Saudi aviation sector enters a new era

Saudi aviation sector enters a new era
In March, Saudi Arabia announced the launch of its second national airline, Riyadh Air, owned by the Public Investment Fund. It is expected to add $20 billion to the non-oil GDP and create over 200,000 jobs. (Supplied)
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Updated 12 August 2023
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Saudi aviation sector enters a new era

Saudi aviation sector enters a new era
  • Transitioning from ‘a period of recovery to sustained and upward growth,’ says GACA official

RIYADH: As the world emerges from the shadows of the COVID-19 pandemic, Saudi Arabia has started reaping the fruit of its efforts to wean its economy off of oil by increasing its focus on its travel and tourism sector.

The Kingdom’s aviation sector is witnessing rapid growth which many analysts say is not just due to large investments in airlines but a result of the ongoing socio-economic transformation process that began with the launch of Vision 2030 in 2016.

One of the several measures taken to boost the sector includes the launch of an e-visa service in 2019 ensuring easy access to millions of potential tourists eager to explore the art, culture, cuisine, archeological wonders, and natural beauty of the Arabian Peninsula.

“2023 is becoming a year in which Saudi aviation (industry) has moved beyond recovery (mode) and (entered) into an era of unprecedented milestones and achievements,” Mohammed Alkhuraisi, executive vice president of strategy and business intelligence at the General Authority of Civil Aviation, told Arab News. 

“In the first half of 2023, Saudi Arabia’s air traffic witnessed significant growth. This reflects a clear transition from a period of recovery to sustained and upward growth in the sector.”

The Kingdom’s fast-evolving aviation sector is reflective of its ambitions to emerge as a global travel destination rivaling its counterparts in the Gulf Cooperation Council. 




Saudi Arabia is creating unprecedented opportunities for global aviation through the Saudi Aviation Strategy. (Supplied)

It is also making its mark as an emerging business hub and center for culture and tourism drawing in visitors from all across the globe.

“The Kingdom of Saudi Arabia is focused on Vision 2030, which is the country’s grandiose and ambitious economic diversification agenda,” Giorgio Cafiero, an analyst for Gulf State Analytics told Arab News.

“Some of the key pillars of Vision 2030 include tourism, non-oil trade, logistics, and transportation,” Cafiero said. 

“Within this context, Saudi Arabia is trying to bring many tourists from many parts of the world into the country, while also making the King Salman International Airport, which is supposed to be completed by 2030, a major hub that can not only compete with the UAE and Qatar’s successful airports, and even surpass them. Saudi Arabia has the resources and the will to make this airport in Riyadh a major success. If the Saudis are successful on this front, the Kingdom’s tourism industry will stand to gain in many ways.”

Alkhuraisi said the Kingdom is better connected than ever before, with the total number of destinations connected to the country reaching 127, which is over 50 percent of the 2030 target set in the Saudi Aviation Strategy. 

HIGHLIGHTS

• The national flag carrier, Saudia, plans to launch 25 new routes in 2023.

• The number of flights to AlUla increased by 64 percent between April and June.

• Saudi Arabia launched a free 96-hour stopover visa and services to facilitate the UK, the US, and Schengen visas holders.

• The Kingdom also announced its plans to replace one of its busiest airports, Riyadh’s King Khalid Airport, with King Salman International Airport.

“Saudi Arabia is creating unprecedented opportunities for global aviation through the Saudi Aviation Strategy, which will triple passenger numbers to 330 million, extend connectivity to more than 250 destinations, and increase air freight capacity to more than 4.5 million tons per annum by 2030,” Alkhuraisi added. 

“The Saudi Aviation Strategy targets reflect the scale of investment and growth occurring right now in the Kingdom’s aviation sector.”

The GACA official said: “This year we have already witnessed the Saudi Aviation Strategy deliver real results for the Kingdom, including Saudi Arabia jumping 14 places on IATA’s 2023 International Air Connectivity Index (the highest-ranking increase of any aviation market), launching of a new national airline, Riyadh Air, and issuing a new license for an airline based in Dammam.”

