Riyadh Seeks to Achieve Recovery Plan for International Aviation Sector

The Saudi Energy Minister attends the Future of Civil Aviation conference in Riyadh on Monday. (Asharq Al-Awsat)
The Saudi Energy Minister attends the Future of Civil Aviation conference in Riyadh on Monday. (Asharq Al-Awsat)
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Riyadh Seeks to Achieve Recovery Plan for International Aviation Sector

The Saudi Energy Minister attends the Future of Civil Aviation conference in Riyadh on Monday. (Asharq Al-Awsat)
The Saudi Energy Minister attends the Future of Civil Aviation conference in Riyadh on Monday. (Asharq Al-Awsat)

Saudi Arabia has revealed plans to strengthen its capabilities in the aviation sector over the next ten years, with the aim to become a leading center for aviation and air transport in the Middle East and the world.

Under the patronage of the Custodian of the Two Holy Mosques, the Saudi General Civil Aviation Authority announced an international initiative to unify procedures and policies regarding health requirements, in order to support the sector’s recovery from the Covid-19 pandemic.

This came during the launch of the Future of Civil Aviation conference in Riyadh on Monday.

In this regard, Saudi Energy Minister Prince Abdulaziz bin Salman underlined the efforts to face energy challenges in the aviation sector.

“We are focusing on two fronts; first, we work with the aerospace industry to develop engines, materials, and innovation; and second, on low-carbon aviation fuels that we believe will be the transitional fuels of the future,” he said.

Speaking during his participation in a dialogue session entitled, “Energy Transformation: How We Can Overcome the Sustainability Challenge”, the minister noted that energy security was the most important pillar, “without which the goals of economic growth and sustainability cannot be achieved, including dealing with climate change.”

He added: “We are not in a position to choose among the sustainability solutions; rather, we should take advantage of all available options, to achieve our goals realistically.”

Prince Abdulaziz stressed that these goals could be reached within the framework of the circular carbon economy, through carbon sequestration from the source, in addition to the use of captured gas in the production of industrial fuels.

According to the Saudi official, the aviation sector emissions do not exceed two percent of the total emissions.

“Whether this percentage is large or small, the world agrees on the importance of finding solutions to reduce emissions of all sectors,” he remarked.

The Saudi Energy Minister noted that the gap between crude oil prices and the prices of jet fuel, diesel and gasoline was about 60 percent in some cases, due to a lack of investment in refining capacity.

“The world needs to consider energy security, sustainability and overall affordability,” he said. “All types of mobility fuels have risen sharply, and the gap between crude oil prices and these products in some cases actually reaches 60 percent.”

On whether geopolitical events in Europe will accelerate or impede the transition to cleaner energy in the medium term, the Saudi minister said: “I think it brought us back to reality about how actual conditions in which we live can undermine aspirations.”

He said that even before the Ukraine crisis, the “dreamland scenario of net zero emissions was faced by many realities, including the cost.”

For his part, Salvatore Sciacchitano, President of the Council of the International Civil Aviation Organization (ICAO), said that the number of passengers around the world was likely to constitute, by the end of 2022, 75 percent of the number achieved in 2019, before the outbreak of the Covid-19 pandemic.

The number of travelers is growing in certain regions faster than others, such as Latin America and Europe, compared to regions that are still suffering from the effects of the pandemic, such as China, he noted.

Meanwhile, the Saudi Civil Aviation Authority said on Monday that it was working to develop a framework aimed at facilitating international travel, in cooperation with the ICAO.

The Saudi initiative will promote a policy of standardizing procedures to ease international travel, whether for passengers or airlines and government agencies, by creating a single digital platform that provides the latest information and developments with clarity and transparency, and identifies entry requirements for all participating countries.

If endorsed by the member states of the ICAO in October, the initiative will enable the unification of procedures and policies regarding health requirements to support the sector’s post-pandemic recovery.



