Saudi set to privatise four airports in transport investment drive

Reuters/Hamad I Mohammed

• Minister 22 investment opportunities in transport and logistics
• Strategy aims to attract $160bn to position Saudi as a global hub 
• Plans to link to 250 cities worldwide and launch second national airline

Saudi Arabia is currently preparing to privatise four regional airports in the kingdom, the state-owned Saudi Press Agency (SPA) reported, quoting Saudi minister of transport and logistics, Saleh bin Nasser Al-Jasser. 

Al-Jasser was speaking at the Municipal Investment Forum held in Riyadh on Tuesday, with SPA reporting that he revealed that there are currently 22 investment opportunities in the transport and logistics sector.

The investment opportunities form part of Saudi’s National Transport and Logistics Strategy – launched in June 2021 by Crown Prince Mohammed bin Salman – which aims to attract SAR600 billion ($160 billion) in a bid to position the kingdom as a global logistics hub connecting three continents. 

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It also aims to increase the sector’s contribution to GDP from 6 to 10 percent. 

To attract such investment, Al-Jasser said it is necessary for the government to capitalise on new financing sources by expanding its partnership with the private sector and by empowering growth of businesses. 

The minister also revealed that his ministry has reached an advanced stage on the establishment of the Saudi road code, with the aim of raising the road quality index. This index will serve as a technical reference for the authorities responsible for the kingdom’s roads.

In November, AGBI reported that Saudi authorities may be planning to open up some restricted military airspace to accommodate a surge in civilian flights, as part of the kingdom’s $100 billion investment to handle 330 million passengers a year by the end of the decade.

Only 56 percent of Saudi airspace is open to civil aviation, with the remaining 44 percent used for military and restricted use, according to Saudi information presented to the International Civil Aviation Organisation.

The negotiations were confirmed by Mohammed Alkhuraisi, vice president of strategy and business intelligence at Saudi Arabia’s General Authority for Civil Aviation.

He said “There are multiple projects ongoing to redesign the air capacity and air corridors.

“We are trying to resolve restrictions, as well as applying the latest technologies and radar information systems to shorten trip time, open new corridors and increase capacity. We will announce the outcome once it’s completed.”

As part of the Saudi Aviation Strategy’s plans under Vision 2030, the kingdom has set a target of increasing cargo capacity from around a million tonnes per annum to 4.5 million tonnes, and hopes to boost the number of passengers through its 29 airports from 100 million to 330 million by the end of the decade.

It also plans to link the kingdom to 250 cities around the world, launch a second national airline and create over 3 million jobs.

In October last year, Apple announced that it will be one of the global anchor investors in Saudi Arabia’s newly-launched Special Integrated Logistics Zone which will play a crucial role in the kingdom’s plan to more than quadruple the amount of cargo processed through its airports by 2030.

The zone measures 3 million sq m, within the parameters of King Khalid International Airport in Riyadh. If there is sufficient demand from investors, the facility can be doubled in size.

Speaking at the launch, minister Al Jasser said the zone would “strengthen Saudi Arabia’s position as the largest, fastest-growing market and leading strategic trading nation in the Middle East”.

Saudi’s General Authority for Civil Aviation said last year that it was planning a series of global roadshows to attract large companies to set up cargo operations in the zone. Bloomberg reported that brands such as Amazon, Alibaba and DHL were among the types of companies it was looking to attract.

Some of the incentives on offer to attract foreign logistics companies to the zone include value-added tax advantages on servicing, manufacturing and assembly, the offer of 100 percent foreign ownership and faster certification and permit procedures.

There will also be cost reductions for multinationals and their third-party suppliers who reassemble products in the zone for onward sale in Saudi Arabia and the wider Middle East.