After the United Arab Emirates and its two carriers - Emirates and Etihad -after Bahrain with Gulf Airafter Oman Air and Qatar AirwaystheSaudi Arabia is tempted to have its own global company.
The idea is in the pipeline at Saudi Crown Prince Mohammed bin Salman. For several years now, the Prince has been encouraging his country's economic diversification. The aim is to ensure that the Saudi Kingdom's prosperity is no longer solely dependent on oil revenues. And to create new jobs in an economy more in tune with a global, contemporary world.
Making Saudi Arabia a major global air transport hub
A week ago, the prince said he wanted to create a new carrier targeting the transfer passenger marketbetween Europe, Africa, the Middle East and Asia. In fact, a carrier whose existence would be based on revenues that have made Emirates, Qatar Airways and - in part - Etihad so successful. The Prince would like to make Saudi Arabia a major hub for global air transport.
By this positioning, the CEO is taking on Emirates and Qatar Airways head-onthe two most dynamic carriers in the region. This strategy would mark a complete turnaround in the kingdom's existing air transport policy. The two Saudi-based airlines, Saudia and its low-cost subsidiary flyadeal, operate mainly domestic and point-to-point services..
The argument can be heard. Saudi Arabia would have the advantage of being able to play both sides. Its natural market of 35 million inhabitants would then be combined with several tens - or even hundreds - of millions of transfer passengers. A combination that neither the USA nor Qatar possess, given their small populations...
Entering a saturated market
However, such a project involves risks. First of all, there are the risks to profitability. The Covid crisis has hit carriers in the region hard, with long-haul flights suspended. Emirates lost $5.5 billion in 2020, while Qatar Airways lost $1.9 billion.. For several years now, Etihad, Gulf Air and Kuwait Airways have been struggling to position themselves.
But the Crown Prince's ambitions know no bounds. He wants to make theSaudi Arabia the region's new economic and tourist hub. With the intention of attracting 100 million passengers by 2030. In 2019, the kingdom welcomed 40 million visitors, most of them pilgrims.
The country already has a very fine aviation infrastructure - in particular with the airports of Riyadh and Jeddah. However, it will have to offer an internationalised product - unlike Saudia. And above all, to develop a major intercontinental network. This will require several hundred million dollars. Rumour has it that the Saudi Arabian state-owned investment fund may step up to the plate. It is true that this is one of the largest sovereign wealth funds in the world, with total assets estimated at 347 billion dollars.
