By Vanni Gibertini
Saudi Arabia Plans To Develop New Megacarrier
The Kingdom of Saudi Arabia has been embarking on a modernization process that is aimed at upgrading all the infrastructure in the country to attract tourism and trade flows and develop local businesses. The country has recently introduced a new visa-free system to facilitate the influx of foreign visitors and has completed a $7.2 billion expansion for the busiest airport in the country, Jeddah’s King Abdulaziz International Airport.
But the country led by Crown Prince Mohammed bin Salman is now looking to undertake an even more ambitious task, transforming the state-owned carrier Saudia and its low-cost subsidiary flyadeal into a megacarrier group that would rival in scale and network the “Big Three” carriers in the Middle East. Dubai’s Emirates Airlines, Abu Dhabi’s Etihad Airways and Doha-based Qatar Airways have now established themselves as worldwide forces in commercial aviation with hundreds of aircraft connecting destinations across six continents from their flashy home hubs.
An exclusive report from Reuters quoting two confidential sources inside the government suggested that a new Saudi international carrier would attract sixth-freedom passenger traffic to a hub in the kingdom and provide connections to numerous destinations around the world.
Saudi Arabia has already announced that as of 2024, it will only allow foreign companies to do business within the country only if they open a local subsidiary, more or less the way it happens in the U.A.E. or in the other Middle Eastern countries that have been promoting themselves as world-class business and trade hubs.
The Crown Prince is trying to attract foreign investments to develop numerous industries, including tourism. The objective is to hit 100 million visitors a year by 2030, up 250% from 40 million in 2019, Reuters reports. During a transportation and logistics drive last week, he announced he wants to make Saudi Arabia the fifth-biggest aviation hub in the world.
A future Saudi Arabian carrier certainly has one big advantage over its rival neighbors: It can rely on a sizeable domestic network that is non-existent in the U.A.E. or in Qatar and could represent a staple market to rely on without possible international interferences. However, much work remains to be done to adapt customer experience to the extraordinary level set by the other Middle Eastern megacarriers.
Currently, the consumption of alcoholic beverages is strictly forbidden in Saudi Arabia and on Saudi carriers, and this could represent a significant obstacle to attracting high-paying international passengers. Furthermore, in Saudi Arabia, laws can be quite strict as to what female travelers can do, and the level of customer service provided is generally not yet up to the standards considered competitive at an international level.
In addition to that, throughout the years, Dubai, Abu Dhabi and Doha have transformed themselves turning into very attractive destinations both for business and for leisure, while this is certainly not the case at the moment for Jeddah or Riyadh. This is part of a strategy undertaken by the Gulf states to diversify their economies and develop economic sectors that would reduce the country’s dependence on oil revenues.
Saudi Arabia is going down a similar path called Saudi Vision 2030, a strategic framework to diversify the country’s economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Some projects involving billions of dollars of investment are already underway, such as the Red Sea Project, a luxury resort on the Red Sea, and Qiddiya, an entertainment megaproject in Riyadh.