LONDON: Plunging profits and mounting competitive pressure have turned up the heat on Gulf airlines, with Emirates President Tim Clark saying recently the Dubai flag carrier was open to cooperation with Abu Dhabi’s Etihad.
But what about a full-scale merger to cut costs and turn their fortunes around?
In an interview with Arab News, veteran analyst Tim Coombs, managing director of UK-based independent consultancy Aviation Economics, said politics would get in the way, even though on many levels “it makes commercial sense.”
“As long as any potential future losses don’t become too great, it’s hard to see what is going to drive consolidation,” said Coombs.
He added that Emirates is Dubai’s major brand, and the model was all about having Emirates as the “lightning rod” for other tourism, from hotels to shopping malls.
“All that infrastructure has been built around Emirates,” he said.
Dubai, Abu Dhabi and Qatar have built what analysts describe as “superconnector” hubs and tempted passengers with attractive fares, luxury travel and stopovers at destinations that have been built up as tourist venues. But now there is a chill wind as Emirates, Etihad and Qatar Airways grapple with overcapacity, security concerns, and the fallout from low oil prices, which have hit regional business and dented the bottom line.
Emirates, the oldest and largest of the Gulf airlines, posted its first full-year profit decline for five years in May, as earnings crashed more than 80 percent. Etihad’s losses in 2016 hit $1.9 billion, which included about $800 million of impairment charges related to its equity stakes in other struggling carriers, some of which are worthless.
Emirates President Tim Clark told Reuters on Oct. 11 that his airline was open to cooperation with Etihad in areas including procurement — but any merger would be up to the owners.
Coombs said: “Airlines have been here before, such as buying fuel jointly together, although such things are not enough to turn round a loss-making airline. To make aircraft procurement work you need to be ordering the same aircraft, and they aren’t.”
Emirates declined to comment when contacted by Arab News; Etihad did not respond to inquiries.
Gulf airlines are having to make difficult commercial decisions after years of growth, and Coombs said staff cuts were already underway. One problem was that the three airlines have got large order books and were continuing to receive new aircraft — but it is hard to cut routes when new aircraft are being delivered, said Coombs.
“If the situation remains the same, they may be going back to the manufacturers and looking to defer future orders,” he added.
Observers said another issue was the new airport in Istanbul that opens next year, and becomes fully functional as a hub in 2019.
“The Turkish Airlines model is to become another ‘superconnector’,” said Coombs.
“Turkey will be lobbying for exactly the same connecting traffic as the Gulf carriers are doing, effectively putting a fourth player into the market, adding to the squeeze.”
Chris Tarry, an airlines analyst at UK consultancy CTAIRA, told Arab News: “It’s not called the Istanbul Grand Airport for nothing. So yes, there will be more competition.
Istanbul is already one of the great circling routes for a lot of the connecting traffic.
“They have a wide catchment area in Europe and I expect Turkish Airlines will put in orders for wide-bodied aircraft as there are space constraints at Ataturk, and that will enable them to broaden their network.”
Tarry was not certain about a merger between Etihad and Emirates. “That is up to the ruling families in the final analysis. Would it mean one of the brands being dropped? These are difficult issues.”
Qatar Airways is profitable enough but under the cosh after a dispute with other Gulf Cooperation Council members led to the airline being shut out of destinations in Bahrain, Egypt, Saudi Arabia and the UAE by an embargo imposed in June. That was the equivalent of 20 percent of Qatar Airways’ seating capacity, said experts.
Profits for all the airlines in the Middle East are forecast to more than halve from $1.1 billion in 2016 to $400 million this year, according to Iata, the global airline trade association, quoted in The Financial Times.
All three Gulf carriers have been forced to discount fares in an effort to retain market share.
Tarry has no doubt the hubs will survive. “Even when it comes to stopovers, the airlines will do what they are doing already and cut fares to encourage passengers to break their flights.”
That means a flight with a stopover in the Gulf will often be cheaper than going point-to-point — for example traveling straight from Europe to the Far East.
Tarry believes there is plenty of headroom for the Gulf states to expand their own offerings for tourists to travel point-to-point to the Middle East.
