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Fri 24 Jul 2015 01:14 AM

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New $1.2bn Saudi airport 'of special significance' - analysts

Prince Muhammad Bin Abdulaziz International Airport in Madinah will drive more privatisation in aviation sector, says Frost & Sullivan

New $1.2bn Saudi airport 'of special significance' - analysts

The opening of a new $1.2 billion airport to serve the Saudi holy city of Madinah is "of special significance" as aviation traffic is likely to grow by 27.2 percent annually over the next decade, analysts have said.

The country’s expanding population and increasing religious tourism is putting pressure on airport resources and the government is working to "sophisticate and streamline the industry through infrastructure development, privatisation initiatives, and market liberalisation", said Frost & Sullivan in a new research note.

The Prince Muhammad Bin Abdulaziz International Airport expansion plan consists of a three-level terminal covering over 156,940 square metres with 16 aircraft stands and boarding bridges.

For Haj and Umrah pilgrims who are looking to sanctify their travel with a visit to Madinah, the airport expansion plan comes "as a boon without disguise", the analysts said.

Frost & Sullivan added that the Madinah airport is also likely to be the harbinger of heightened economic activity and the precursor to other privatisation initiatives. 

Its research note estimates that Saudi Arabia has close to 11 million tourists annually of which 5.7 million are aviation passengers.

The new airport is expected to significantly boost Madinah’s economy. Besides improving commercial trade to more than $107 million, almost 20,000 new job opportunities will be created and housing accommodation for an excess of 100,000 residents will require new constructions. 

The Madinah airport project will now be operated as a private enterprise - the country has been steadily moving towards aviation privatisation and the sale of Saudia Airlines was the first of multiple such steps.

“Privatisation is seen as a welcome move as it provides a more competitive environment for airports to function. Besides improving efficiency, privatisation ensures that the airport management will have a more focused business outlook that could contribute to the economy of Saudi Arabia,” said Vinod Cartic, senior consultant, Business and Financial Services, Frost & Sullivan.

Cartic also suggested that the Madinah airport could also pave the way for a Madinah Aerotropolis - an urban planning concept where all economic and business activity revolves around the airport.

Apart from the geographical size and the economic impact, an aerotropolis serves to boost significantly the airport’s non-aeronautical revenue.

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