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  • Sheryll Mericido

GACA introduces economic policy and regulations for Saudi aviation sector

Riyadh, October 30, 2023, The General Authority of Civil Aviation (GACA) has introduced an economic policy for the civil aviation sector in Saudi Arabia, implementing three key economic regulations for airports, ground services, air freight, and air transport services. These regulations took effect on October 30, 2023.

The economic policy's primary objectives include enhancing the operational performance of the country's airports and national carriers. This aligns with GACA's broader vision of transforming Saudi Arabia into a global hub for transportation and logistics services. The goal is to establish a competitive infrastructure that appeals to foreign investments and fosters growth and innovation in the aviation sector.

These efforts are intended to position the aviation sector as a leader in the Middle East, diversify Saudi Arabia's sources of income, and support the objectives of the National Aviation Strategy. Furthermore, they aim to stimulate the investment environment by increasing the transport and logistics sector's contribution to GDP to 10%. This will result in creating both direct and indirect job opportunities within the aviation sector, attracting up to $100 billion in investments from both the public and private sectors by 2030. Additionally, these initiatives will promote a competitive landscape that offers a level playing field for current operators and future investors in the aviation sector.

GACA has also issued a regulation governing its operations in the Kingdom, which is pivotal for its privatization efforts and welcoming new investors into the Saudi aviation market. The regulation allows airport operators to establish wages according to their schemes and emphasizes compliance with GACA's rules. It also empowers airport operators to diversify their revenues by enhancing returns from non-navigational services, thereby encouraging airports to provide a wider range of services and commercial activities while adhering to global standards.

Additionally, GACA has introduced a regulation governing ground handling and air cargo services. This regulation is founded on the principle of free market access for those seeking to provide services at Saudi airports. It establishes standards for selecting ground service providers in a fair competitive environment and streamlines the process of issuing economic licenses for ground handling and air cargo services. This is designed to attract investments and promote transaction transparency by facilitating consultations among service providers and clarifying the roles and responsibilities of each provider category.

Furthermore, GACA has rolled out an economic regulation for air transport services, aimed at boosting air traffic by simplifying the requirements for airlines to obtain licenses and eliminating the economic requirements for non-commercial flights. This is expected to enhance Saudi Arabia's airline connectivity. In addition, the authority has adopted new regulations concerning the allocation of air traffic rights among national carriers on international routes with limited capacity, ensuring equitable opportunities.

These regulations have been developed following extensive public consultation, with input gathered through a polling platform and discussions with various stakeholders in the aviation sector. GACA has outlined a phased implementation plan for the regulations over the next 18 months to ensure a smooth transition for the sector.

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