Meanwhile, the carriers are adjusting their business models to cope with a much tougher trading environment. Emirates has agreed a tie-up with low-cost sister airline Flydubai, in a deal in which the pair will align their systems at Dubai International Airport.
And airport expansion plans are afoot at Dubai World Central and Abu Dhabi’s Midfield Terminal, as the emirates look to extract efficiencies to sustain growth — allowing them to navigate their way through the current turbulent conditions.
Emirates-Etihad merger makes sense but will never fly – analysts
Emirates-Etihad merger makes sense but will never fly – analysts
India’s Vedanta Copper to invest $2bn in Saudi mining sector
RIYADH: Saudi Arabia’s Ministry of Investment and Ministry of Industry and Mineral Resources have joined forces with Vedanta Copper International, a subsidiary of India’s Vedanta Ltd., to develop $2 billion worth of copper projects in the Kingdom.
The collaboration, formalized through a memorandum of understanding, represents a significant step toward advancing Saudi Arabia’s Vision 2030, which seeks to diversify the country’s industrial and mineral resources sectors.
The investment will focus on the construction of a 400,000-tonnes-per-year copper smelter and refinery, as well as a 300,000-tonnes copper rod production facility. These projects will be located in Ras Al-Khair Industrial City and are intended to reduce Saudi Arabia’s reliance on copper imports, addressing the Kingdom’s growing demand for the metal.
Currently, Saudi Arabia imports most of its annual copper requirement of 365,000 tonnes, a figure expected to more than double by 2035. This partnership will help bridge that gap and strengthen the Kingdom’s domestic copper supply.
In a broader context, these initiatives align with Saudi Arabia’s goal of unlocking its vast, untapped mineral resources, which are estimated to be worth $1.3 trillion. The country aims to increase the mining sector’s contribution to its GDP from $17 billion to $64 billion by the end of the decade.
The projects also support Vision 2030’s broader industrial diversification goals, which are focused on reducing the Kingdom’s dependence on oil revenues and fostering growth in non-oil sectors.
“We are excited and honored to collaborate with the Kingdom of Saudi Arabia in its Vision 2030 initiative,” said Chris Griffith, CEO of Base Metals at Vedanta Ltd.
“Our projects will enhance the Kingdom’s self-reliance in the copper supply chain. Saudi Arabia has been a leader in oil exploration for decades, and now, under visionary leadership, it is ready to tap into its untapped mineral potential, as it embraces the 4th Industrial Revolution.”
Vedanta Copper has already welcomed senior officials from Saudi Arabia’s Ministry of Industry and Mineral Resources, as well as the National Industrial Development Center, to its operations in India. These visits have paved the way for further high-level discussions and planning.
The first phase of the project will involve the construction of a 125,000-tonnes-per-year copper rod mill, requiring an investment of approximately $30 million. Vedanta has confirmed that all necessary approvals have been obtained, land has been acquired, and technology orders have been placed. Construction is expected to begin soon, with commercial production slated to start by the fourth quarter of fiscal year 2025-26.
Beyond the copper rod mill, Vedanta’s broader investment in copper smelting, refining, and rod manufacturing is expected to generate thousands of new jobs and stimulate the development of hundreds of downstream industries in Saudi Arabia.
Over the long term, these projects are projected to contribute approximately $19 billion to the Kingdom’s gross domestic product while helping achieve its goal of self-sufficiency in copper production.
EU seeks to boost green energy collaboration with Saudi Arabia
RIYADH: The EU is keen to expand its cooperation with Saudi Arabia in the energy sector as the world increasingly shifts toward green energy, according to a senior EU official.
In an interview with Arab News on the sidelines of the World Investment Conference, Christophe Farnaud, the EU ambassador to Saudi Arabia, emphasized that the EU possesses significant expertise in the green energy sector, which could help accelerate Saudi Arabia’s clean energy transition, as well as support the broader Gulf Cooperation Council region.
Saudi Arabia, with its ambitious initiatives such as the world’s largest green hydrogen plant in NEOM, is leading the energy transition in the region, aiming for net-zero emissions by 2060.
