HH Prince Turki Faisal Al-Saud talks to Joe Bates about plans to upgrade and improve Saudi Arabia’s airport system.

With so many high-profile projects going on elsewhere across the Gulf region, it is fair to say that Saudi Arabia hasn’t grabbed too many headlines for its airport development plans.

There is simply no denying that the size and scale of the ongoing multi-billion dollar airport projects in Abu Dhabi, Doha and Dubai have stolen the limelight and continue to attract global attention.

Indeed, while they have become familiar names to everyone – without question helped by the incredible growth of their respective airlines Etihad, Qatar Airways and Emirates – it is quite possible that few people outside of Saudi Arabia could name the country’s top gateways let alone be aware of their development plans.

All this is about to change, however, as Saudi Arabia’s General Authority of Civil Aviation (GACA) looks to complete the biggest shake-up of its airport system in the Kingdom’s long aviation history.

Major new facilities are planned or already being built in Jeddah, Riyadh and Dammam and GACA has unveiled plans to invest up to $5 billion on five new gateways, including a possible fourth airport designed to serve the Muslim holy city of Medina.

And in all cases, private investors are involved, either in terms of newly appointed management companies responsible for operating the airports on behalf of GACA or through Build Operate Transfer (BOT) projects such as the current upgrade of the Hajj Terminal at Jeddah–King Abudulaziz International Airport.

“Yes, times are changing in Saudi Arabia,” admits HH Prince Turki Faisal Al-Saud, GACA’s vice president of international organisation affairs and ACI Asia-Pacific board member.

“We have awarded six-year contracts to Fraport to manage Jeddah–King Abdulaziz International Airport and Riyadh–King Khaled International Airport and appointed Changi Airports International (CAI) to manage Dammam–King Fahd International Airport.

“As part of our strategic development plan, GACA has also taken the decision to enter into joint venture agreements with the private sector to participate in the development and operation of the Kingdom’s airports, and we expect to grow this strategy in the future

“As part of the shake-up, three of our four international airports are also in the process of being transformed into independent companies that will be expected to operate on a commercial basis from now on, as happens in most of the rest of the world.”

Fraport assumed responsibility for operating Jeddah–King Abdulaziz and Riyadh–King Khaled in June 2008 while CAI’s recent $42 million deal to manage Dammam’s King Fahd International Airport is the largest contract to date for the international investment arm of Singapore Changi.

Elsewhere Aéroports de Paris Management (ADPM) in partnership with the Saudi Binladin Group (SBG) operates the Hajj Terminal at Jeddah–Abdulazziz International Airport.

With little serious investment in Saudi Arabia’s airports in recent times, GACA is acutely aware of the need to enhance the country’s gateways to ensure that they are equipped to keep pace with demand.

Between them, the country’s 26 airports officially have the capacity to handle 43mppa, but a total of 42.

5 million passengers (+4.7%) passed through them in 2008, and with even greater numbers expected this year the need to raise capacity is obvious.

GACA estimates that in excess of $13 billion needs to be invested on modernising and expanding Saudi Arabia’s airports, with Jeddah– King Abdulaziz being the main beneficiary of the largely government funded upgrade.

“King Abdulaziz International Airport is already operating above its design capacity of 14 million passengers per annum, so is clearly most in need of extra facilities,” reveals Prince Turki.

“We have expanded and refurbished the existing terminals to improve passenger comfort, but this has not been enough and we are currently building a new terminal that will raise the airport’s capacity to 30 million passengers per annum by 2015.

With further expansion, dictated by demand, the airport will eventually be equipped to handle up to 80 million passengers and 1.6 million tonnes of cargo by 2035.”

In addition to a new 400,000sqm crescent-shaped passenger terminal, the gateway’s $1.5 billion upgrade includes new runways, a state-of-the-art 450,000 tonnes per annum capacity cargo complex, new ATC tower and railway station in readiness for a rail link to both downtown Jeddah and the holy cities of Mecca and Medina.

A planned Automated People Mover will provide the ground transportation links between the new 42-gate terminal and the Hajj Terminal, which is being expanded and redeveloped by the Hajj and Umrah Terminals Construction and Development Co (HTDC) on behalf of concessionaire SBG.

But King Abdulaziz is not alone in getting a facelift.

GACA also has big plans for Riyadh and Dammam’s gateways as it looks to increase the long-term capacity of Saudi Arabia’s airports to in excess of 140 million passengers yearly.

It is believed that a masterplan currently being drawn up by Netherlands Airports Consultants BV (NACO) will involve increasing the capacity of King Khaled International Airport from 14mppa to 40mppa by 2038.

“Capacity constraints at King Khaled International Airport are currently being addressed by its masterplan which outlines proposals for modern, new facilities,” says the prince.

