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Wednesday, October 27, 2021

Saudi Arabia eyes new airline plan to compete with Qatar Airways


Saudi Arabia plans to push economic diversification with the launch of a new national airline, increasing competition in the Gulf.

Saudi Arabia is set to launch a new airline which it hopes will compete with Emirates airlines and Qatar Airways, in its latest efforts to wean off oil revenues and expand economic opportunities, according to Reuters. 

Earlier last week, Crown Prince Mohammed bin Salman unveiled a transportation and logistics plan in a bid to make the Gulf state the fifth-biggest air transit centre.

Sources who spoke to Reuters say they believe the kingdom’s plan focuses on sixth-freedom traffic, which increases international routes by carrying passengers from one destination to another while using Saudi Arabia as a transit hub.

This would expand Saudi Arabia’s aviation sector, which has so far only relied on Saudia airline and its low-cost flyadeal which served domestic destinations. 

The strategy is expected to be a turning point for Saudi’s economy, which heavily relies on the oil and gas sector.

“Commercial competition in the aviation industry has always been fierce, and regional competition is heating up. Some turbulence in regional relations is on the horizon,” Robert Mogielnicki, resident scholar at the Arab Gulf States Institute told Reuters.

Read also: Qatar Airways set on launching new Airbus or Boeing cargo jet

However, experts say that the kingdom’s plan may cost the country years of losses, especially with the ongoing coronavirus pandemic still posing a threat to the aviation industry.

So far, the UAE’s Emirates airlines reported around $5.5 billion annual loss in May, which forced Dubai to pledge $3.1 billion in state support.

The Saudi government said starting from 2024, companies that are interested in collaborating will not be authorised to do so without setting up regional headquarters in the kingdom.

This hopes to bump up the total number of visitors to the kingdom from 40 million in 2019 to 100 million by 2030.

Sources told Reuters that the new airline could be based in the capital Riyadh, and that  the kingdom’s Public Investment Fund [PIF] is helping with the launch.

The agency requested a statement from the PIF, however has yet to receive a response.

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