Gulf Aviation could benefit from oil price slump says Helios

Writing for the Helios publication network, the company’s Director Middle East & Asia, Alan Corner says addressing the oil drop challenges could spur further privatisation initiatives, particularly in Saudi Arabia. 

 

“This is not entirely new to Saudi Arabia or aviation, but the urgent need to reduce the budget deficit should be a catalyst to drive existing initiatives and identify new opportunities that can deliver benefits to the government and aviation sector,” says Corner.

 

Saudia has already begun privatising some its business areas, though Corner says it “still has some way to go in its overall transformation programme.”

Ta’if Airport has recently been tendered and Corner says bidders are currently being shortlisted for Jeddah. “The GACA has also confirmed that Riyadh Airport will be privatised later this year, Dammam Airport will follow in late 2017 and even some of the regional airports are now being considered,” he adds.

 

On the air navigation services front, Corner points out that GACA ANS will be be transformed later this year into Saudi Air Navigation Services - a corporatised and eventually self-funding entity. “State-owned monopolies are also being challenged and forced to compete. Helios recently supported GACA in a tender process resulting in the award to Swissport of a second licence to provide ground handling services at all GACA operated airports in the Kingdom. Cargo and catering are the next logical targets.”

 

Corner says that with the economic challenges prompted by the oil price slump, the Gulf states should seized the opportunity to act. “As we have seen through our work elsewhere in the world over the last 20 years, the corporatisation or privatisation of state-owned assets can create a win-win for all stakeholders – including end users. Moving from a government department to a government‐owned corporation or even a more commercialised operation will reduce the reliance on state funding. It will also generate revenues whilst creating more commercially focused organisations and a more competitive environment that will drive improvements in efficiency and performance.”