Saudi Air Connections Take Off, Thanks To Government Subsidy Scheme

A Saudi government scheme to support the country’s aviation industry and draw in more tourists appears to be doing well, with at least 30 new international routes opened up since July.

The Air Connectivity Program was launched earlier this year, backed by the powerful and wealthy state-owned Public Investment Fund.

With the program’s support, national airline Saudia has in recent months started direct flights from the country’s second city of Jeddah on the Red Sea coast to Barcelona in Spain, Zurich in Switzerland, the South Korean capital Seoul and the Dutch capital Amsterdam.

From September 1, it added flights to the Tunisian capital Tunis and Kuala Lumpur in Malaysia, also in collaboration with the Air Connectivity Program.

Other airlines are also tapping into the scheme. Local low-cost airline Flynas signed a deal with the Air Connectivity Program in August to launch four routes from Jeddah to Marseille in France, Almaty in Kazakhstan, Algiers in Algeria and Casablanca in Morocco.

The most recent addition to the scheme is Wizz Air Abu Dhabi, a joint venture between the UAE sovereign wealth fund ADQ and European low-cost carrier Wizz Air. It said in late August that it was launching 20 new routes to European destinations, departing from the Saudi cities of Riyadh, Jeddah and Dammam.

More may be added in the future. Air Connectivity Program chief executive Khalil Lamrabet said it was “working with Wizz Air to explore other route opportunities in Saudi Arabia.”

The terms of the program are not clear. At the time of writing, a spokesman for the program had not responded to questions from Forbes about the value of the subsidies on offer, whether the partner airlines have to meet any particular targets, or how long the program is due to last.

Given high oil revenues this year, the cost is unlikely to be an immediate point of concern for the authorities in Riyadh – particularly as it forms part of its wider strategy to develop the country’s tourism industry.

Under the Saudi national aviation strategy, the government wants to increase the number of destinations with direct flights from the kingdom to more than 250 by 2030, up from less than 100 at the moment.

The government is also preparing to launch a new airline – likely to be called RIA and backed by a $30 billion investment pot – which will be based in the capital Riyadh. There have reportedly been difficulties in finding an experienced industry hand to take on the job of chief executive of the carrier. Among those said to have been approached is Tony Douglas, chief executive of Abu Dhabi-based airline Etihad.