transit passenger traffic with its new national airline, going head-to-head with Emirates and Qatar Airways.
The strategy marks a shift for Saudi Arabia whose other airlines Saudia and low-cost subsidiary carrier flyadeal, mostly operate domestic services and point-to-point flights to and from the country of 35 million people.
Dubai, the world’s largest international air travel hub, has announced a five-year plan to grow air and shipping routes by 50% and double tourism capacity over the next two decades.
This, despite Emirates Airlines reporting a record $5.5 bn annual loss last month with the pandemic forcing Dubai to step in with $3.1 bn in state support.
Emirates ranks globally number 5 among airlines in terms of numbers of countries served and number four in terms of brand value and scheduled passenger and freight-tons kilometers.
Qatar Airways gives Emirates a run for its money when it comes to the number of countries served and scheduled freight-ton kilometer, servicing at least 160 passenger and cargo destinations, compared to Emirates’ 139 destinations, and Turkish Airlines which tops the list with 200 international destinations.
The UAE, bolstered by Emirates and DP World, currently serves as the region’s transportation and logistics hub. DP World handles 10% of the world’s global container traffic and operates some 80 ports as well as marine and inland terminals in more than 40 countries.
Riyadh airport makeover
Riyadh Airports Company (RAC), which manages and operates King Khalid International Airport (KKIA) in the capital city, Riyadh, has announced an extensive Request for Proposals (RFP) process.
RAC is inviting qualified international travel retailers to bid for various retail outlets and lounges.
The bidding will be for the retail outlets and lounges located in KKIA’s refurbished international terminals, T3 and T4, that are set to open later this year.
The RFP includes 16 F&B outlets, with three packages of three units, plus seven individual units across the two terminals, covering both landside and airside.
Specialist retail units include packages covering three Travel Essentials CTN shops; two pharmacies; two fashion outlets; two authentic gift shops; and a watches and jewelry store.
The duty-free shops will be walk-throughs to use space commercially more effectively.
“Exciting innovation” will be highly considered across all the offers, RAC said.
KKIA is amongst the largest airports in the Kingdom and the Middle East. Located north of Saudi Arabia’s capital city, Riyadh, KKIA services five main terminals. One of them is currently being used for domestic flights, while the other two are for international flights.
The remaining terminals (T3 & T4) are being transformed and renovated from the inside as part of a wider expansion project at the airport. The development centers on meeting a future capacity of over 35 million passengers annually.
RAC has been using AI-driven state-of-art technologies that use machine learning to monitor social distancing and has adapted several other precautionary measures to align with compliance.