Saudi Arabia Says Airport Ambitions Won't Be Dented by Oil Slump

  • Aviation authority budgets $1.5 billion for upgrades in 2016
  • Plans for three local startup carriers said to be progressing

Saudi Arabia said it will press on with the modernization of its major airports as a prelude to selling them off, even as the slump in the price of oil slows economic growth.

The General Authority of Civil Aviation plans to spend as much as 5.5 billion riyals ($1.5 billion) on airport infrastructure this year, according to Faisal Al-Sugair, chairman of Saudi Civil Aviation Holding Co., the authority’s commercial arm. Any project delays that do occur will be for “technical reasons,” he said.

While crude’s plunge to below $30 a barrel is weighing on state spending, it has also led Saudi officials to pursue measures including privatization to wean the kingdom off oil. The GACA said Jan. 5 that it will sell off all its airports by 2020, with a winning bid to run the country’s busiest hub in Jeddah due mid-year and the terminal in Riyadh set to be next on the block later in 2016.

Plans are advancing for the introduction of three new airline operators based in Saudi Arabia this year, Al-Sugair said by e-mail, adding that the GACA would need to “assess market dynamics before issuing more licenses.”

The new entrants are SaudiGulf Airlines, Egypt-backed Saudi Nesma Aviation Co. and Al Maha Airways. Owned by Qatar Airways, Al Maha should start flights in the second quarter once final compliance issues have been settled, Al-Sugair said. Saudi Arabia currently has two main operators -- flag carrier Saudi Arabian Airlines, known as Saudia, and no-frills operator Flynas.

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