Further accelerating travel and easy access to the Kingdom, this year the government announced the launch of a free 96-hour stopover visa and services to facilitate the UK, the US, and Schengen visas holders, as well as permanent residents of the UK, the US, and any EU country to obtain tourist e-visas through a simple online portal. 

2023 is becoming a year in which Saudi aviation (industry) has moved beyond recovery (mode) and (entered) into an era of unprecedented milestones and achievements.

Mohammed Alkhuraisi, executive vice president of strategy and business intelligence at the General Authority of Civil Aviation

Ali Shihabi, a Saudi analyst and writer, told Arab News: “Aviation is a driver of growth as Dubai showed us. The more air connections you develop, the more traffic, tourism, and business come.” 

AlUla, a key tourist destination of the Kingdom, is also attracting foreign and domestic tourists. According to the Royal Commission of AlUla, the total number of flights to the historic destination increased by 64 percent between April and June, while the total number of passengers increased by 74 percent. 

The surge in the sector could be gauged through the fact that until March Wizz Air, a multinational airline, operated on 17 routes in the Kingdom and added 9 more destinations in April. 

The national flag carrier, Saudia, plans to launch 25 new routes in 2023. According to official data, it welcomed 14 million guests, with 76,000 daily passengers. 

“During the first half of 2023, Saudia showcased its crucial role in supporting tourism, business, Hajj, and Umrah sectors through strategic partnerships,” Capt. Ibrahim Koshy, CEO of Saudia, told Arab News. 

The Kingdom has also announced its plans to replace one of its busiest airports, Riyadh’s King Khalid Airport, which has a capacity of approximately 25 million passengers per year, with King Salman International Airport. This means that the Saudi capital will be able to host 120 million passengers per year by 2030. Estimated to be among the biggest in the world, the new airport, while still smaller in size than Dammam’s King Fahd International Airport, is expected to add an additional $7.18 billion to the Kingdom’s non-oil gross domestic product. It seeks to compete with other top GCC airports.

In March, Saudi Arabia announced the launch of its second national airline, Riyadh Air, owned by the Public Investment Fund. It is expected to add $20 billion to the non-oil GDP and create over 200,000 jobs. Its goal is to serve over 100 destinations by 2030 and connect the Kingdom’s capital to major international cities. 

During the first half of 2023, Saudia showcased its crucial role in supporting tourism, business, Hajj, and Umrah sectors through strategic partnerships.

Ibrahim Koshy, CEO of Saudia

“Riyadh Air was launched to shape the future of air travel, drawing on authentic Saudi hospitality and the latest digital technologies to offer an exceptional guest experience,” Riyadh Air CEO Tony Douglas told Arab News. “Riyadh Air will shape the future of air travel and empower Saudi Arabia’s aviation ecosystem. The airline will serve as a catalyst for the National Transport and Logistics Strategy and help realize its aviation sector goals by optimizing the Kingdom’s strategic location and connecting the three continents of Asia, Africa, and Europe.”

Further expansion for Saudi’s aviation sector comes with the soon-to-be-opened solar-powered Red Sea International Airport, in Hanak, Tabuk. Part of Red Sea Global, the multi-project luxury and sustainable tourism project under development and wholly owned by the PIF, it will open in the fourth quarter of this year and begin with domestic flights and offer international flights in 2024. 

“Saudi Arabia, through its Vision 2030, has opened the country to the world, welcoming international tourists, staging major sports events, including Formula 1, golf, boxing, tennis, and e-racing, as well as putting on major musical and entertainment events, Mdlbeast, for example, holding major business exhibitions (FII, Global Mining Forum, etc.), and staging unprecedented political meetings,” Amr Khashoggi, a Saudi economist and board chairman at Amkest Group, told Arab News. 

Khashoggi also said he believed that a large number of people are coming to the Kingdom seeking medical treatment.

“Saudi Arabia has now become a global travel destination for many reasons,” he added.


