DUBAI (Reuters) – Saudi Arabia plans to target international transit passenger traffic with its new national airline, going head-to-head with Persian Gulf giants Emirates and Qatar Airways and opening up a new front in simmering regional competition.
Crown Prince Mohammed bin Salman, who is pushing economic diversification to wean Saudi Arabia off oil revenues and create jobs, announced a transportation and logistics drive on Tuesday aimed at making the kingdom the fifth-biggest air transit hub.
Two people familiar with the matter said the new airline would boost international routes and echo existing Persian Gulf carriers by carrying people from one country to another via connections in the kingdom, known in the industry as sixth-freedom traffic.
The transport ministry, which has not released details of the plans, did not respond to a Reuters request for comment.
The strategy marks a shift for Saudi Arabia whose other airlines, like state-owned Saudia and its low cost subsidiary flyadeal, mostly operate domestic services and point-to-point flights to and from the country of 35 million people.
The Saudi expansion threatens to sharpen a 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 forecast to take the longest to recover.
Riyadh has already moved to compete with the UAE. The Saudi government has said that from 2024 it would stop giving contracts to firms that do not set up regional headquarters in the kingdom.
“Commercial competition in the aviation industry has always been fierce, and regional competition is heating up. Some turbulence in regional relations is on the horizon,” said Robert Mogielnicki, resident scholar at the Persian Gulf States Institute.