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Saudi Arabia Seeks Tourism Boost By Paying Airlines For Flights: Report

The Saudi Arabian government is seeking to ratchet up its tourism industry by offering to subsidize airlines that fly unprofitable routes linking the Persian Gulf kingdom to major global cities.

Benzinga · 06/09/2022 12:40

The Saudi Arabian government is seeking to ratchet up its tourism industry by offering to subsidize airlines that fly unprofitable routes linking the Persian Gulf kingdom to major global cities.

What Happened: According to a Bloomberg report, Saudi Arabia is very late to the world tourism stage — it only began issuing tourist visas in 2019 and the tourism ministry is aiming to attract 12 million foreign visitors this year, which would contribute to roughly 4% of the Saudi economic output. However, Tourism Minister Ahmed Al Khateeb wants to raise that share to 10% by 2030.

"The main purpose is to create direct flights to our main target markets," Al Khateeb said. "The program will compensate airlines to cover their losses from flying direct flights to these very important hubs for us."

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What Happens Next: The new subsidy is part of the government's Air Connectivity Program. The first deal has already been signed to secure flights by national carrier Saudia to Barcelona and Zurich.

Al Khateeb did not disclose the depth of the subsidies being paid to airlines, only acknowledging the government will "negotiate with every carrier to size it."

The Saudi government is also aiming to allocate $147 billion to expand its transportation capabilities, with goals that include a new airport in the capital city of Riyadh, a new airline owned by the Public Investment Fund and the expansion of direct destinations served from the country from 100 to 250.

Photo: Paul Davey / Wikimedia Commons