The Government of Saudi Arabia realized from the outset the importance of the private sector as an economic development partner, and civil aviation sector is ambitious having ideal investment factors. Air transport has increasing growth in the Middle East, particularly in the Saudi Arabia. Kingdom of Saudi Arabia is a special country withgeographical location and status of religion in the Muslim world. Furthermore, due to its economic strength and openness, investments to the sector are attracted with the belief that they will be successfully developed. Given the importance and the role of the air transport sector in the service of pilgrims and visitors to the Prophet's mosque, The King (Allah preserve him) directed to transform Prince Mohammad Bin Abdul-Aziz airport in Medina to an international airport, to join the international airports systems in the Kingdom.
On that the Supreme Economic Council issued a decision to approve the participation of the private sector into the implementation, development and operation of the Prince Mohammed bin Abdul Aziz Airport Project, which is considered as a new airport.
In this context the General Organization of Civil Aviation (GACA) ensured international participation in this partnership project between public and private sector and with the support of International Finance Corporation (IFC), a member of the World Bank Group, as lead advisor to the organization for the project, which represents the first partnership between the public and private sectors in airports in KSA; launched an ambitious plan to modernize and expand the airport with private sector participation under a long-term concession. This approach is part of GACA’s overall strategy of reforming and modernizing Saudi Arabia’s aviation industry.
For the tender; ten international, regional and local firms submitted qualification applications. Four consortia ultimately submitted bids on 8 August 2011. Technical bids were evaluated and scored before opening financial bids. After determining a final score, TIBAH was awarded the concession.
On 29/10/2011 the Build, Transfer and Operate Agreement (BTO), was signed between the General Authority for Civil Aviation and TIBAH Airports Development Co. to become the first airport project in the Middle East to be fully built in PPP.
The project was funded by amount of one billion and two hundred million U.S. dollars in an Islamic finance way by the NCB, SABB and Arab National Bank under the supervision of the International Finance Corporation consultative (IFC) a member of the World Bank Group.
The project was inaugurated on 2nd July, 2015 by The Custodian of the Two Holy Mosques King Salman bin Abdulaziz al Saud, in the presence of other major dignitaries from the kingdom. The $1.2 billion expansion plan consists of a three-level terminal covering over 156,940 square metres with 16 aircraft stands and boarding bridges.
For Hajj and Umrah pilgrims, who are looking to sanctify their travel with a visit to Madinah, the airport expansion plan comes as a boon. Moreover, Prince Mohammad Bin Abdulaziz International Airport (Madinah Airport) is also likely to be the harbinger of heightened economic activity and the precursor to other privatisation initiatives.
While Phase I of the airport can handle 8 million passengers, the second and third phases will be able to handle passenger traffic of 14 million and 27 million, respectively.
The new Madinah Airport is not only a major part of the Holy city’s infrastructure, it is also playing an eminent role in the socio-economic development of the region by fostering economic activities by means of encouraging international commerce and tourism and by generating employment opportunities.