Global focus on Saudi Arabia’s massive airport investments

Infrastructure developments critical to Vision 2030
Airport developments are a “work in progress”
KSA targets SR6.4 trillion GDP by 2030
Kingdom outperforming in domestic markets since 2016
Jeddah, Riyadh and Dammam want to be among Top 100

As the capital-intensive airport infrastructure development sector starts picking pace globally, Saudi Arabia – the largest economy in the Middle East – is working fast to develop sustainable and modern airport facilities with a US$100 billion aviation commitment over the next decade.

The Kingdom considers airport development to be critical to its unfaltering commitment to deliver Vision 2030, launched in 2016 to become a futuristic nation. Its aviation strategy will help it position itself into a global aviation hub connecting Asia, Europe and Africa. The sky is the limit for its growth and expansion, with over 70 per cent of its over 36 million population under the age of 35 and mostly upwardly mobile.

The oil-rich nation recognizes airport infrastructure should be compatible with the fast-changing socio-economic scene, in this decade, as it targets a Gross Domestic Product (GDP) of SR6.4 trillion and seeks over SR12 trillion investments to position itself in the world’s 15 largest economies. By 2030, total investments are set to exceed SR2 trillion per annum, or three times the current SR650 billion.

The largest aviation economy within the Middle East, accounting for over a third (35.8 per cent) of the total intra-regional capacity, plans to make Riyadh, Jeddah and Dammam among the top 100 airport cities globally, with King Salman International Airport set to be one of the world’s largest airports. To be developed on more than 57 square kilometres with six parallel runways, the airport will accommodate up to 120 million travellers by 2030 and, by 2050, up to 185 million passengers and 3.5 million tonnes of cargo. This new airport is expected to contribute US$7 billion annually in line with Vision 2030 objectives. The expanding infrastructure will generate wider business volumes in several domains along the supply chain and increase air connectivity.

Vision 2030 heralds multiple opportunities for aviation sector companies looking to expand their businesses and seek new growth avenues. Over 10 years, the Kingdom is committing an incredible US$100 billion to the aviation sector to accelerate its development away from a reliance on oil exports, and become a window to the world. Through a mix of public and private sector investments and drafting international aviation brands, it is keen on ensuring the process of transformation is progressive and orderly and bridges the gaps.

The most appropriate venue for airport industry players to explore the unlimited business avenues in the highly-competitive, ever-expanding market is the Saudi Airport Exhibition (SAE) whose second edition is to be held for two days from 19th December 2023 at the Riyadh International Convention and Exhibition Center (RICEC). “Vision 2030 is all about thinking big and bold, and it is maintaining momentum with massive investments in infrastructure also taking shape”, says Daksha Patel of SAE’s organizer, Niche Ideas. “By 2030, the expansions and upgrades to the Kingdom’s airports will see them tripling capacity to 330 million passengers and Saudi Airport Exhibition provides an opportunity for Saudi aviation authorities to see the latest technologies and innovations from the best airports and suppliers in the world.”

The Kingdom is undertaking a massive airport expansion and upgrades programme through US$147 billion in investments. Jeddah Airport City at King Abdulaziz International Airport (KAIA) is taking airport-centric development to a new level. Its expansion could push the passenger capacity to 114 million passengers per year after its completion. Total investment is estimated to be US$4.5 billion. It will be the first airport city development in line with Vision 2030. A former military airport at NEOM Bay has been designated as a commercial airport and started handling passengers while another new airport, Red Sea International Airport (RSI), is due to open in 2023 to handle up to a million passengers in time.

In 2019, passenger volumes reached 87 million, according to OAG Traffic Analyzer. Domestic traffic had been growing faster than international traffic, at an average annual rate of 11 per cent between 2011 and 2019, and international transit traffic has a target of 30 million passengers by 2030. With aircraft already ordered for its fleet, the new flag carrier, Riyadh Air, is to take off to compete with leading Middle Eastern airlines, through an extensive long-haul network.

