HomeWorldMiddle EastSurge in Middle Eastern Airlines' Passenger Demand Reflects Strengthened Aviation Sector

Surge in Middle Eastern Airlines’ Passenger Demand Reflects Strengthened Aviation Sector

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RIYADH: Middle Eastern airlines experienced a significant 9.7 percent annual growth in passenger demand in May, spurred by an uptick in Asia-related travel, according to a recent report by the International Air Transport Association (IATA). This growth is part of a broader trend of robust development in the region’s aviation sector, driven by economic diversification efforts and strategic investments in infrastructure and services.

Record Growth in Passenger Demand and Capacity

In May, Middle Eastern airlines not only saw a 9.7 percent increase in passenger demand but also achieved a 9 percent year-on-year growth in total capacity. The region accounted for 9.4 percent of the global passenger traffic in May, maintaining the same share as the previous month.

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Countries like Saudi Arabia have been at the forefront of this expansion, actively enhancing their aviation sectors to support broader economic goals. Saudi Arabia’s national aviation strategy aims to triple its passenger numbers from 2019 levels, manage 4.5 million tons of cargo, and establish over 250 direct destinations from the Kingdom’s airports by 2030. In 2023, the sector contributed $21 billion to the Kingdom’s GDP, underscoring its economic significance.

Asia-Middle East Route Shows Remarkable Growth

The IATA report highlighted the strong performance of the Asia-Middle East route, which ranks second globally in terms of revenue passenger kilometers (RPK). The route has not only recovered to 2019 levels but also set new records for 2024, standing 32 percent above the corresponding value from 2019. This surge is attributed to increased travel demand and geopolitical factors, such as the Russia-Ukraine conflict, which have redirected passengers through the Middle East.

Similarly, the Europe-Middle East route showed consistent growth, with RPKs increasing for the second consecutive year between April and May. The IATA report suggested that ongoing geopolitical tensions could continue to influence these trends.

Robust Cargo Demand Driven by E-commerce

Middle Eastern airlines also recorded a notable 15.3 percent year-on-year increase in cargo demand in May, driven by the booming e-commerce sector and disruptions in maritime logistics. The region handled 13.5 percent of the global cargo capacity, reflecting its critical role in international logistics.

Total cargo capacity in the region increased by 2.7 percent in May compared to the same period the previous year. This growth is consistent with the broader global trend, where cargo demand saw a 10.7 percent rise, and capacity expanded by 8.5 percent.

Global and Regional Passenger Demand Trends

Globally, passenger demand rose by 10.7 percent in May compared to the previous year, with total capacity increasing by 8.5 percent. Airlines filled a record 83.4 percent of their seats, driven by strong summer travel demand, particularly in the Asia-Pacific region, which led the world with a 27 percent increase in passenger demand.

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Asia-Pacific airlines handled 31.7 percent of global passengers in May, followed by Europe (27.1 percent) and North America (24.2 percent). Latin American airlines also saw significant growth, with a 15.9 percent increase in passenger demand, while African airlines recorded a 14.1 percent rise.

Despite these positive trends, North American carriers experienced the lowest growth in passenger demand at 8.7 percent, with capacity increasing by 7.7 percent and the load factor declining slightly to 84 percent.

Saudi Arabia’s Vision 2030 and Aviation Sector Expansion

Boosting the aviation sector is a cornerstone of Saudi Arabia’s Vision 2030, which aims to diversify the economy away from oil dependency. In May, the Kingdom unveiled a new roadmap to enhance the business travel sector. The General Authority of Civil Aviation reported a record 112 million passengers in 2023, a 27 percent increase from the previous year.

The upcoming launch of Riyadh Air in 2025, backed by the Public Investment Fund, is a key part of this strategy. The airline aims to fly to 100 countries by 2030, further cementing Saudi Arabia’s position as a global aviation hub.

Oil Market Dynamics and Saudi Arabia’s Economic Resilience

Meanwhile, oil prices have remained stable, with Brent crude and US West Texas Intermediate crude futures seeing modest gains. The market has been buoyed by strong summer fuel demand and geopolitical tensions. Saudi Aramco’s decision to cut the price for its Arab Light crude for August sales to Asia reflects the pressures faced by OPEC producers amid growing non-OPEC supply.

The ongoing Russia-Ukraine conflict and its impact on global oil supply routes have also played a significant role in shaping market dynamics. Analysts have noted strong mobility indicators and geopolitical tensions in the Middle East as key factors supporting market sentiment.

Saudi Arabia’s Stock Market and Economic Indicators

Saudi Arabia’s stock market has also shown resilience, with the Tadawul All Share Index rising by 0.55 percent to close at 11,658.66 points. The market saw a trading turnover of SR4.94 billion ($1.31 billion), with significant gains in various sectors, including insurance and agriculture.

The Kingdom’s parallel market, Nomu, also recorded gains, reflecting investor confidence in the economic outlook. This positive trend is supported by robust growth in commercial registrations, which surged by 78 percent year-on-year in the second quarter of 2024.

Strategic Defense and International Collaborations

Saudi Arabian Military Industries (SAMI) recently signed three agreements with Turkish defense firms to localize defense businesses in aviation, space, and technology sectors. These agreements are part of the Kingdom’s efforts to contribute to the localization of 50 percent of government defense spending, aligning with Vision 2030. The deals with Baykar, Fergani Space, and Aselsan aim to enhance Saudi Arabia’s defense capabilities and foster international cooperation.

These agreements were signed during high-level meetings between Saudi and Turkish officials, emphasizing the strategic importance of defense collaboration. The agreements include establishing manufacturing capabilities for unmanned aerial vehicles, developing emerging technologies, and transferring advanced electronics technologies to Saudi Arabia.

Saudi-Turkish Business Relations and Economic Cooperation

In addition to defense collaborations, Saudi Arabia is strengthening its economic ties with Turkey through initiatives like the Saudi-Turkish Contracting Forum. This forum aims to boost cooperation and create partnerships to support Vision 2030 by attracting international investments and expertise.

The forum saw active participation from Saudi and Turkish companies, discussing solutions and enablers to advance the contracting sector. These discussions are expected to foster successful partnerships and drive growth in the Kingdom’s construction and infrastructure sectors.

Conclusion

The Middle Eastern aviation sector is experiencing robust growth, driven by increased passenger and cargo demand, strategic investments, and geopolitical dynamics. Saudi Arabia, in particular, is leading this trend with its Vision 2030 economic diversification plan, significant investments in aviation infrastructure, and strategic international collaborations. As the region continues to strengthen its aviation and defense sectors, it is poised to play a pivotal role in the global economy, offering new opportunities for growth and development.

 

This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members

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