Riyadh, the administrative and commercial capital of Saudi Arabia, is crowned as the official base for the newly introduced national airline of Saudi Arabia. According to the officials of the General Authority for Civil Aviation, Saudi Arabia, this big step has been taken to diversify the country’s growth and expand networks, which would otherwise be difficult to achieve with a single airline in place.
The ‘Vision 2030’ of Saudi Arabia aims to diversify the country’s economic growth by lessening the dependency on oil resources while boosting other sectors such as tourism, infrastructure, and education. As per this vision, instead of removing the current airline, Saudia, and introducing a new airline, the Gulf country decided to implement a ‘dual-hub’ strategy.
Dual hub strategy
The ‘dual-hub’ strategy has been implemented to create two logistic hubs in the country. One is Jeddah, the gateway to the holiest cities of Islam. And second is Riyadh, the commercial and administrative capital of Saudi. These national airlines will function in parity so that new carriers can reach the maximum capacity of airports. At present, Saudi Arabia witnesses around 100 million passengers, which it wants to boost to at least 300 million in the coming years. Through two national airlines, the number of destinations covered by flights at present will also increase from around 100 to 250. With this new airline, transit traffic is also supposed to grow three times more than before. The main target is set on the arrivals coming to the country, which has the capacity to increase Saudi’s air traffic in the whole Middle Eastern region, making it to be one of world’s biggest aviation hubs.
Although diversification of economic growth has been suggested, the focus on religious tourism still remains one of the priorities. Jeddah’s base will prioritize the maximum traffic of the pilgrims to Makkah and Madinah, and Riyadh will cover other non-religious economic flights. That way, Saudia, the only national airline of Saudi Arabia at present, will function more efficiently and effectively. The previous years’ performance of the airline has not been very optimistic and, therefore, these measures are thought to be extremely important and necessary at the moment.
The pandemic years have not been very fruitful for economies all around the world, and Saudi is no exception. The country is successfully going back to the high economic growth rates of pre-pandemic years, but the road to success is not easy. The country believes that investing in the tourism sector can be profitable and yield exponential growth. The new nameless airline is being funded by the Public Investment Fund (PIF), which is a sovereign investment fund owned by the state.
Does a new airline mean new competition
The plan is to introduce the new airline with five-star carriers, and this only means more competition with international airlines. According to Gulf News, the new airlines will be competing head-to-head with regional aerospace giants such as Turkish Airlines, Emirates, and Qatar Airways.
The low-cost airlines, namely Flyadeal and Flynas, will not be much affected as they are not the direct competition of the new airline. While talking about the latest emerging competition, the officials cleared out that no plans for acquisitions or consolidations of these low-cost carriers are on the table for the future.
The anonymous airline
As pointed out earlier, the carrier is unnamed as of now. The Public Investment Fund will work out the decisions pertaining to the name, operationalization, and other details. Everything related to the new airline is under its jurisdiction. And, since naming the airline is related to brand identity, the big reveal can take time.
