KSA: Privatization of airports to begin in 2016

airport-ksaSaudi Arabia will embark on a 5year privatization program of state controlled aviation infrastructures such as airports and related services.

The announcement was made by the head of the kingdom’s General Authority for Civil Aviation (GACA) Sulaiman al-Hamdan.

The program is planned to boost productivity and ease financial constraints as the aviation sector continues to develop and stands out as one of the major competitive areas between Gulf States.

According to GACA’s 2014 data, the oil-rich kingdom has 27 airports, including four international airports in Riyadh, Jeddah, Dammam and Medine.

Saudi Arabia has been investing billions of dollars to develop its aviation infrastructure and boost its capacity but it still has one of the smallest airline networks in the region when compared to its size for it is the largest Gulf State.

Al-Hamdan said “the privatization program comes in line with the kingdom’s plan to improve the productive efficiency of airport systems and ease the financial burden on state budget” and Riyadh’s main airport, King Khaled International airport, would be first to be privatized, as early as the first quarter of next year.

Air traffic control and information technology units will follow in the second and third quarters respectively. The privatization program would run till 2020.

Low oil and gas prices have been affecting the finances of oil-dependent economies although Saudi Arabia has enough sovereign reserves for its expenses for at least a decade. The International Monetary Fund forecasted a budget deficit of more than $100 billion this year.

The national carrier had already privatized its catering and ground services and the cargo unit is expected to soon follow.

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