“We are also conducting studies at King Fahd International Airport and 13 other regional gateways, which we believe are most in need of extra capacity.

Of these, Abha is our top priority as it is the fifth busiest airport in the Kingdom.”

The bulk of the anticipated $13 billion in funding needed to modernise and expand Saudi Arabia’s airport system will come from the government, with the rest provided by investment partners, according to GACA’s vice president of international organisation affairs.

GACA certainly doesn’t appear to lack for suitors ready to invest in its airports, with the most recent example of this being the $66 million desalination plant under construction at Jeddah–King Abdulaziz.

A consortium comprising Abdullah Ali Riza & Co, WTD and SETE Technical Services will build and operate the facility under the terms of a BOT agreement.

And the prince has no qualms about stating that GACA is looking for further investment partners to help fund and play their part in the creation of a new-look Saudi airport system.

“Part of our new strategy is to attract private investors to finance new projects that can also act as a new source of revenue for GACA,” he says.

“We have seen the value and proven success of BOT agreements and are actively considering more such deals.”

GACA will definitely be looking for investment partners to help build, fund and operate different components of its planned ‘airport city’ project at Jeddah–King Abdulaziz, but as the plans are in their infancy they are very much top secret for now.

Around 65% of all passengers handled in the Kingdom pass through either Jeddah or capital, Riyadh, ensuring their status as the country’s two busiest airports.

A total of 16.6 million passengers and 390,000 tonnes of cargo were handled in Jeddah in 2008 making King Abdulaziz Saudi Arabia’s biggest gateway by some distance.

Its dominant position is almost a given due to the city’s centuries old tradition of being a centre for trade and commerce, located close to the holy mosques of Mecca and Medina and the home base of national flag carrier, Saudi Arabian Airlines.

Riyadh–King Khaled handled just over 11 million passengers in 2008 while the next biggest airports, Dammam–King Fahd and Medina’s Prince Mohammed Bin Abdulaziz, welcomed 4.3mppa and 3.7mppa respectively.

Saudi Arabian Airlines enjoys the lion’s share of the market but faces growing competition on international routes from carriers such as Austrian Airlines, Emirates and Jet Airways, which recently launched daily flights from Riyadh and Jeddah to Mumbai.

Indeed, a record 16.8 million people arrived or departed on international flights last year meaning that international traffic now accounts for 44.7% of all passengers handled at Saudi airports.

Religious tourists – over two million pilgrims alone fly to Jeddah for the Hajj each year – and business travellers make up the bulk of international visitors to Saudi Arabia.

Saudi Arabia hasn’t been completely unscathed by the global economic downturn, however, as in marked contrast to the booming international market, the number of Saudis travelling on domestic flights dropped by 11.2% during 2008.

GACA blamed the downturn on high fuel prices forcing airlines to scale back services, and the government responded by taking the unprecedented step of lowering the cost of oil for Saudi Arabian low-cost carriers nas air and sama to encourage them to up frequencies and relaunch services.

It appears to have worked because sama currently serves 16 destinations within Saudi Arabia and its neighbouring countries and nasair flies to 20 domestic cities.

Saudi Arabia’s 26 airports comprise four international gateways (Jeddah, Riyadh, Dammam and Medina), six regional airports (Tabuk, Abha, Hail, Taif, Gizan and Gassim) and 16 domestic gateways (Yanbu, Qaisumah, Dawadmi, Sharorah, Rafha, Arar, Turaif, Wedjh, Al Ahsa, Bisha, Hafr Al Batin, Najran, Wadi Al Dawasir, Al Jouf, Gurayat and Al Baha).

Prince Turki Faisal Al-Saud would be the first to admit that few of the Kingdom’s smaller gateways would be known outside of Saudi Arabia, but he is confident that more people will know about them in the future as their facilities are upgraded and passenger numbers grow.

He is also genuinely excited about the prospect of Jeddah–King Abdulaziz being transformed into one of the region’s best equipped hubs and believes the future is bright for Saudi Arabia’s airports.

Saudi’s development strategy and the ongoing mega projects in the UAE and Qatar ensure that the Gulf is one of the hottest places on earth for airport development, but does the region really need all this capacity? “There is no doubt in my mind that the capacity will be needed as the growth of the Middle East travel market is expected to be bullish in the years to come,” enthuses Prince Turki.

“My confidence is based on the potential for strong economic, tourism and trade growth between the Middle East and other regions.

Given this backdrop, it is only natural to expect airport authorities across the region to plan for capacity expansion in order to meet future demand.”

If you had to think of Gulf countries with big ambitions for the future development of their airports, you would almost certainly write down the UAE and Qatar and may possibly include Oman and Kuwait.

Add Saudi Arabia to that list.

Asia-Pacific Airports 2009 Issue 3