Euro Falls as Markets Brace for French Post-election Gridlock

A participant holds a French flag during an election night rally following the first results of the second round of France's legislative election at Place de la Republique in Paris on July 7, 2024. (AFP)
A participant holds a French flag during an election night rally following the first results of the second round of France's legislative election at Place de la Republique in Paris on July 7, 2024. (AFP)
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Euro Falls as Markets Brace for French Post-election Gridlock

A participant holds a French flag during an election night rally following the first results of the second round of France's legislative election at Place de la Republique in Paris on July 7, 2024. (AFP)
A participant holds a French flag during an election night rally following the first results of the second round of France's legislative election at Place de la Republique in Paris on July 7, 2024. (AFP)

The euro slipped on Sunday after projections from France's election pointed to a hung parliament and an unexpectedly strong showing for the left-wing New Popular Front, casting fresh uncertainty over markets and setting the stage for further volatility ahead.

Analysts said markets would likely be relieved that Marine Le Pen’s far-right National Rally (RN) was forecast to come third after last week's first-round victory.

Yet investors also have concerns that the French left’s plans could unwind many of President Emmanuel Macron’s pro-market reforms. And they believe political gridlock could end attempts to rein in France's debt, which stood at 110.6% of gross domestic product (GDP) in 2023.

The euro fell 0.2% to $1.081 as the week’s trading got underway. It had climbed last week as opinion polls suggested a hung parliament was likely, assuaging fears of a far-right victory, after dropping sharply - along with stocks and bonds - when Macron called the elections in early June.

"It looks like the anti-far right parties really got a lot of support," said Simon Harvey, head of FX analysis at Monex Europe.

"But fundamentally from a market perspective, there’s no difference in terms of the outcome. There’s really going to be a vacuum when it comes to France’s legislative ability."

Harvey added: "The bond market is going to be the real place to look at. There might be a bit of a gap lower in French bonds (prices)."

Trading in French bonds and stocks will begin on Monday morning in Europe.

The leftist alliance, which gathers the hard left, the Socialists and Greens, was forecast to win between 172 and 215 seats out of 577, according to pollsters' projections based on early results from a sample of polling stations.

Macron’s centrist alliance was projected to win 150-180 seats, with the RN seen getting 115 to 155 seats.

Analysts said a period of volatility and uncertainty was expected to continue as investors now assess what form the parliament will take, and how many, if any, of its policies the leftist alliance will be able to implement.

The New Popular Front alliance says its first moves would include a 10% civil servant pay hike, providing free school lunches, supplies and transport while raising housing subsidies by 10%.

"The economic program of the left is in many ways much more problematic than that of the right, and while the left will not be able to govern on their own, the outlook for French public finances deteriorates further with these results," said Nordea chief market analyst Jan von Gerich.

JITTERY MARKETS

Markets tumbled after Macron gambled in June by calling a parliamentary election following a trouncing at the hands of the RN in European Parliament elections - as investors worried an RN victory could install a prime minister intent on a high-spending, France-first agenda that would exacerbate a large debt pile and shake relations with Europe.

The risk premium investors demand to hold the country's debt soared to its highest level since the euro zone crisis in 2012. French stocks, led by banks, dropped as investors worried about their holdings of government debt, new regulation and economic uncertainty in the euro area's second biggest economy.

Yet equities, bonds and the euro all recovered somewhat last week as polls showed a hung parliament was the most likely outcome as the left wing and centrist parties struck deals to give anti-RN candidates a better chance.

The exact make-up of the next parliament remains uncertain, as does the next prime minister. Gabriel Attal said he would hand his resignation to Macron on Monday.

"It’s going to be very hard to actually go ahead and pass any policy and bring about any progressive reforms because each party’s vote is split and no one has an absolute majority," said Aneeka Gupta, director of macroeconomic research at WisdomTree.

Yet she added: "I think the markets will be happy we’re avoiding this extreme situation with the far right."