Commercial Aviation
Air Arabia-Led Consortium Launches New Low-Cost Carrier in Saudi Arabia
A new low-cost airline based in Dammam by Air Arabia-led consortium targets 10M passengers by 2030, boosting Saudi aviation and Vision 2030 goals.
Saudi Arabia’s aviation industry continues to evolve at an accelerated pace, aligning with the country’s long-term economic development framework known as Vision 2030. One of the most prominent recent developments is the announcement of a new low-cost carrier (LCC) to be based in Dammam and spearheaded by a consortium comprising Air Arabia, Nesma Group, and KUN Holding. This move reflects increasing investment momentum across the Kingdom’s transportation and tourism infrastructure and adds to a growing list of aviation undertakings aimed at increasing regional connectivity and passenger handling capacity.
The General Authority of Civil Aviation (GACA), the central regulator for Saudi civil aviation, has awarded this consortium the right to establish a new national low-cost airline, marking a significant expansion of the country’s airline portfolio. Currently dominated by players such as flynas and flyadeal, the LCC market is expected to benefit from this addition, particularly as it adds presence in the historically underserved Eastern Province. King Fahd International Airports (DMM) in Dammam will serve as the new airline’s base of operations.
This development is emblematic not only of the Kingdom’s increasing liberalization of its aviation sector but also of Saudi Arabia’s broader goal of becoming a leading regional and global aviation hub. The introduction of a Dammam-based LCC supports Saudi Arabia’s Vision 2030 objectives, including increasing the number of annual air travelers to 330 million by the end of the decade.
The new LCC initiative is driven by a tri-partite consortium. Leading the collaboration is Air Arabia, the largest and first low-cost carrier in the Middle East, headquartered in Sharjah, United Arab Emirates. Air Arabia brings seasoned expertise in budget airline operations with established joint ventures in Morocco, Egypt, and Pakistan. Joining it are Saudi Arabia’s Nesma Group, with operations ranging from aviation to logistics, and KUN Holding, a domestic investment entity with a focus on the tourism and infrastructure sectors.
According to official statements, each partner will bring complementary capabilities to the new venture. Air Arabia will contribute its longstanding operational low-cost model and fleet management experience. Nesma provides local insight and logistical support precipitated by its aviation background through Nesma Airlines, while KUN Holding supplies capital and alignment with regional economic development initiatives.
The company will operate under the “Air Arabia Alliance” brand, representing both continuity with Air Arabia’s platform-based model and an evolution toward deeper market localization in Saudi Arabia.
“This achievement represents a key milestone that reaffirms our commitment to supporting the growth and development of the Kingdom’s aviation sector.” , Adel Al Ali, Group CEO, Air Arabia
The new carrier will be based at King Fahd International Airport in Dammam (DMM), strategically enhancing air travel in a region historically overlooked by aviation development. The consortium’s plan aims to operate 45 Airbus A320-family aircraft by 2030, with services extending across 81 cities, 24 domestic and 57 international destinations. This scope is designed to capitalize both on domestic demand and international tourism objectives under Vision 2030.
The airline targets transporting 10 million annual passengers by 2030, positioning it as a direct participant in Saudi Arabia’s effort to elevate its air travel volume from 111 million passengers in 2022 to 330 million by 2030. Employment generation is another cornerstone objective, with the company projecting the creation of over 2,400 direct aviation-sector jobs, further contributing to regional economic activation. The Eastern Province, while home to significant parts of Saudi Arabia’s industrial output and nearly 50% of its GDP, has lacked a flagship airline, a gap the consortium explicitly aims to fill. By boosting accessibility to and from Dammam, the LCC is expected to stimulate both inbound tourism and internal business travel.
The carrier’s fleet is expected to mirror Air Arabia’s existing configurations, dominated by Airbus A320-family aircraft. This uniformity allows for streamlined training, operational simplicity, and maintenance efficiency. Air Arabia currently operates more than 80 aircraft and has orders for an additional 120 A320neos, providing reservoir capacity for the Saudi operation’s launch trajectory.
The rollout of actual services will be phased. Preliminary operations are targeting launch in 2026, with gradual scaling leading to projected full deployment by 2030. This timeline aligns with procurement cycles, regulatory certifications, and route network negotiations.
Additionally, plans are in place for innovation in customer experience, digital bookings, and cost-effective services, modeled after Air Arabia’s existing approach that emphasizes no-frills, affordable regional connectivity.