“One of the many sectors where we are investing and what the partnerships are developing is the energy sector. It comes against the backdrop, not just of the regional needs, but also with this view of facing the green transition that we committed worldwide, not just as the Europeans, but also the Saudi government. This is where can make a difference,” said Farnaud.
He added: “The EU has a strong expertise in that field (green energy). And the energy sector has been in many ways a key factor in the development of the Kingdom. So we already have relationships, between EU companies and Saudi Arabia. But now we will have a stronger focus on energy transition.”
Farnaud noted that European firms have significant opportunities to collaborate in Saudi Arabia’s expanding renewable energy sector, particularly with the Kingdom’s substantial investments in solar power and green hydrogen projects. He also mentioned that European energy companies could work with Saudi energy giants like ACWA Power to help speed up the green energy transition.
In addition to energy, Farnaud pointed out that there are numerous other areas where Saudi Arabia and the EU could strengthen cooperation, including transport, machinery for emerging industries, entertainment, and tourism.
“Machinery is currently already a key sector for the exchanges between the EU and the Kingdom. But I also wanted to insist on the fact that even the new sectors for the Kingdom, like entertainment, tourism, which are a major asset for the coming years, and the EU has a well-known competence and expertise in these industries,” he said.
The EU ambassador also noted that European companies are increasingly aware of the transformation taking place in Saudi Arabia and are eager to explore new opportunities in the Kingdom.
“We had the first ever EU-Saudi investment forum last year in October. We had around 1,400 companies registered and it shows the strong interest from them. It shows also the commitment by the Saudi government and EU to promote these exchanges,” said Farnaud.
He added that the EU is also helping small and medium-sized enterprises in Europe understand the potential of the Saudi market, and highlighted how the Kingdom’s updated investment law could benefit firms entering the country.
Saudi Arabia’s revised investment law, introduced in August, promises enhanced protections for international investors, including adherence to the rule of law, fair treatment, property rights, and stronger safeguards for intellectual property, while facilitating smooth fund transfers.
Wider EU-GCC cooperation
Farnaud also discussed broader EU-GCC relations, noting that the EU-GCC Summit held in October underscored the importance of “partnership in the economic field,” with energy cooperation identified as a key area for strengthening ties.
“The EU and GCC have very dynamic economic relations. And it is not just about Saudi Arabia and the EU, where already the investment stocks from EU in the Kingdom is above €31 billion ($32.58 billion) which is quite significant. But if you enlarge the picture to the GCC as a whole, we are above €215 billion,” he told Arab News.
During a panel discussion on the second day of the World Investment Conference, Farnaud highlighted that European companies are playing an active role in most of Saudi Arabia’s major “giga-projects,” including NEOM, Qiddiya, and AlUla.
He also emphasized that Europe offers an open market with a highly skilled workforce, which countries in the GCC, including Saudi Arabia, can tap into to accelerate their economic diversification efforts.
Regarding foreign investments, Farnaud said: “Investment is a two-way thing, and it is a question of trust and mutual knowledge. It is not just us going to the GCC, which is important, it is also GCC countries coming to Europe. In that way, they are already doing it. About 50 percent of foreign investments of GCC countries go to Europe.”
Progress on Vision 2030
During the same panel, Prince Sultan bin Khalid Al-Saud, CEO of the Saudi Industrial Development Fund, highlighted Saudi Arabia’s socio-economic progress since the launch of Vision 2030. He described the Kingdom as unique, thanks to its “positive energy and optimism.”
The SIDF CEO stressed that Vision 2030 is designed to benefit both current and future generations of Saudis, with a particular focus on investing in people.
“For Saudi Arabia, development starts with investing in people. No matter how you look at Vision 2030, or how you slice it, it’s all about the people—it’s about investing in them, trusting their abilities, and empowering them to create something not just for this generation of Saudis, but for all future generations,” he said.
Affirming the growth of the startup ecosystem in Saudi Arabia, the SIDF chief said that venture capital in Saudi Arabia has grown at a compound annual growth rate of 86 percent in the last five years.
He also added that Saudi Arabia’s women participation in the workforce is higher than that of Western Europe.
According to the latest report by the General Authority for Statistics, unemployment among Saudi nationals fell to 7.1 percent by the end of the second quarter, a quarterly drop of 0.5 percentage points and an annual decline of 1.4 percentage points.
