Saudi Arabia has said that global airlines industry body the International Air Transport Association (IATA) has agreed to open a regional headquarters in Riyadh, but the industry's main trade association denied that it will be a regional base in the latest evidence of sensitivities over the status of foreign business representation in the kingdom.
The General Authority of Civil Aviation (GACA) announced it has signed a "headquarters agreement" with IATA to open its "regional office in the kingdom".
IATA, which represents some 290 airlines around the world, currently has its regional office in Jordan's capital, Amman.
IATA said that the body has agreed to set up an office in Saudi Arabia but not a regional headquarters.
"It will serve the growing needs of the industry in [Saudi Arabia]. We have a regional headquarters...in Amman and we are not moving its functions to [Saudi Arabia]," an IATA spokesperson said by e-mail.
GACA did not immediately respond to a request for further comment.
Saudi Arabia is putting pressure on companies to move their regional offices to the kingdom, warning that from 2024 it will not award state contracts to those with regional headquarters elsewhere.
The move is one of many recent economic and social reforms in an effort to diversify the economy away from its oil dependence.
Saudi Arabia has announced a transportation and logistics drive aimed at making the kingdom the fifth biggest air transit hub.
People familiar with the matter said that a planned new airline will target international transit passenger traffic, going head-to-head with Gulf giants Emirates and Qatar Airways and opening up a new front in regional competition.
Global Air Travel Remains Subdued
IATA has said that passenger air travel demand remains subdued compared to pre-COVID-19 pandemic levels, with figures showing it was 63% lower in May 2021 than in the same month two years ago.
IATA also said that global air travel measured by passenger kilometre was down 62.7% in May of 2021 compared to May of 2019.
International travel is much more affected by ongoing restrictions than travel within domestic markets like China and Russia, IATA said.
IATA director general Willie Walsh blamed ongoing restrictions and a lack of co-ordination between governments for creating consumer confusion and hindering the speed at which aviation can recover.
Walsh called on governments to better co-ordinate between themselves to aid the airline industry's recovery.
"We're seeing a wide variation in the requirements for things like testing...clearly this is causing great confusion in the minds of consumers," Walsh told a briefing.
He said that data shows that the risk of reopening borders is very, very low where people are fully vaccinated or where sensible testing regimes are used to facilitate travel.
Governments will come under increasing pressure to allow travel, he forecast, as growing numbers of vaccinated consumers, who were reluctant to holiday at the height of the pandemic, demand their freedom again.
"What we're seeing is a shift in the consumer attitudes over time and I think that's going to accelerate now, as people become more frustrated at the pace at which governments are moving," he said.
Walsh Expects Transatlantic Travel To Resume In The Coming Weeks
Walsh said he is cautiously optimistic about demand for travel in the second half of the year, adding that he expects transatlantic flying between Britain and the United States to resume in the coming weeks.
Schedules are expanding as airlines sense consumer demand for travel rising and progress with COVID-19 vaccinations means shuttered routes could resume, Walsh told reporters.
"I think we have to be optimistic that we will see a relaxation in relation to transatlantic flying during the coming weeks," Walsh said.
Major airlines including American Airlines, IAG unit British Airways, Delta Air Lines and United Airlines have for some months been pushing the US and UK governments to reopen travel between the two countries citing the pair's advanced vaccination programmes.
Walsh said that there has been no announcement on the matter at the G7 leaders meeting in June due to a lack of data about the vaccine's efficacy against the Delta variant of the virus, but that has changed now.
A transatlantic reopening would be a huge boost for the airlines.