Saudi to launch a Second National Airline

Crown Prince of Saudi Arabia Mohammed bin Salman announced plans of launching second national airline as part of broader strategy to turn kingdom into global logistics hub in a bid to diversify from oil.

Key Points

  • Creation of another flag carrier will put Saudi Arabia into 5th rank worldwide in terms of air transit traffic.
  • Detailed plan, of when and how airline will be created, is not yet out.

Background

Plan of creating new airlines was announced because; Prince Mohammad has been pushing for Saudi Arabia, which is the biggest Arab economy and largest country in Gulf geographically, to boost non-oil revenues to 45 billion riyals by 2030.

Boosting Non-oil revenues

Saudi Arabia government seeks to make the kingdom a global logistics hub. Plan includes the development of ports, rail and road networks. These networks would increase transport and logistics sector’s contribution about 10 % in gross domestic product which currently stands at 6 percent.

What is the purpose of creating new airline?

Comprehensive strategy of creating new airlines aims to position Saudi Arabia as global logistics hub by connecting three continents. New airline would increase number of international destinations from Saudi Arabia to more than 250. It will also double air cargo capacity to 4.5 million tonnes.

Why need of second airline was felt?

Current flag bearer Saudi Arabian Airlines, Saudia, is one of the smallest airline networks in gulf region relative to its size. Saudia has struggled with losses for years. It has also been hit hard by covid-19 pandemic.

Public Investment Fund (PIF)

PIF is the sovereign wealth fund of Saudi Arabia. it has planned to build a new airport in Riyadh as a part of new airline launch. This fund is the main vehicle of boosting Saudi Arabian investments at home and abroad.

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