World Bank raises Saudi Arabia’s 2025 GDP growth forecast to 5.9%

World Bank raises Saudi Arabia’s 2025 GDP growth forecast to 5.9%
Updated 15 April 2024
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World Bank raises Saudi Arabia’s 2025 GDP growth forecast to 5.9%

World Bank raises Saudi Arabia’s 2025 GDP growth forecast to 5.9%

RIYADH: The World Bank has raised its expectations for Saudi Arabia’s economic growth to 5.9 percent in 2025 from 4.2 percent predicted earlier in January.

In its latest report the bank, however, revised its 2024 forecast for the Kingdom’s gross domestic product growth downward to 2.5 percent from an earlier forecast of 4.1 percent.

Concurrently, the overall GDP growth forecast for Gulf Cooperation Council countries in 2024 has been reduced to 2.8 percent, down from 3.6 percent, while the 2025 forecast has been revised to 4.7 percent from 3.8 percent.  

The report also adjusted the UAE’s GDP growth forecast to 3.9 percent for 2024, up from the previously projected 3.7 percent, with a further rise to 4.1 percent in 2025, from 3.8 percent. 

Kuwait’s economy is expected to expand by 2.8 percent in 2024 and increase further to 3.1 percent in 2025.  

Similarly, Bahrain’s economy is likely to grow by 3.5 percent in 2024 and 3.3 percent in 2025, marking an increase from January’s projections. 

Meanwhile, Qatar’s economy saw a downward revision for its 2024 forecast from 2.5 percent to 2.1 percent but an upward revision for 2025 from 3.1 percent to 3.2 percent. 

Oman’s economy projections for 2024 and 2025 saw a marginal increase of 0.1 percent since the January forecast. 

This adjustment reflects the broader economic trends where the surge in oil prices following Russia’s invasion of Ukraine in 2022 bolstered oil-exporting economies in the Middle East and North Africa.  

In contrast, economic growth in non-oil-exporting nations — including MENA oil importers like Djibouti, Jordan, Morocco, Tunisia, and the West Bank and Gaza — has slowed. 

By 2024, the growth disparity between GCC oil exporters and developing oil importers is expected to narrow to just 0.9 percentage points, marking a significant shift from 2022 when GCC countries grew 5.6 percentage points faster, the report stated.  

“Developing oil exporters will grow 2.8 percent in 2024, down from 3.1 percent in 2023 while growth in developing oil importers is forecasted to decrease to 2.5 percent in 2024, down from 3.1 percent in 2023,” the report stated. 

Overall, the MENA region is expected to achieve a growth rate of 2.7 percent in 2024, which aligns with pre-COVID levels but still trails the global average.  

While other emerging markets and developing economies are also projected to remain below pre-pandemic growth rates, they are expected to surpass the MENA region by 1.2 percentage points in 2024.  


GCC oil companies’ capex to grow by 5% to reach $115bn in 2024

GCC oil companies’ capex to grow by 5% to reach $115bn in 2024
Updated 15 April 2024
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GCC oil companies’ capex to grow by 5% to reach $115bn in 2024

GCC oil companies’ capex to grow by 5% to reach $115bn in 2024

RIYADH: The capital expenditures of national oil companies in the Gulf Cooperation Council are likely to grow by 5 percent in 2024 as compared to the previous year and are expected to reach $115 billion, according to a report.

The analysis by S&P’s Global Ratings, however, does not take into account the potential surge in spending from recent expansion plans such as the North Field West Project in Qatar, which it said could significantly boost expenditures.

The report highlighted that while the growth in capital expenditure is modest, Saudi Arabia’s planned output cuts in line with the current policy of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is likely to decrease demand for drilling platforms, operating ratios, average daily production rates, and profitability among regional drilling companies, especially in the Kingdom.

“We stress-tested the effect of a hypothetical 15-20 percent loss of total rig demand in the region on GCC drillers, and we estimate that the debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of rated and publicly listed drillers based in GCC countries could increase by about 1x on average,” S&P Global Ratings Credit analyst Rawan Oueidat said.

