GACA licensed Saudi logistics service co (SAL) to provide ground services at Saudi airports. Under the license, SAL will provide ground services, baggage and freight handling, passenger services, and aircraft towing. SAL was established in 2019, following the Saudi Cargo ground handling services being incorporated into a separate entity. The services that SAL will provide are similar to the services provided by SGS, we see this as an increase in competition for SGS and Swiss Ports. We believe the target to increase passenger traffic to 330mn by 2030, is a key catalyst for the aviation sector, which should increase the industry size and limit the negative impact on SGS.
The Saudi aviation sector is expected to grow strongly, given that the target is to reach 330mn passengers by 2030. Saudi aims to achieve the target through a Dual Hub strategy. According to the strategy, the current flag carrier Saudia will retain its presence in Jeddah and across the country, while the new airline RIA will have Riyadh as its Hub. A third new airline is also expected to be launched, which would serve as the official airline for NEOM. The third airline will offer exclusive routes to Europe and Asia, with NEOM as its Hub.
Saudi currently has a total of 35 airports (11 international airports).
Jeddah Airport is the biggest, with an initial capacity to cater to 30mn passengers. The aim is to increase the passenger handling capacity to 85mn passengers by 2035.
Riyadh is set to build one of the biggest international airports, the King Salman International Airport. The airport aims to have a 120mn passenger capacity by 2030 and, with plans to process 3.5 million tons of cargo by 2050,
The two main airports Jeddah and Riyadh will potentially have a combined capacity to cater to +200mn passengers at completion.
In 2019, the total number of passengers stood at 103mn with more than 770 thousand flights. We have taken 2019 as a base year due to the impact of Covid-19 during 2020 and 2021. The implied growth in the aviation sector bodes well for the industry players.
We expect the overall growth in the sector to positively impact SGS. Although a new local player will increase competition, the significant increase in the industry size to benefit the entire market. Therefore, we expect SGS's overall operations to grow, while its market share might decline.