Gaca overhauls Saudi airports

02 December 2015

Gaca is investing in new airports and expanding existing facilities

The General Authority of Civil Aviation (Gaca) is the statutory authority charged with overseeing civil aviation in the kingdom. The organisation is responsible for air traffic regulation, licensing requirements for civil aviation operators, the release of notices to airmen, and certification.

It also seeks to promote investment opportunities in the air transport sector, and is in charge of developing, constructing, managing and operating the infrastructure for the sector through the use of state-of-the-art technologies and systems.

A particular focus is on investment in regional airports, which many Saudis complain have been neglected

Gaca is undergoing a restructuring that will see it become an independent organisation operating on a commercial basis. It has already witnessed structural changes. In 2011, it was split away from the Ministry of Defence. The government has also approved the transformation of its air navigation services strategic business unit to an independent company with its own board of directors.

Airport projects

Gaca has poured more resources into expanding capacity in the past year, with a project execution portfolio of about $12.3bn-worth of new airport schemes as well as the overhauling of existing ones (this is about 14 per cent of all Saudi transport projects). A further $22bn-worth of projects are in the planning stages.

A particular focus is on investment in regional airports, which many Saudis complain have been neglected in favour of the main international centres of Riyadh, Jeddah and Dammam.

In March 2014, Gaca issued tenders for the redesign of seven domestic airports, involving new passenger terminals, as well as runways, aprons, control towers and associated facilities.

Gaca announced prequalified bidders for Taif International airport in the summer of 2015. It will follow Prince Mohammed Abdulaziz airport in Medina’s example of being let as a public-private partnership (PPP), an area where Gaca has established itself as a pioneer in Saudi Arabia.

The authority is considering privatising management and operations at some major airports, following the privatisation of the Medina terminal. Expansion of the $1.2bn Prince Mohammad bin Abdulaziz airport was undertaken by the private operator Tibah, which comprises Turkey’s TAV Airports and local contracting firms Saudi Oger and Al-Rajhi Holdings. It was completed on schedule in 2015.

Biggest projects

Some of Gaca’s projects are ambitious in scale. In May 2013, it awarded a joint venture of TAV and the local Al-Arrab Contracting Company a SR1.5bn ($400m) contract to construct the new Terminal 5 building at King Khalid International Airport in Riyadh, as part of a plan to boost its annual capacity from 14 million passengers a year to 24 million a year by 2017.

Key Gaca projects
ProjectBudget ($m)StatusAward yearDue
King Abdulaziz International airport (KAIA): phase 210,000Study20192026
KAIA: phase 310,000Study20292036
KAIA: phase 1 – new terminal (package 2)3,077Execution20102016
KAIA: phase 1 – new terminal (package 1)3,013Execution20102016
King Khalid International airport expansion: terminals upgrade2,900Execution20142018
Taif International airport1,000Main contract PQ20162018
King Abdullah bin Abdulaziz airport in Jizan685Execution20142018
Hail domestic airport500Study20172021
Abha regional airport480Execution20152018
King Khalid International airport expansion: terminal 5400Execution20132015
PQ=Prequalification. Source: MEED Projects

Among the biggest projects are the $28bn investment in King Abdulaziz International Airport in Jeddah, which will be operational in 2016. More recent contract awards include a $280m expansion package for Prince Nayef bin Abdulaziz regional airport, awarded in June 2015.

Gaca has been successful in attracting financing for its various schemes. In October 2013, it secured the largest-ever government-guaranteed sukuk (Islamic bond), with a SR15.2bn ($4bn) issue that achieved a 3.2 per cent a year profit rate.

Encouraging competition

The biggest challenge to Gaca lies not in the expansion of airport capacity, but in encouraging more competition from airlines and securing a better deal for passengers. So far, Saudi Arabian Airlines, the kingdom’s flag carrier, has seen no serious erosion of its market share. In December 2011, Gaca announced that the domestic market would be opened to new entrants, including foreign companies.

A year later, licences were granted to two bidders: Al-Maha Airways, a subsidiary of Qatar Airways, and Saudi Gulf Airlines, a new airline set up by the Al-Qahtani Group. However, neither Al-Maha, which was due to start operations in the third quarter of 2014, nor Saudi Gulf (due shortly thereafter) has got off the ground yet, with delays attributed to the failure to obtain air operator certificates from Gaca. Airline chiefs have alluded to complications in securing these licences.


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