New Saudi airline plan takes aim at Emirates, Qatar Airways




Saudi Arabia plans to target international transit passenger traffic with its new national airline, going head-to-head with Emirates Qatar Airways revving up regional competition.


Crown Prince Mohammed bin Salman, who is pushing economic diversification to wean Saudi Arabia off oil revenues create jobs, announced a transportation 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 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 comment.


The strategy marks a shift for Saudi Arabia whose other airlines, like state-owned Saudia its low cost subsidiary flyadeal, mostly operate domestic services point-to-point flights to from the oil-rich country of 35 million people.


The Saudi expansion threatens to sharpen a battle for passengers at a time when travel has been hit by the coronavirus pandemic. Long-haul flights like those operated by Emirates Qatar Airways are forecast to take the longest to recover.


“Commercial competition in the aviation industry has always been fierce, 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 travel hub, has announced a five-year plan to grow air shipping routes by 50% double tourism capacity over the next two decades.


Any airline requires substantial start-up capital experts warn that if Saudi Arabia’s ambition is to compete on transit flights it may have to contend with years of losses.


Emirates reported a record $5.5 billion annual loss last month with the pandemic forcing Dubai to step in with $3.1 billion in state support.


Etihad Airways has scaled back its ambitions after it spent billions of dollars to ultimately 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 business, trade 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.


Prince Mohammed is trying 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, that sovereign wealth fund PIF is helping set it up.


PIF did not respond to a request for comment.

(This story has not been edited by Business Standard staff is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information commentary on developments that are of interest to you have wider political economic implications for the country the world. Your encouragement constant feedback on how to improve our offering have only made our resolve commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed updated with credible news, authoritative views incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better more relevant content. We believe in free, fair credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism subscribe to Business Standard.

Digital Editor



Source link