The report added that the unemployment rate among Saudi females also witnessed a sharp quarterly decline of 1.4 percentage points at the end of the second quarter reaching 12.8 percent.
Saudi Arabia grants operator license for 1st international marina to Jeddah yacht club
JEDDAH: Saudi Arabia has granted an operator license for its first international harbour to Jeddah Yacht Club and Marina, boosting tourism and strengthening its position as a leading regional and global maritime hub.
On Nov. 26, the Saudi Red Sea Authority announced that it had submitted the license to the organization, which is owned by Sela, a company under the Public Investment Fund.
Mohammed Bukhari, vice president of the coastal tourism operations at SRSA, presented the license to Amer Daggag, head of destinations at Sela, at the headquarters of the Jeddah-based club.
In line with the Kingdom’s Vision 2030, the authority began working in 2021 to develop and regulate the coastal tourism sector.
Its efforts include issuing licenses and permits, creating policies and strategies, and assessing infrastructure needs, as well as preserving the marine environment, attracting investments, and promoting navigational and marine tourism activities.
In a statement, SRSA said the move is part of its efforts to develop a thriving coastal tourism sector by issuing licenses and permits and establishing guidelines, rules, and standards for marinas’ development, management, and operation.
The release added that the initiative aims to encourage participation in these activities, attract and support investors, and promote coastal tourism projects along the Red Sea.
In May, SRSA granted licenses for three tourist marinas: the Al-Ahlam Marina in Jeddah, the Al-Ahlam Marina in Jazan, and the Red Sea Marina in Jeddah.
The authority emphasized that regulating marina operations would enhance the quality of services for tourists and visitors while protecting and sustaining the marine environment, emphasizing that these operators must adhere to international standards to obtain their licenses.
SRSA also issued its first maritime tourism agent license to Cruise Saudi, a company owned by PIF, as part of its broader role in enabling tourism.
The licensed agent was stated to provide services to yachts and cruise ships, ensuring the sustainable development of marine tourism and facilitating vessel movements within the Kingdom’s waters in accordance with the highest environmental standards and practices.
Last year, the Saudi Sailing Federation and Sela signed a memorandum of understanding at JYC to enhance cooperation between the two parties. Under the agreement, Sela committed to providing consultancy services and logistical support for SSF events and activities held at the Jeddah Yacht Club and Marina.
Sela also agreed to collaborate with SSF to establish a strategic partnership to manage races and events at JYC. The agreement allows SSF to benefit from the JYC training academy, offering educational programs for those seeking to develop their sailing skills.
In December 2023, JYC hosted the first America’s Cup race on the Red Sea, which was attended by Prince Abdulaziz bin Turki Al-Faisal, minister of sport, along with dignitaries from across the Kingdom, the world’s top professional sailors, and global enthusiasts.
Saudi Arabia pledges $932m boost to 17 tourism projects in Al-Ahsa
RIYADH: Saudi Arabia has committed over SR3.5 billion ($932 million) to develop 17 tourism projects in Al-Ahsa, positioning the region as a key destination in the Kingdom’s growing travel sector, according to a senior official.
During a meeting with investors and entrepreneurs as part of his broader tour across Saudi regions, Tourism Minister Ahmed Al-Khateeb outlined plans to enhance the governorate’s tourism infrastructure.
The projects will add more than 1,800 hotel rooms, leveraging Al-Ahsa’s natural and cultural assets to attract domestic and international visitors, the Saudi Press Agency reported.
The initiative aligns with the Kingdom’s National Tourism Strategy, which aims to attract 150 million visitors annually by 2030 and increase the tourism sector’s contribution to Saudi Arabia’s gross domestic product from 6 percent to 10 percent.
Al-Khateeb highlighted investment opportunities in the sector, reaffirming the ministry’s commitment to providing comprehensive services and facilities to encourage further private sector involvement.
As part of the tour, the minister visited the SR200 million Radisson Blu Hotel in Al-Ahsa. Spanning over 10,000 sq. meters and featuring more than 180 rooms, the hotel — supported by the Tourism Development Fund — combines international luxury with local authenticity, serving as a model for future developments in the region.