“At this point, we think that drillers’ rating headroom could shrink, but we don’t expect any short-term rating pressure,” Oueidat added.

The agency also raised concerns about the future of capital expenditure in other oil and gas-producing countries of the GCC, following Saudi Aramco’s decision to suspend its plan to increase the Kingdom’s maximum production capacity.

Despite these concerns, the total oil capital expenditure in the region is expected to remain relatively high due to the ongoing expansion plans in Qatar and the UAE.

However, the pace and magnitude of spending are expected to impact oilfield service companies and the entire value chain, particularly drilling companies whose business models heavily rely on corporate capital expenditures.

The UAE’s Abu Dhabi National Oil Co. is set to increase its oil production capacity to 5 million barrels per day by 2027, up from 4 million bpd as of February 2024, according to the US Energy Information Administration.

Meanwhile, Qatar is aiming to boost its liquefied natural gas production capacity to 142 million tonnes annually by 2030 from the current output of 77 million tonnes.

The report predicted oil prices to average $85 per barrel for the remainder of 2024 and $80 per barrel the following year.

It also suggested that geopolitical tensions and planned production cuts by OPEC+ will support prices and enhance the cash flows of oil companies across the Gulf region.


Saudi housing program Sakani benefits over 32,000 families in Q1

Saudi housing program Sakani benefits over 32,000 families in Q1
Updated 15 April 2024
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Saudi housing program Sakani benefits over 32,000 families in Q1

Saudi housing program Sakani benefits over 32,000 families in Q1

RIYADH: As many as 32,343 Saudi families benefitted from Sakani’s housing options during the first quarter of 2024, marking an annual 15 percent increase.

In collaboration with the Real Estate Development Fund and financial institutions, the program provides a variety of housing support packages to encourage first-time house buyers, including non-refundable financial assistance of SR100,000 ($26,659) or SR150,000.

The number of the Kingdom’s households that purchased their first homes reached 25,391 in the first three months of the year, reflecting the objective of Sakani to offer a variety of residential options and financial solutions.

Founded in 2017 by the Saudi Ministry of Housing and the Real Estate Development Fund, the program aims to increase the proportion of families that own a home in the Kingdom to 70 percent by 2030, in line with the economic diversification strategy Vision 2030.

Figures from Sakani showed that the number of beneficiary households reached 12,184 in March, with 9,381 Saudi families obtaining their first residence.

In January, Sakani announced that more than 100,000 Saudi families benefited from the initiative in 2023, while the number of applicants who obtained their first home over that 12 month period reaching 98,475.

The core objectives of the Sakani initiative are to enable homeownership in the Kingdom by creating new housing stock, assigning plots and properties to citizens, and providing financing for their purchases.

The Sakani website and application provide a wide range of housing facilities and services, such as real estate consultancy, issuance of real estate transaction tax certificates and a display of financing institution rates.

It also provides electronic financing and the disbursement of land contracts, engineering design services, access to certified contractors, and additional services.


Qatar inflation dips 1.4% in March: official data

Qatar inflation dips 1.4% in March: official data
Updated 15 April 2024
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Qatar inflation dips 1.4% in March: official data

Qatar inflation dips 1.4% in March: official data

RIYADH: A fall in food and beverage prices helped drive Qatar’s inflation down 1.4 percent in March as compared to the previous month, official data showed.

According to a report released by the country’s Planning and Statistics Authority, the consumer price index reached 106.67 points in March.

Compared to February, expenses for food and beverages slid by 4.74 percent in March. Prices for recreation and culture witnessed a decline of 5.58 percent during the same period. 

Similarly, costs for restaurant and hotels, as well as furniture and household equipment, decreased by 1.92 percent and 0.34 percent, respectively, in March compared to the previous month. 

On the other hand, prices for clothing and footwear increased by 1.88 percent, followed by expenses for transport, which went up by 0.23 percent. 

