OBG talks to Prince Fahad bin Abdullah bin Muhammad, President, General Authority of Civil Aviation (GACA), and Chairman of the Board of Directors, Saudia

Interview: Prince Fahad bin Abdullah bin Muhammad

What motivated the issue of the King Abdulaziz International Airport (KAIA) sukuk (Islamic bond)?

PRINCE FAHAD BIN ABDULLAH BIN MUHAMMAD: At the forefront of these plans is the transformation of GACA from a government body that completely relies on the government’s budget to an independent body with its own revenues and financial resources. To accomplish this, GACA approved sources of finance apart from the government budget. Among these was the sukuk. It’s worth mentioning that international airports, including KAIA, are currently restructuring themselves to become private companies. Remaining works necessary for transforming strategic units targeted for privatisation are still under way.

How will Saudia’s current fleet expansion impact its strategy for regional and international markets?

PRINCE FAHAD: Saudia’s fleet expansion will support a change in the current business model to a more aggressive approach. KAIA will also act as a hub serving special market segments, such as religious traffic.

The new Jeddah KAIA, with its state-of-the-art facilities, is intended to be a hub for both regional and international airline travel. In this regard, Saudia’s fleet expansion will help cater to expanding regional and international market requirements. Fleet expansion will make these markets more competitive and will serve the ever-increasing customer needs in both segments.

Saudi Arabia is due to receive 30m religious pilgrims by 2030. What is being done to ensure air transport infrastructure can match this demand?

PRINCE FAHAD: The total number of pilgrims who arrived through Jeddah and Medina during the Hajj and Umrah seasons was more than 6m in 2011. The airports in these two cities receive 90% of pilgrims, with the rest arriving by sea or land. These numbers will continue to rise. In view of this, we decided to implement several development projects. The KAIA Hajj & Umrah Terminal Complex Development Project, for example, aims for the expansion and rehabilitation of the KAIA Hajj and Umrah Terminal, raising its capacity to 12m passengers per year, which will accommodate the expected increase in pilgrims for the next 20 years. Likewise, the new project at the Prince Mohamed Bin Abdulaziz International Airport in Medina is planned to be completed by the end of 2015, bringing its capacity to 8m passengers in the first phase and 12m passengers in the second phase, to meet growing demand.

How will airport upgrades encourage economic development in the rural hinterlands?

PRINCE FAHAD: The development of rural airports is a result of our belief in the air transport sector’s role as the main stimulant to economic development, especially because of the Kingdom’s vast size. Projects for the construction of new airports or the development of existing ones are based on comprehensive studies on the different regions of the Kingdom, aiming to identify each one’s specific needs for air transport.

The development of airports will considerably contribute to economic development in the regions in which they are located. These include new job opportunities, a rise in trade volumes, increased movement of businessmen, investors, transport of goods and mail by air, and boosting domestic tourism.

What will the Kingdom’s air transport liberalisation mean for end-consumers and existing carriers?

PRINCE FAHAD: The steps taken by GACA include extending opportunities for national and international air transport companies to apply for a national air carrier licence and developing a package of procedures and benefits to be given by GACA to the investors awarded the licence. GACA has recently updated bilateral agreements with a number of countries to increase the number of flights to the Kingdom. It has concluded open skies agreements with several Arab countries and opened domestic airports at Yanbu, Tabouk, Qassim, Abha, Taif and Hail. Further, 10 foreign air carriers now operate direct regular flights from these airports.