Clear Skies Ahead for the Middle East's Aviation Industry

On the sidelines of Saudi Arabia’s Future Aviation Forum, the kingdom’s national flag carrier Saudia ordered 105 Airbus A320neo--the largest order in Saudi aviation history. The order comes on the heels of reports that Saudi Arabia's Public Investment Fund (PIF) is in talks to acquire the airline. The potential acquisition aligns with PIF’s goals of boosting investments in tourism and transportation and supports Saudi Arabia’s Vision 2030.

It also aligns with the kingdom’s National Aviation Strategy, which aims to mobilize $100 billion from the public and private sectors by 2030 to make Saudi Arabia the hub for the leading aviation sector in the region. The strategy will support the transport of 330 million passengers across more than 250 destinations and 45 million tons of air cargo by 2030.

In May, OAG reported that Saudi Arabia saw substantial airline capacity growth over the past year, with seats increasing 9.9% from last year, from about 5.78 million in May 2023 to 6.36 million in May 2024. At the Future Aviation Forum, Saudi Arabia’s General Authority of Civil Aviation (GACA) president announced a 20% increase in passenger travel figures this year, bringing the total number of passengers to 111 million. Last year, the kingdom saw a 26% surge in passenger figures as it added 148 new destinations and expanded connectivity by 48%. 

GACA has said that it will unveil a roadmap to expand the GDP of its general aviation sector tenfold--or up to $2 billion--by 2030 at the Future Aviation Forum.

In 2023, Saudia carried 30 million passengers, marking a 21% increase compared to 2022. If acquired by PIF, Saudia could be privatized or merged with Riyadh Air, a newly established carrier also owned by PIF.

But Saudia isn’t the only airliner expanding in the kingdom.

At the Arabian Travel Market in Dubai in May, Riyadh Air signed an MoU with the Saudi Tourism Authority (STA) that will expand its operations to over 100 countries by 2030 and improve the travel experience for passengers. With this partnership, the two parties will work to improve access to tourism platforms like the Sustainable Tourism Observatories in Cities (STOCH). They will also offer joint loyalty program benefits, promotions, incentives, and advanced payment technologies to attract more visitors to the region. 

Private players are also getting on board with the transformation. In January, Saudi Venture Studio BIM Ventures launched the Riyadh-headquartered private aviation platform SKYNA.

In fact, privately-held low-cost airliner flynas recorded the biggest increase in capacity, increasing by 28.5% over the past year, compared to Saudia’s 6.5% increase, OAG reports. In April, flynas, which is partly owned by the PIF, reported a 32% YoY increase in revenue and announced plans for an IPO later this year. In May, it revealed plans to expand its footprint in the UAE. 

The Next Big Aviation Hub

Saudi’s ambitions to become the largest aviation hub in the region rival only the UAE’s, which is currently the region’s top aviation market in terms of airline capacity, boasting 7.25 million seats as of May. 

According to OAG, the Middle East has an airline capacity of around 22.25 million seats, up by 6.76% year-on-year (YoY). As of May 2024, international travel dominated flights, with 17.93 million international seats compared to 4.32 million domestic ones.

Home to the Middle East’s leading airline, Emirates, the UAE is also working to bolster its aviation sector.

The UAE is home to the region’s busiest airport and the second busiest airport in the world, DXB, which hosted 86 million passengers last year.

In April, Dubai announced plans for the $35 billion Al Maktoum International Airport (AMI). AMI will accommodate 260 million passengers annually once fully operational and will be five times larger than DXB, with 400 airplane gates and five parallel runways. Upon completion of the first phase in 10 years, the airport will be able to accommodate 150 million passengers annually. On the airliner front, the UAE’s national carrier, Etihad, is planning a much-anticipated IPO later this year, which could raise up to $1 billion. In May, Etihad Airways reported a $143 million surge in profits in Q1 2024.

According to a report released by the airline, it flew around 4.2 million passengers during Q1 of this year--a substantial 41% increase since last year. Along with increasing passenger numbers, the airline has been boosting operational efficiency, with its operation cost per available seat kilometer (CASK) declining by 9% YoY. It also expanded its operational fleet from 75 to 89 aircraft over the past year.

Dubai-based Emirates, the region's biggest carrier, also recorded a surge in profits last year. In 2023, the long-haul carrier’s revenue reached $33 billion, with profits hitting $4.7 billion compared with $2.9 billion in 2022. The Dubai flag carrier transported 51.9 million passengers in 2023, a 19% increase since last year.

While the UAE and Saudi vie to lead the region's aviation industry, Qatar's Doha Airport is the fastest growing in the region, growing by 18.7% from 2.62 million last year to 2.69 in 2024. This is driven largely by the growth of Qatar Airlines, which reported a 17.6% growth in seats since last May, making it the second-largest airliner in the region.