Aviation, tourism and related services are the engine of Saudi economic growth. Data, deals and discussions at the third Future Aviation Forum (FAF2024) organized by Saudi Arabia’s General Authority of Civil Aviation or GACA and convened in Riyadh, Saudi Arabia, indicate that it will remain so for the next few years until investments in other industries such as technology and mining begin to pull ahead.
The vision for aviation
Boosting aviation and tourism is a key tenet of Vision 2030, the Kingdom’s ambitious vision for its future. Its National Tourism Strategy envisions attracting 150 million tourists, equally distributed between domestic and international, and creating 1.6 million job opportunities by 2030 with the greater objective of improving youth employment and increasing tourism’s contribution to the national economy.
The strategy is already paying dividends. According to the aviation report launched at FAF24, during 2023 civil aviation contributed U$53 billion to national GDP split across aviation (U$20.8 billion) and tourism (U$32.2 billion) in the tourism sector. The industry was responsible for providing just under a million jobs with civil aviation accounting for 241,000 jobs and tourism for around 717,000.
More impressively, in 2023, Saudi Arabia achieved 123% growth in international seat capacity over its pre-pandemic capacity; the average recovery rate was 95% for the region and 90% globally. 112 million passengers passed through the Kingdom’s airports in 2023.
Doing the groundwork …
Recognizing that attracting foreign investment, direct and indirect, would be a critical component of a successful National Aviation Strategy, especially one as ambitious as Saudi Arabia’s, the government set up the Saudi Air Connectivity Program (ACP) in 2021. With a focus on both capacity and service, the ACP’s goals are to ‘streamline market entry and promote expansion opportunities for air travel partners in the Kingdom. Through the development of new routes, the Program aims to position Saudi Arabia as a global leader in tourism air connectivity.’
A dense network of directly connected destinations is vital to the successful realization of the Kingdom’s travel and tourism ambitions specifically increasing passenger volumes from 120 million in 2023 to 330 million by 2030. Saudi Arabia’s air connectivity has a lot of catching up to do to deliver against these targets. The ACP is working on adding new point-to-point destinations and building a pipeline of transfer markets that will add around 250 destinations to the aviation industry’s international network and help deliver the industry’s ambitious targets for 2030 having added 28 destinations since launch to the second quarter of 2024.
Nor are Jeddah and Riyadh it’s only focus. According to Majid Khan, CEO of ACP, Saudi Arabia is home to 29 airports including the four largest in Dammam, Riyadh, Jeddah, and Medina. The ACP’s goal is to attract more airlines to the top four and to build a richer network of domestic connections.
To this end, the ACP has been ‘working with airlines in China, Korea, Japan, South Asia, Europe and the GCC.’ According to Majid Khan, China’s top three carriers have already begun flights to the Kingdom: China Southern Airlines from Daxing; China Eastern Airlines from Shanghai and Air China from Beijing to Riyadh. Some European routes launching over summer 2024 include ITA Airways from Rome to Jeddah and Riyadh and British Airways from London Heathrow to Jeddah.
… Building momentum
FAF2024, a well-attended opportunity designed to build on the groundwork being done by organizations such as ACP, GACA and the tourism industry surpassed expectations. 102 deals, agreements, memorandums of understanding, worth upwards of U$21 billion were signed. These including aircraft orders, national air service agreements, cargo and logistics, advanced air mobility, maintenance, repair, and overhaul services as well as knowledge and technology transfer service agreements.
Notable deals – Aircraft Orders
Saudia Group signed a landmark deal with the European aircraft manufacturer, Airbus to acquire 105 narrowbody aircraft:
- Saudia: 54 A321neo aircraft
- Flynas: 12 A320neo aircraft + 39 A321neo aircraft
Notable deals – MRO
Saudia Technic, Saudia’s MRO arm has plans to enhance and streamline its maintenance operations by investing in advanced automation and artificial intelligence solutions. To this end it has signed multiple agreements with local and global firms including UiPath, a global automation and artificial intelligence (AI) solutions provider, Saudia Telecom Company, Eve Air Mobility, which specializes in MRO services for electric vertical take-off and landing (eVTOL) aircraft
The company is also expanding its footprint for domestic MRO and has signed agreements to provide services to the NEOM Vertical Mobility Operating Company, Riyadh Airports Company (RAC) and Saudia Cargo.
Notable Deals – Knowledge Transfer and more
The aviation industry is suffering from a dearth of talent: from pilots and cabin staff to engineers and technicians, there is not a sector of the industry that is isn’t struggling to find trained employees or losing highly trained ones to the highest bidder. Keenly aware of the train barrelling down its ambitions, the Saudi government is investing in building up its own talent base. Riyadh Air’s agreement with Saudia Academy designed to ‘enhance aviation training capabilities across the Kingdom’ is a welcome and important development.
According to the press release, the agreement will ‘combine their expertise and resources to deliver comprehensive training programs covering many disciplines crucial to the aviation industry. These programs will encompass technical training, aviation fundamentals, ground operations, management principles, language proficiency, and regulatory compliance. Additionally, the collaboration will extend to executive education and coaching, catering to the professional development needs of aviation leaders and decision-makers.’
The event also saw the launch of the latest aviation strategy report and a roadmap for general aviation which envisions increasing the size of private and business aviation ten-fold and creating 35,000 new jobs.
Multiple agreements to improve connectivity and strengthen international cooperation were signed with over a dozen nations including Albania, Belize, Brunei Darussalam, Cambodia, El Salvador, Eritrea, Grenada, Kingdom of Eswatini, Kiribati, Lithuania, Malawi, Mozambique, Romania, Sao Tome and Principe and Uzbekistan.
“The 2024 Future Aviation Forum has been an extraordinary event, exceeding all expectations. Over the past few days, we have witnessed groundbreaking commercial agreements, forward-thinking policy initiatives, and transformative partnerships that will undoubtedly enhance global aviation connectivity. The deals and commitments made here represent a monumental vote of confidence in Saudi Arabia’s aviation sector and our vision to become a global leader in this vital industry.”
President of GACA President HE Abdulaziz Al-Duailej
