Iata chief sees scope for new Saudi Arabian airline amid Gulf's mega-hubs

The kingdom also has great opportunities for the production of green hydrogen and sustainable aviation fuels, Willie Walsh says

Iata director general Willie Walsh said Middle East airlines will see more recovery to come in 2023, particularly if China re-opens its borders for international travel. Photo: Iata

The head of the International Air Transport Association has said he sees room for the planned new national airline in Saudi Arabia among the established travel mega-hubs in the UAE and Qatar, as Middle East carriers continue to recover from the pandemic.

“Do I see scope for a hub in Saudi? Yes,” Willie Walsh, Iata's director general, said at a media briefing in Geneva on Wednesday.

“There is scope for the geographic location of a new hub not in close proximity to Dubai and Doha. That is something that could work.”

Saudi Arabia is developing its aviation sector as part of a government strategy to become a global transport and logistics hub by 2030. The kingdom has announced plans for a new national carrier to be based at King Khalid International Airport in Riyadh, as part of its aviation strategy.

Saudi Arabia's Crown Prince Mohammed bin Salman has announced that a new airport will be opened in the capital Riyadh with six parallel runways and designed to accommodate up to 120 million travellers by 2030.

Saudi Arabia has the ambition, determination, infrastructure and investment to achieve this plan, Mr Walsh said.

“If anyone can deliver on that ambition … it probably is Saudi Arabia, because you've got a vision for the future that is being supported by the finances being made available and a clear determination to achieve it,” he said.

“It's going to be a really, really difficult task.”

Saudi Arabia's ambitions to develop its aviation sector contrasts with the attitudes towards travel in some European hubs.

“The view in Europe is: 'We want less flying, we want less tourism, we want less travel, we want less business.' I just don't understand it. Europe believes that it can retain the economic value that it has created while putting at risk the infrastructure that actually provided that,” Mr Walsh said.

“In Saudi Arabia, they see an opportunity to transition the economy into one that can have a much greater input from tourism, which clearly will be a big benefit.”

SAF production

Saudi Arabia also has the potential to produce sustainable aviation fuels and green hydrogen that are required for the aviation sector's decarbonisation goals.

“They've got the ability to produce a lot of clean energy,” Mr Walsh said. “There's a lot of opportunity for Saudi Arabia and I'd be amazed if there isn't a significant focus on the production of green hydrogen and sustainable fuels, which clearly represents an opportunity for the kingdom.”

Airlines have pledged to achieve net-zero carbon emissions by 2050 and see SAF as a key contributor to this goal.

Iata estimates that SAF production will reach at least 300 million litres in 2022 — a 200 per cent increase on 2021, when production reached 100 million litres. More optimistic calculations estimate total production in 2022 could reach 450 million litres.

China's reopening to boost recovery

Middle East carriers are benefitting from a “strong recovery” from the Covid-19 pandemic, after their exposure to long-haul markets that were most affected by border closures and their relative lack of large domestic markets, according to Mr Walsh.

Regional carriers are particularly seeing a rebound in markets they serve in North America and Asia, he said.

“In the main, carriers are making good progress in terms of recovery but more recovery is to come as we go into 2023,” he added.

“If China reopens, that represents a big opportunity for a lot of the carriers in the region.”

Covid-related curbs in the world’s second-largest economy have shut off international travel. If China reopens its borders, major long-haul airlines in the Gulf are likely to benefit, as they are heavily dependent on Asian traffic flows that link the region with the Americas, Europe, Africa and the Middle East through their hubs.

The Fifa World Cup hosted by Qatar has also been a “significant benefit” to regional carriers that operate shuttle flights between their hubs and Doha, Mr Walsh said.

“The region does benefit from events like that and I think that will be a positive going into next year as well,” he said.

Premium travel

Iata has also seen a recovery in premium travel at a pace that is in line with, if not slightly ahead of recovery in economy travel, which is an additional boost for Middle East airlines that have a high proportion of premium seats in their aircraft, Mr Walsh said.

Emirates plans to carry out a $2 billion upgrade to the entire interior cabins of 120 Airbus A380 and Boeing 777 aircraft.

This will see nearly 4,000 new premium economy seats installed, 728 first-class suites refurbished and more than 5,000 business class seats upgraded to a new style and design when the project is complete in April 2025, the airline said in August.