Saudi Aviation Sector Contributes $53 Bln to Economy

A civilian aircraft flies over the skies of the Saudi capital (Riyadh Air)
A civilian aircraft flies over the skies of the Saudi capital (Riyadh Air)
TT

Saudi Aviation Sector Contributes $53 Bln to Economy

A civilian aircraft flies over the skies of the Saudi capital (Riyadh Air)
A civilian aircraft flies over the skies of the Saudi capital (Riyadh Air)

Saudi Arabia’s civil aviation sector is playing a crucial role in driving the Kingdom’s economic growth, contributing $53 billion to the Gross Domestic Product (GDP), according to the Saudi General Authority of Civil Aviation (GACA).

This data was revealed in the inaugural 2024 State of Aviation Report, which GACA will launch at the Future Aviation Forum, detailing the contribution of the aviation sector to Saudi Arabia’s economic development and Vision 2030 transformation program.

The forum, held under the patronage of King Salman bin Abdulaziz, will take place from May 20-22 in Riyadh.

Transport Minister and Chairman of GACA Saleh Al-Jasser emphasized the significant strides made by Saudi Arabia’s aviation sector in international metrics, aligning with the transformative goals of Vision 2030 and the National Transport and Logistics Strategy.

These advancements offer unprecedented opportunities in the aviation sector.

The report, developed by GACA in line with its strategic regulatory mandate, highlights that the Saudi aviation sector contributes $20.8 billion through aviation-related activities, enabling a further estimated $32.2 billion in tourism economic activity.

Moreover, aviation supports 241,000 jobs, and a further estimated 717,000 jobs in the tourism sector.

The report also captures the transformation of Saudi aviation, with Saudi Arabia outperforming global aviation sector growth rates in 2023 – achieving 123% of international pre-pandemic seat capacity compared with a global and regional average recovery rate of 90% and 95% respectively, with 2023 growth amounting to 26% as total passenger volumes reached 111.7 million.

Hosted by GACA under the patronage of the Custodian of the Two Holy Mosques King Salman, the Future Aviation Forum will showcase investment opportunities exceeding $100 billion, aimed at realizing Vision 2030 objectives to position Saudi Arabia as a leading logistics hub in the Middle East.

This includes $50 billion in airport investments and nearly $40 billion in new aircraft orders, with the remaining $10 billion allocated to various projects, including $5 billion for logistics zones at major airports in Riyadh, Jeddah, and Dammam.

The event will convene more than 5,000 aviation experts and leaders from more than 100 countries to shape the future of aviation, including executives from international carriers, all major global manufacturers, airport executives, industry leaders and regulators.



Germany's Coalition in Impasse Over 2025 Budget

FDP Finance Minister Christian Lindner (L), Greens Economy Minister Robert Habeck (C) and Chancellor Olaf Scholz (R) of the SPD are locked in a budget dispute - AFP
FDP Finance Minister Christian Lindner (L), Greens Economy Minister Robert Habeck (C) and Chancellor Olaf Scholz (R) of the SPD are locked in a budget dispute - AFP
TT

Germany's Coalition in Impasse Over 2025 Budget

FDP Finance Minister Christian Lindner (L), Greens Economy Minister Robert Habeck (C) and Chancellor Olaf Scholz (R) of the SPD are locked in a budget dispute - AFP
FDP Finance Minister Christian Lindner (L), Greens Economy Minister Robert Habeck (C) and Chancellor Olaf Scholz (R) of the SPD are locked in a budget dispute - AFP

The three parties in the German government are locked in a bitter dispute over the 2025 budget, with experts warning the stalemate could be the final straw for the uneasy coalition.

Chancellor Olaf Scholz's Social Democrats (SPD), the Greens and the liberal FDP, who came to power in 2021, have until July 3, the end of the current parliamentary term, to reach a compromise, AFP reported.

FDP Finance Minister Christian Lindner, a fiscal hawk, is demanding close to 30 billion euros ($32 billion) in savings -- which the Greens and SPD have baulked at.

The coalition has faced many rows in the past but some pundits believe this could be the one that finally blows the government apart.

"These talks will decide the coalition's continued presence in office," said the Sueddeutsche Zeitung daily this week.

While budget discussions have been difficult before, they have never lasted this long.

"It's much more difficult than usual," Jacques-Pierre Gougeon, an expert on German politics at the French Institute for International and Strategic Affairs, told AFP.

He pointed to a gloomy backdrop due to Germany's poor performance in recent times, with Europe's biggest economy hit hard by high inflation and a manufacturing slowdown.

According to the finance ministry, tax revenues for 2025 are set to be 11 billion euros lower than originally forecast.

A ruling by the country's top court in November that the coalition had contravened the constitutionally enshrined "debt brake", a self-imposed cap on annual borrowing, has also limited room for new spending.

In addition, all three parties are increasingly worried about their own levels of support after doing badly at this month's EU elections -- in which the opposition conservative CDU-CSU bloc came first, with the far-right AfD second.

A key sticking point in discussions centres on unemployment benefits.

Lindner wants to restrict the current payouts, which he believes are too expensive and do not provide enough of an incentive to get people to return to work.

But the SPD won't accept this. Improving benefits was central to the party's 2021 election campaign as they sought to win back support of lower-income voters.

"Politically, the Social Democrats cannot afford to give it up," said Gougeon.

There is also disagreement about any measures affecting diplomacy and defence, at a time when Germany is seeking to stand up for liberal, European values and overhaul its creaking military in the wake of Russia's invasion of Ukraine.

Defence Minister Boris Pistorius is calling for an increase in his ministry's budget, and for military spending not to be covered by the debt brake.

"It would be disastrous to have to say in a few years' time: we saved the debt brake at the expense of Ukraine and the European security order," said Foreign Minister Annalena Baerbock, from the Greens.

While calls have grown for the debt rules to be relaxed, Lindner and the FDP categorically refuse to countenance any changes.

Maintaining the brake is an "existential question" for the party, according to Gougeon.

Lindner did however promise on Wednesday not to push for any savings in defence.

Scholz, Lindner and Economy Minister Robert Habeck, from the Greens, are due to meet Sunday in an attempt to make progress.

The aim is to prevent "the budget crisis from turning into a crisis of confidence", which could lead to new elections, according to the left-leaning daily TAZ.

The parties may ultimately compromise as the alternative -- a collapse of the government -- will not be in their favour.

They "know that they would be swept aside if there were new elections, and will want to avoid them", said Gougeon.