EXCLUSIVE Saudi airline’s new plan targets Emirates and Qatar Airways – .

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EXCLUSIVE Saudi airline’s new plan targets Emirates and Qatar Airways – .


DUBAI, July 2 (Reuters) – Saudi Arabia plans to target international transit passenger traffic with its new national airline, taking on Gulf giants Emirates and Qatar Airways and opening a new front in latent regional competition.

Crown Prince Mohammed bin Salman, who is pushing for economic diversification to wean Saudi Arabia off oil revenues and create jobs, on Tuesday announced a transport and logistics campaign aimed at making the kingdom the fifth hub for air transit.

Two people familiar with the matter said the new airline would strengthen international routes and echo existing Gulf carriers by transporting people from one country to another via connections within the kingdom, known in the industry as sixth freedom traffic.

The Transportation Ministry, which did not release details of the plans, did not respond to a request for comment from Reuters.

The strategy marks a shift for Saudi Arabia whose other airlines, such as state-owned Saudia and its low-cost subsidiary flyadeal, primarily operate domestic services and point-to-point flights to and from the country of 35. millions of inhabitants.

Saudi expansion threatens to escalate the battle for passengers at a time when travel has been hit by the coronavirus pandemic. Long-haul flights like those operated by Emirates and Qatar Airways are expected to take the longest to recover.

Riyadh has already decided to compete with the United Arab Emirates, the region’s business, trade and tourism hub. The Saudi government has said that from 2024 it will stop giving contracts to companies that do not establish regional headquarters in the kingdom.

“Commercial competition in the aviation industry has always been fierce and regional competition is intensifying. Turbulence in regional relations is on the horizon, ”said Robert Mogielnicki, resident researcher at the Arab Gulf States Institute.

Dubai, the world’s largest international air transport hub, has announced a five-year plan to expand air and sea routes by 50% and double tourist capacity over the next two decades.

Riyadh has already decided to compete with the United Arab Emirates, the region’s business, trade and tourism hub. The Saudi government has said that from 2024 it will stop giving contracts to companies that do not establish regional headquarters in the kingdom.

Saudi Crown Prince Mohammed bin Salman attends a Shura Council session in Riyadh, Saudi Arabia, November 20, 2019. Bandar Algaloud / Courtesy Saudi Royal Court / Document via REUTERS

Prince Mohammed is trying to attract foreign capital to create new industries, including tourism, with the ambition of increasing the total number of visitors to 100 million by 2030, from 40 million in 2019.

“Saudi Arabia has the capacity to push forward its aviation and tourism strategy as others step back and retract,” aviation consultant Brendan Sobie said.

“It’s a risky strategy, but also a sensible one given its position and its overall objective of diversification. “

TOURIST GROWTH

However, any airline needs substantial start-up capital, and experts warn that if Saudi Arabia’s ambition is to compete on transit flights, it could face years of losses.

Saudi Arabia’s large population generates direct traffic that could cushion losses as a new airline targets international transit traffic, aviation consultant John Strickland said.

Emirates reported a record annual loss of $ 5.5 billion last month as the pandemic forced Dubai to step in with $ 3.1 billion in state support.

Etihad Airways has slashed its ambitions after spending billions of dollars to finally compete unsuccessfully in building a major hub in the UAE’s capital, Abu Dhabi.

People familiar with the matter said the new airline could be based in the capital Riyadh and that the sovereign wealth fund PIF is helping set it up.

PIF did not respond to a request for comment.

Saudi Arabia is developing non-religious tourism with megaprojects supported by the PIF. He launched social reforms to open up the country, the cradle of Islam, in particular by allowing public entertainment.

Reporting by Alexander Cornwell; Editing by Tim Hepher and Alexander Smith

Our Standards: Thomson Reuters Trust Principles.

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