The Airports Council International says aviation must be supported with adequate infrastructure to fully deliver its economic and social benefits. Runways, terminals and other essential facilities are required to meet current and future passenger and cargo demands safely and efficiently. It encourages the development of safe, sustainable facilities that are demand-led, fit-for-purpose and cost-effective to develop and flexible to adapt to changes in the operating environment. International Air Transport Association (IATA), the global body of 240 airlines comprising 84 per cent of total air traffic, says the investment plans encourage airports to focus on their functional requirements and inefficiencies and highlight global best practices for better outcomes. This ensures that planned infrastructure is resilient, flexible, functional and able to adapt to technological trends and changes, it said.

The Kingdom fits perfectly in what IATA asserts. To become an international hub, cities must first have sufficient demand for air travel, good geographic locations, highly-developed airport infrastructure and high-volume passenger and cargo traffic. This requires an extensive understanding of global marketplace dynamics, the economics of airport operations, the long-term impact of policy decisions and consumer behaviour. The development of the airport sector relies on the development of its operations, navigation services, maintenance services, ground handling, logistics and training.

The planned expansions in Saudi Arabia include the redevelopment of airports in Abha, Al Ahsa, Al Qassim, Arar, Hail and Jizan. Also on the cards are plans to develop new airports in Al-Qunfudah, Farasan Island and Taif, Riyadh North (serving the provinces of Al Ghat, Al Majmaah and Zulfi) and Riyadh South (serving the provinces of Al Aflaj, Al Hariq, Al Kharj and Howtat Bani Tamim). The General Authority of Civil Aviation had announced plans to privatize all 27 existing airports and the new airports to improve efficiency and performance. The process is underway with the aviation regulator envisaging three different models as exemplified by airport developments in Riyadh, Dammam, Jeddah and Madinah. According to data, over 600 commercial airports worldwide have been either partly or fully privatized, with the scale of privatization remaining stronger in Europe, where almost one-third of the airports have private sector participation.

The Kingdom is also moving fast towards harnessing cutting-edge capabilities and technologies. Its bold and ambitious programme shows how aviation is a fundamental economic catalyst for broader prosperity. Over the next seven years, the country is committing an incredible US$100 billion to the aviation sector in a drive to accelerate the country’s development away from a reliance on oil exports. Saudi Arabia’s visionary leadership, wide resources and unbridled determination is leading it towards becoming a global powerhouse since it began opening up to the world. The Kingdom has designated US$1 trillion for the travel and tourism sector through 2030 – almost equivalent to the GDP of Mexico. To facilitate this, its airport authorities are in full gear towards adopting technologies and a data-driven approach to optimize existing assets while upgrading the current air traffic infrastructure is also in the works.

Cirium data of schedules shows the Available Seat Kilometers (ASKs) for airlines serving international markets had been up, and post-pandemic recovery remains strong for international traffic. In 2023, international ASKs would be at par with 2019 at 131.7 billion. In September 2019, Saudi Arabia opened its doors to visitors from all over the world through a new entry visa regime. The Kingdom continues to expand its presence in the international market with the launch of 15 new routes in 2022 amongst several other seasonal and ad-hoc operations. The schedule data also shows the domestic markets have continued to outperform every year since 2016. Domestic travel peaked at 26.3 billion ASKs in 2019 and stood in the year 2022 at 98 per cent of 2019 levels.

The Middle East’s largest aviation market with the fastest passenger traffic growth until 2040 has been featured on the list of the global airport construction market that is projected to reach US$1.4 trillion by 2026. The Kingdom has started working rapidly to expand and upgrade its airports to support a US$82.3 billion GDP by 2037. The government wants direct international flights to rise to 250 from 99 and the contribution of the civil aviation and air transport sector to its GDP is expected to increase to more than SR280 billion by 2030, making the Kingdom the first in the Middle East and the fifth globally in terms of air connectivity.