SAUDI’S SHRINKING FLEET
Historically the Middle East’s largest and most important market, a flood of sales has seen the installed fleet in Saudi Arabia drop below that of the United Arab Emirates.
Recent research by Ionic Aviation has shown that the installed fleet in Saudi Arabia, historically the Middle East’s largest business aviation market, is now smaller than that of the neighbouring United Arab Emirates. This change has been influenced by a variety of factors, both global and local, but the company believes that two major contributing elements are the continued relocation of multinationals and ultra-high-net-worth individuals to the UAE, and the fallout from 2017’s clamp down on corruption, which saw a number of UHNWI Saudi Nationals temporarily held in the Riyadh Ritz-Carlton.
Saudi also saw some severe restrictions during the height of the pandemic but has seen a strong recovery in the last six months, with activity up almost 50% this year compared to last.
The UAE, and Dubai in particular, has shown great resilience and weathered the Covid storm very well, although the global downturn may be beginning to affect this boom. According to aviation market intelligence hub WINGX, overall the UAE is only 3% up this year compared to last year, but with 86% more bizjet sectors than in the first half of 2021. Dubai International got 71% more movements in July 2022 than in July 2019, but it is down 15% compared to July last year.
So are the Saudi aircraft relocating to the UAE and other parts of the Middle East? Perhaps not. Of the exodus of aircraft from the Kingdom, Graeme Shanks, Managing Director, Ionic Aviation Limited, said: “While one or two aircraft may have found new owners in the UAE, the main market driver post-Covid has been the high level of demand for used aircraft from the US market. As a result of this demand, residual aircraft values have risen markedly for good quality used aircraft. In my opinion, many owners have simply seen an opportunity to cash-in on this market and sell their aircraft while demand is high and values are strong.”
And it may be that we will see the number of aircraft in KSA rising again, as the demand in the US market begins to slow and movement returns to the Kingdom, with a determined push for increased tourism and specifically health tourism. Shanks added: “The pandemic had a negative impact on aircraft usage and need in Saudi over the past couple of years, not unlike everywhere else in the world, but high oil and gas prices should now feed increased demand for aircraft, both new and pre-owned, in the Kingdom and across the wider Middle East. Anecdotally, I know many OEM sales staff are now reporting high levels of activity across the region.”
Saudi Arabia has an installed fleet of 90 aircraft, with Gulfstream being the largest OEM by fleet size.
Saudi Arabia has an installed fleet of 90 aircraft, with Gulfstream being the largest OEM by fleet size, making up almost a third of the total number, with 29% of the fleet. In line with the trend across the Middle East markets, corporate jet iterations of large commercial aircraft – notably ACJs and BBJs – are also strongly represented, making up more than one-third of the fleet.
Almost two-thirds of aircraft are based in Riyadh, the political and administrative capital, followed by Jeddah, and then Dammam, home of Saudi Aramco and the oilfield activities. Ionic reports that, in a challenge to those seeking to finance/refinance aircraft within the Kingdom, almost two-thirds of aircraft in the fleet are self-managed, with no third-party operator involvement. Fifty-seven percent are registered locally in Saudi Arabia (HZ-), and a total of 17 aircraft are owned and operated by a variety of royal, government, and military entities.