Saudi Arabia outsources airport operations

The signing of public-private partnerships to manage five airports in the kingdom, including in Jeddah, could set a precedent for infrastructure across the Gulf.

Saudi Arabia’s nascent privatisation programme gathered speed this month when it signed contracts for the development and operation of five airports in the country.

The General Authority of Civil Aviation (GACA) entered into long-term public-private partnerships (PPPs) with companies from Turkey, Germany, Singapore and at home, in deals set to invigorate the kingdom’s privatisation agenda in line with Vision 2030.

Described as “game changing” by the Clifford Chance lawyer who led the negotiations, the deals are significant as they represent the start of a more sophisticated approach to PPPs in Saudi Arabia.

They are also among the first tangible examples of how PPPs can be deployed beyond the power and water programmes, notes PwC Middle East partner and infrastructure lead, Maarten Wolfs. “The GACA airport concession contracts represent a significant boost for the privatisation agenda in Saudi Arabia and the region,” he states.

Contracts were signed on June 8. Under the deals — which are long-term concession arrangements rather than transfer of ownership — Singapore’s Changi Airports International (CAI) will operate King Abdulaziz International Airport (KAIA) in Jeddah for 20 years; a consortium comprising Munich Airport, Consolidated Contractors Co and Saudi Arabia’s Asyad Holding will develop and operate the new Taif International Airport; and a consortium of Turkey’s TAV Airports Holding and local firm Al Rajhi Holding Group will operate Prince Naif Bin Abdul Aziz Airport in Qassem, Hail International Airport and Prince Abdul Mohsen Bin Abdul Aziz Airport near Yanbu. Contracts for the Taif, Qassim, Yanbu and Hail airports are based on a build-operate-transfer (BOT) model while the Jeddah deal is an operate and maintain arrangement — no construction is required. The value of the deals was not disclosed.