This new airline venture plays a direct role in supporting the Kingdom’s national transformation agenda. Vision 2030 highlights tourism as one of the central non-oil sectors set for expansion. With major projects such as NEOM, Red Sea Global, and Amaala under development, the need for diversified and economical air travel options becomes imperative.
Dammam’s strategic location near Bahrain, Qatar, and the UAE grants it regional accessibility. This geographic advantage reinforces the logic of making it a regional transport hub. The airport itself handled over 12.6 million passengers in 2024, and this addition may well push those numbers upward, contributing to regional tourism flows toward destinations within Saudi Arabia.
Such connectivity also improves accessibility for Umrah pilgrims, business travelers, and visiting expatriates, all of whom contribute to the Kingdom’s growing service economy. Tourism targets aim to welcome over 150 million visitors annually by decade’s end, and cost-efficient air services are essential in facilitating that growth.
Existing low-cost carriers in the Kingdom include flynas and flyadeal. Flynas, launched in 2007, operates a growing fleet of 61 aircraft with ambitions to expand to 250. Flyadeal, founded in 2017 as a Saudia subsidiary, operates 42 aircraft. Collectively, these LCCs dominate 29% of Saudi Arabia’s seat capacity, comparable but slightly below emerging markets like Southeast Asia. The latest entrant is unlikely to substantially displace these incumbents but will instead aid in growing the overall market. As GACA’s EVP Mohammed Alkhuraisi noted, the objective is not saturation but strategic growth driven by structured licensing and airport availability. This approach leverages increasing demand trends while avoiding excess supply that could undercut fare revenues.
Furthermore, the new airline will inherit tried-and-tested LCC methodologies from Air Arabia’s other ventures, giving it an operational resilience that may shorten ramp-up timelines compared to newer startups.
As aviation growth accelerates, environmental considerations inevitably take precedence. Saudi Arabia aims to achieve net-zero emissions by 2060, and its Civil Aviation Environmental Sustainability Program (CAESP) outlines feasible targets. While low-cost carriers are generally more carbon-efficient per seat, fleet expansion still leads to absolute emissions growth without offset technologies or alternative fuels.
SAF adoption is considered one pathway, though costs remain prohibitively high, estimated to be over four times the cost of conventional jet fuel in 2025. Investment in more fuel-efficient aircraft, incentivization schemes, and carbon market alignment offer partial mitigation solutions. Details from the new consortium on sustainability strategies remain minimal but are expected in later operational disclosures.
Balancing rapid passenger growth, economic opportunity, and environmental responsibility will be crucial to ensure long-term compatibility with Saudi Arabia’s national and international climate commitments.
The establishment of a new low-cost airline headed by Air Arabia, Nesma Group, and KUN Holding represents a calculated and strategic move to further liberalize and expand the Saudi aviation sector. As it sets base in Dammam, this initiative reflects not only strong commercial fundamentals but also an alignment with regional development goals, economic diversification mandates, and global connectivity ambitions.
Looking ahead, the airline’s success will hinge on execution, operational scalability, and its ability to carve out a distinctive identity amidst an increasingly competitive landscape. With deep regional experience and a clear mandate, the project enters the aviation ecosystem at a defining moment, bridging strategic necessity with market opportunity.
What is the name of the new airline? When will the airline begin operations? What aircraft will the new LCC operate? Where is the airline based? How will this airline affect the local economy?
New Low-Cost Carrier in Saudi Arabia: Strategic Launch by Airlines-Led Consortium
Consortium Structure and Strategic Objectives
Composition of the Consortium
Operational Parameters and Market Reach
Fleet, Technology, and Expected Timeline
Impact and Broader Implications
Supporting Vision 2030 and Regional Tourism
Competitive Dynamics and Market Maturity
Sustainability Considerations and Future Challenges
Conclusion
FAQ
The name is expected to reflect the “Air Arabia Alliance” brand, although a final brand name has yet to be publicly confirmed.
The airline is targeting a phased launch starting in 2026, with full operational scale-up anticipated by 2030.
The airline is expected to operate Airbus A320-family aircraft, similar to those used in Air Arabia’s existing fleets.
The airline will be based at King Fahd International Airport (DMM) in Dammam, Eastern Province, Saudi Arabia.
It is projected to create over 2,400 direct jobs and significantly enhance tourism and connectivity in Eastern Saudi Arabia.
Sources
Photo Credit: Gulf Business