Daa eyes expansion in Saudi Arabia and the wider Middle East

With expansion at home stalled, the Irish airport authority sees more scope overseas, even in politically contentious areas

King Abdulaziz International Airport in Jeddah, Saudi Arabia is operated by Ireland's Daa. It accommodated 42.7 million passengers last year. Picture: iStock

With the expansion of Dublin Airport being up in the air as it awaits a planning decision, the airport’s operator, Daa, is looking to grow its international operations, particularly in the controversial kingdom of Saudi Arabia.

Daa’s international arm encompasses a number of areas: It manages several international airports, provides advisory services, and operates duty-free shops in 27 airports.

Daa-managed airports deal with 100 million passengers a year, with just 35 million of these travelling through Dublin and Cork Airports combined. Daa employs 3,750 people across 50 countries.

In Saudi Arabia, it manages the King Abdulaziz International Airport in Jeddah, Terminal Five at King Khalid International Airport, in Riyadh, and the Red Sea International Airport, which is south of Al Wajh in the west of the country. 

The Daa also owns a 20% stake in Dusseldorf Airport, in Germany, and an 11% stake in Hermes Airports, which owns and operates Larnaca and Paphos airports in Cyprus.

Daa chief executive Kenny Jacobs said there was a lot of Irish involvement in the aviation sector in Saudi Arabia and Daa had a very good relationship with its government.

Daa chief executive Kenny Jacobs said the operator was looking to get 'more involved in Saudi Arabia as the country builds out its tourism and aviation sector.

“They will always have some unique parts of their culture, but, so far, I have found it to be a very good from a business point of view,” Mr Jacobs said. 

“The culture is definitely evolving and it’s definitely opening up and I think the Irish Government has the right strategy of actively trading there.”

Human rights

Saudi Arabia is a controversial place to do business. Its human rights record has received sharp criticism from Amnesty International and Human Rights Watch.

Freedom of expression is restricted and breaches of it can result in lengthy prison sentences. Women still have fewer rights, with the authorities continuing to implement a male guardianship system.

Saudi Arabia has capital punishment, and 170 people were reportedly executed in 2023.

Saudi Arabia has involved itself in the disastrous ongoing Yemen civil war and, in 2018, its government was implicated in the murder of journalist Jamal Khashoggi in a consulate in Turkey.

However, Saudi Arabia is trying to improve its reputation on the international scene, spending massively on sports and tourism.

It has established Liv Golf, with massive cash incentives to attract some of the world’s best golfers away from other tours. 

In 2021, the country’s public investment fund led a consortium to buy English football club Newcastle United and, recently, it has been on a spending spree, luring players such as Cristiano Ronaldo to play in its domestic league.

Until 2019, Saudi Arabia was largely closed off to tourists, except for Muslims going on the Hajj pilgrimage. It aims to attract 70 million  tourists a year by 2030 and has set aside $800bn to turn itself into a travel hotspot.

Daa manages some of the country’s largest airports, so the first experience many people will have of Saudi Arabia will be facilitated by Daa.

When asked if Daa was therefore complicit in the washing of Saudi Arabia’s reputation, Mr Jacobs said: “No, we’re helping them run their airports.”

“I don’t subscribe to that. We’re doing a good job, helping them run their airports and, as they expand, it’s a business relationship,” he said.

“I don’t think that we’re doing anything politically by helping them run their aviation. I don’t view it that way,” he said, adding it was in line with Irish Government policy to trade with and do business with Saudi Arabia.

Mr Jacobs said the Daa wanted to be “more involved” in Saudi Arabia, subject to board approval.

Of the approximately 65 million passengers Daa manages in Saudi Arabia, 15 million fly through the airport in Riyadh, with traffic to the Red Sea International Airport expected to grow to two million a year.

The remaining 50 million fly through Jeddah, which is the main airport for the Hajj pilgrimage.

Saudi Arabia has a very “high-end tourism product” to offer, Mr Jacobs said, and he is convinced it will start allowing alcohol in the next 12 months. 

Daa has about 50 staff in executive roles in Saudi Arabia, managing the airports, and these staff include women.

Daa also has the responsibility for enticing more airlines to fly to these airports, potentially increasing the number of visitors to the country.

Mr Jacobs said about 40% of people travelling through Jeddah Airport are going on pilgrimage, which takes a “lot of management”.

Duty-free

One of the biggest aspects of Daa’s international operations is its retail duty-free side.

It manages its duty-free shops through the company ARI, which opened the world’s first duty-free shop at Shannon Airport, in 1947. The concept was further developed at Cork and Dublin Airports.

It has since grown further, establishing duty-free in countries such as Indonesia, India, Canada, and Portugal, among others.

On the duty-free side, Mr Jacobs said it had a very busy pipeline of opportunities in North America, the Middle East, Asia, and Europe.

When it comes to stocking these shops, Daa said it would not be a “cookie-cutter approach” and would be stocking the shops with local products.

“You are obviously pricing against downtown, and you’re pricing it to be 20% cheaper than downtown. So downtown Dublin is different to downtown Montreal and Jeddah for pricing.”

In its annual reports, Daa does not reveal how much it makes from each individual contract or airport, but it does say both the retail division and the airport-management division are profitable.

In 2022, the latest figures available, Daa recorded a profit of €98m, before exceptional items, with a turnover of €752m.

During the year, Daa’s international arm reported turnover of €233m. For comparison, Daa made €154m, or 20% of its total revenue, from aeronautical charges in Cork and Dublin Airport during the year.

Of total turnover during 2022, 81% was generated in Europe, while 6% was generated in the Middle East. An additional 7% was generated in Australasia and 6% in North America.

Mr Jacobs said its international operations were a “big part of our finances” and it is something it would like to expand, which means opening more duty-free shops and bidding for more airport-management contracts.

In terms of where Daa sees growth potential outside of Ireland, Mr Jacobs said there was going to be a “lot more” business in the Middle East, with Saudi Arabia having a ”big, ambitious plan” for aviation.

“They want to open up lots more airports, they want to set up new airlines. So we’ll definitely be going for more contracts in Saudi Arabia and the Middle East,” he said.