Other regions across the Kingdom are also experiencing significant growth in the tourism sector.
Earlier this month, the Ministry of Tourism announced that Saudi Arabia’s Hail region welcomed over 1.1 million tourists in the first half of 2024, including 170,000 international visitors, reflecting the Kingdom’s growing appeal as a travel hub.
The ministry also reported that over 907,000 visitors were domestic travelers, showcasing the region’s popularity among residents. Licensed hospitality facilities in Hail now offer around 2,600 rooms, meeting increasing demand.
The surge aligns with Saudi Arabia’s Vision 2030, which focuses on enhancing tourism infrastructure and attracting global travelers.
The Kingdom plans to develop Hail as the fifth destination under the Saudi Tourism Investment Co., known as ASFAR, a Public Investment Fund-owned entity.
According to the latest UN Tourism report, Saudi Arabia climbed 15 places to rank 12th globally in tourist spending for 2023 — the largest jump among the top 50 countries.
This follows a September report from the UN Tourism, which highlighted the Kingdom’s leadership among G20 nations with a 73 percent increase in international visitor growth and a 207 percent rise in international tourism receipts from January to July, compared to the same period in 2019.
Jordan forecasts $14.3bn in public revenues in 2025 budget
RIYADH: Jordan’s public revenues for 2025 are projected at 10.2 billion dinars ($14.3 billion), slightly down from the 10.3 billion dinars forecast for 2024, according to the nation’s General Budget Department.
The 2025 draft budget estimated 9.5 billion dinars in local revenues and 734.3 million dinars from foreign grants, closely aligning with the figures for 2024.
The draft budget provided a detailed financial framework for the country, highlighting major national development projects, governorate-specific allocations, and a roadmap for spending during 2025–2027.
The document underscored the government’s commitment to balancing fiscal discipline with strategic investments aligned with Jordan’s Economic Modernization Vision.
The vision is centered on the slogan “A Better Future” and focuses on two main pillars: driving accelerated economic growth and enhancing the quality of life for all citizens.
Sustainability is also a key foundation of this vision.
Economic and fiscal overview
Total public expenditures for 2025 are estimated at 12.5 billion dinars, consisting of:
- 11.04 billion dinars in current expenditures allocated for operational and administrative functions, including salaries, pensions, and subsidies.
- 1.47 billion dinars in capital expenditures, reflecting a 16.5 percent increase compared to 2024. This allocation prioritizes infrastructure development, health care enhancements, and educational improvements.
The budget targets a reduction in the primary deficit to 2 percent of gross domestic product, compared to 2.9 percent in 2024.
Key national investments
The draft budget emphasized transformative projects to address critical national needs, including the National Water Carrier Initiative, which addresses Jordan’s chronic water scarcity and ensures long-term water security.
There is also a focus on a railway project that connects Aqaba Port to Al-Shidiya and Ghor Al-Safi. This initiative aims to boost logistical efficiency and economic integration.
Other key projects include investments in renewable energy and infrastructure upgrades and enhancements in public transportation networks to ease connectivity and reduce environmental impact.
Economic growth targets
The budget framework projects there will be 2.5 percent real GDP growth, driven by ongoing structural reforms.
It also forecases 4.9 percent nominal growth, supported by moderate inflation rates that contribute to financial and monetary stability.
Governorate budgets and modernization efforts
The budget allocates significant funds to governorates to ensure equitable development and address local priorities. Notable regional allocations include money for the construction and maintenance of hospitals, schools, and transportation infrastructure.
There is also funding for agricultural development, water management, and job creation initiatives tailored to local needs.
Specific projects detailed in the governorate budgets include road maintenance and expansions in Irbid, Al-Mafraq, and other regions, investments in health care facilities, including expansions of hospitals and primary care centers, and the development of educational institutions, such as building new schools and upgrading existing facilities.
In line with the “Public Sector Modernization The Roadmap,” the draft budget included funding for implementing updated job guidelines, creating new vacancies, and modernizing public administration to enhance service delivery.
This framework is a comprehensive roadmap to improve public administration and enhance the institutional approach to responding efficiently to domestic and global developments.