Cost of healthcare and communication remain unchanged in March, data showed.

However, the Gulf country’s annual consumer price index edge up by 0.98 percent in March compared to the same month of the previous year.

The year-on-year surge in prices was driven by recreation and culture (8.48 percent), communication (3.84 percent), education (3.48 percent), food and beverages  (2.73 percent), furniture and household equipment (1.28 percent), and miscellaneous goods and services (0.83 percent).

A year-on-year decrease has been recorded in the prices of  clothing and footwear, followed by housing, water, electricity and other fuel. 

Qatar’s economy is expected to stabilize in the near future after experiencing a surge in 2022 due to hosting the FIFA World Cup, according to the IMF.  

The Washington-based lender has forecasted a 1.9 percent growth in the country’s gross domestic product for 2024. 

Highlighting Qatar’s resilience to recent global disturbances, the IMF stated that the country’s economic prospects are promising. 

Furthermore, it noted that the Hamas-Israel conflict has not had any discernible impact on Qatar. 

“Risks are broadly balanced. Maintaining prudent macroeconomic policy and intensifying reform efforts will support Qatar’s resilience to shocks and accelerate its economic transformation,” the IMF said. 


Closing Bell: TASI gains 41 points to close at 12,708, reaches $2.59bn trade volume  

Closing Bell: TASI gains 41 points to close at 12,708, reaches $2.59bn trade volume  
Updated 15 April 2024
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Closing Bell: TASI gains 41 points to close at 12,708, reaches $2.59bn trade volume  

Closing Bell: TASI gains 41 points to close at 12,708, reaches $2.59bn trade volume  

RIYADH: Saudi Arabia’s Tadawul All Share Index closed at 12,708.34 points on Monday, gaining 41.44 points, or 0.33 percent.  

The parallel market Nomu also gained 158.48 points, or 0.6 percent, to conclude at 26,548.59.   

However, the MSCI Tadawul 30 Index fell 4.77 points – 0.3 percent – to finish at 1,610.23.  

The main index posted a trading value of SR9.7 billion ($2.59 billion), with 172 stocks advancing and 54 declining. On the other hand, Nomu reported a trade volume of SR103.7 million.  

Saudi Cable Co. was the top performer on TASI as its share price surged 9.89 percent to SR77.80. Saudi Chemical Co. followed next with its share price jumping 7.62 percent to close at SR8.19.  

Salama Cooperative Insurance Co. was also among the top performers, climbing 7.19 percent to SR33.55. Al-Etihad Cooperative Insurance Co. and Al Yamamah Steel Industries Co. increased 6.82 and 6.81 percent to SR26.15 and SR42.35, respectively.  

Conversely, Saudi Tadawul Group Holding Co. recorded the most significant dip, declining 2.73 percent to SR270.40.  

Arabian Internet and Communications Services Co. and the National Co. for Glass Industries also experienced setbacks, with their shares dropping to SR368.20 and SR45.90, reflecting declines of 2.33 and 2.24 percent, respectively. Bupa Arabia for Cooperative Insurance Co. and Saudi Awwal Bank also reported significant losses.  

Nomu’s top performer was Abdulaziz and Mansour Ibrahim Albabtin Co., which saw a 9.49 percent jump to SR45. Amwaj International Co. and Meyar Co. also recorded notable gains, with their shares closing at SR55.60 and SR73.90, marking an increase of 8.59 and 5.57 percent, respectively. Alqemam for Computer Systems Co. and Professional Medical Expertise Co. also fared well.  

Raoom Trading Co. was the worst performer on the parallel market, declining by 7.72 percent to SR145.80. Other underperformers included Al Mohafaza Co. for Education and Mohammed Hasan AlNaqool Sons Co., whose share prices dropped 4.67 percent and 3.68 percent to SR20.80 and SR44.50, respectively.  

Alhasoob Co. and Mulkia Investment Co. declined during the day to settle at SR67.20 and SR34, respectively.