This is marketing research on the Aviation - Saudi Arabia industry and can include information on the background, market structure, definitions, competitors, trends and developments of Aviation - Saudi Arabia and is related to other topics such as aircraft, flight, flying and airlines.

[edit] Summary

Most industrial sectors in Saudi Arabia have been experiencing an economic boom, including aviation. For the past 60 years, state-owned Saudi Arabian Airlines has been the country’s only licensed operator for domestic and international flights. However, the Kingdom’s growing aviation sector has been greatly enhanced by the launch of two new domestically operating budget airlines, the privatization of Saudi Arabian Airlines and by a number of airport expansion projects throughout the Kingdom.

[edit] Market Demand

Due to the Kingdom of Saudi Arabia welcoming Umra visitors, who come to perform certain religious rituals throughout the year, and Haj pilgrims, who come to perform certain religious rituals during one specific time of the year, Saudi Arabian Airlines carried more than 17 million passengers during 2006. This is compared to 16 million in 2005 and 15.7 million passengers in 2004. To facilitate domestic travel and to accommodate the increased number of passengers, the General Authority for Civil Aviation (GACA) awarded licenses to National Air Services (NAS) and Sama Airlines to begin operations as domestic, private, low cost carriers in December 2006.

National Air Services (NAS) owns five single-aisle aircraft to serve domestic destinations and is expected to expand to serve other destinations in the Middle East. NAS has a budget of $2 billion and plans to own a fleet of 100 aircraft by 2010 to serve its projected 10 million passengers by 2011.

Dammam-based Sama Airlines has launched with three aircraft to operate domestically within the Kingdom. They plan to own another five aircraft by the end of 2007 with a planned fleet of 35 within five years. Moreover, in an effort to attract foreign investment, there are plans to privatize the national carrier, Saudi Arabian Airlines. This will also play a vital role in the development of the Kingdom’s aviation sector. By the end of 2007, the catering, cargo, ground handling, pilot training and technical services will become private, independent companies.

The Saudi government allocated contracts valued at U.S. $817 million to GACA to expand and upgrade the country’s existing airports. This will help to accommodate the increased number of passengers and to compete more successfully with other airports in the region. The allocation will also add to the economic, civil, social, political and religious development in the region.

[edit] Major Ongoing Projects (Market Data & Best Prospects)

Privatization of Saudi Arabia Airlines

Saudi Arabian Airlines has selected BNP Paribas, of France, to act as a financial advisor for its privatization process. In 2004, the capital of the airline was US $117.33 million and increased to US $133.33 million in 2005. It has been decided that the non-core units, such as catering, ground handling services, pilot training and technical services, should become profit centers by the end of 2007. An aggressive marketing campaign to attract investors began in late 2006. By the first quarter of 2008, Saudia Airlines will become a holding company and its shares will be offered for sale at a later stage.

[edit] Expansion of Airports

1. King Abdul Aziz International Airport (Jeddah)

The King Abdul Aziz International Airport will be expanded and modernized in an effort to keep up with the strong competition in the region, to make it a regional hub and a major passenger transit point, as well as to significantly add to the economic development in the region. The Netherlands Airport Consultation, which specializes in the planning and designing of airports, has been appointed to develop the general plan and the space allocation. Jeddah’s King Abdul Aziz International Airport (KAIA) will be upgraded in three phases with a total budget of US $1.5 billion. It is to be finished by 2011 with a planned total annual capacity of 80 million passengers. This upgrade involves the following:

• Two new terminals • Renovation of the existing north & south terminals • A Concourse with 25 gates • Three connector buildings • A 1.6 million ton a year cargo complex

The first phase is estimated to cost US $240.77 million and was awarded to a local company, Al-Mabani General Contractors Co. They are to finish the project within 16 months and are in charge of:

• Upgrades of the airfield pavement • The lighting system • The fuel network system • The storm water drainage network • Development of the existing Haj terminals

2. Prince Mohamed Bin Abdel Aziz Airport (Madinah)

The decision to transform the Prince Mohamed Bin Abdel Aziz Airport from domestic to an international one has received positive reactions. Previously, pilgrims arrived at King Abdul Aziz Airport in Jeddah, traveled straight to Makkah Al-Mukkaramah for a few days, then went back to Jeddah to either take a bus or a plane to go to Madinah, following which they returned to Jeddah to catch their flights to return to their countries. This was physically exhausting, time consuming and costly for most pilgrims.

With the transformation of the airport to operate internationally, it will give the pilgrims the choice of which way to return to their country, either from Prince Mohamed Bin Abdel Aziz International Airport in Madinah or from the King Abdul Aziz International Airport in Jeddah. It also reduces the heavy pressure on the airport in Jeddah. Designs to upgrade the existing facilities and the construction of a new terminal and runway will be ready by the end of 2007. In the meantime, GACA has allocated U.S. $1 billion to build a “Greenfield” airport in the city to accommodate approximately 6 million passengers.

3. Tabuk Regional Airport (Tabuk)

Tabuk Regional Airport is considered the 4th largest regional airport in the Kingdom and has an annual passenger growth rate of 4.5 percent. The airport currently serves 60 domestic flights daily.

The Saudi Bin Laden Group was awarded U.S. $59 million for the airport expansion, which includes:

• Establishment of new runways • Aircraft parking facilities • Maintenance workshops • Control tower • Cargo service building • New arrival and departure lounges • Jet bridges to link passengers from the gate to the plane. • Electricity plant • Parking for 900 vehicles

The project will increase the airport’s present area of 33,779 square meters by 12,000 square meters

4. King Abdullah Economic City & Airport

Emaar Properties, the world’s largest real estate company, is the master developer of King Abdullah Economic City. It will be located in the north of Jeddah with an investment of US $26.6 billion. There are 6 major components to the city:

• Industrial district • Waterside resort (a mix of waterfront hotels and boutiques) • Financial island • Three residential districts • Education zone (universities, schools and R&D centers) • Millennium seaport

King Abdullah Economic City has also announced plans to build Saudi Arabia’s 5th international airport in Rabigh. This new airport will serve the economic city and nearby areas. It is expected to increase the investment projects in the city to U.S. $53.3 billion instead of the previously estimated U.S. $26.6 billion.

[edit] Market Entry

Trade Regulations: There are no significant trade regulations to the participation in the aviation expansion projects. The American companies will have the opportunity to obtain a joint venture agreement with the selected consortium to work as sub-contractors Duty Rates: There are no quotas on the importation of aviation equipment and related accessories. The Saudi government applies a 5% duty on imported equipment. U.S firms wishing to set up an agency contract in Saudi Arabia are encouraged to contact the offices of the Commercial Service at Riyadh, Jeddah or Dhahran, or any of the Export Assistance Centers in the U.S. Moreover, U.S companies are encouraged to obtain legal counsel when drawing up their agency/distributorship agreements. Please note that government offices are closed on Thursday and Friday. Most private sector firms do not open Thursday afternoon and on Friday. Arabic is the official language in Saudi Arabia, while English is the official business language.

[edit] Opportunities for Suppliers

There are excellent opportunities for suppliers in the following fields:

Airplane manufacturers Buses Destination signs Automated transit systems Communication equipment Computerized control systems Paging systems Construction material Aircraft maintenance systems Signaling systems Uniforms Passenger information systems Fluid saving devices

[edit] Sources

Latest U.S. Government Data