Saudi Arabia plans to target international transit passenger traffic with its new national airline, going head-to-head with Emirates and Qatar Airways and revving up regional competition.
Crown Prince Mohammed bin Salman, who is pushing economic diversification to wean Saudi Arabia off oil revenues and create jobs, announced a transportation and logistics drive on Tuesday aimed at making the kingdom the fifth-biggest air transit hub.
Two people familiar with the matter said the new airline would boost international routes and echo existing Gulf carriers by carrying people from one country to another via connections in the kingdom, known in the industry as sixth-freedom traffic.
The transport ministry, which has not released details of the plans, did not respond to a Reuters request for remark.
The strategy marks a shift for Saudi Arabia whose other airlines, like state-owned Saudia and its low cost subsidiary flyadeal, mostly function domestic services and products and point-to-point flights to and from the oil-rich country of 35 million people.
The Saudi expansion threatens to sharpen a battle for passengers at a time when go back and forth has been hit by the coronavirus pandemic. Long-haul flights like those operated by Emirates and Qatar Airways are forecast to take the longest to get better.
“Commercial competition in the aviation industry has all the time been fierce, and regional competition is heating up. Some turbulence in regional relations is on the horizon,” said Robert Mogielnicki, resident scholar at the Arab Gulf States Institute.
Dubai, the world’s largest international air go back and forth hub, has announced a five-year plan to grow air and shipping routes by 50% and double tourism capacity over the next two decades.
Any airline requires substantial start-up capital and experts warn that whether Saudi Arabia’s ambition is to compete on transit flights it should have to contend with years of losses.
Emirates reported a record $5.5 billion annual loss final month with the pandemic forcing Dubai to step in with $3.1 billion in state toughen.
Etihad Airways has scaled back its ambitions after it spent billions of dollars to in the end unsuccessfully compete in building a major hub in United Arab Emirates capital Abu Dhabi.
Riyadh has already moved to compete with the UAE, the region’s commerce, commerce and tourism hub. The Saudi government has said that starting 2024 it would stop giving contracts to firms that don’t set up regional headquarters in the kingdom.
Prince Mohammed is attempting to lure foreign capital to create new industries including tourism, with ambitions to increase overall visitors to 100 million by 2030, from 40 million in 2019.
People familiar with the matter said the new Saudi airline could be based in the capital Riyadh, and that sovereign wealth fund PIF is helping set it up.
PIF did not respond to a request for remark.
(This story has not been edited by Trade Standard staff and is auto-generated from a syndicated feed.)
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