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Exclusive: Saudi private jet industry stalls after corruption crackdown

Reuters  |  DUBAI 

By Alexander Cornwell

DUBAI (Reuters) - A on corruption in has severely dented the kingdom's private jet industry in a sign of the impact the campaign has had on private enterprise and the wealthy elite.

Dozens of planes, owned by individuals and charter companies and worth hundreds of millions of dollars, are stranded at airports across the kingdom including and Jeddah, four people familiar with the matter told

Some were handed over to the state in settlements reached after the was launched in late 2017, when dozens of princes, and government officials were detained, they said.

Others belong to Saudis who either or are reluctant to fly the planes because they are wary of displays of wealth that might be seen as taunting the government over the anti-corruption campaign, two of the sources said.

The did not respond to requests for comment. The said questions on the impact of the anti-corruption drive on the private jet industry were outside its mandate, adding that its relationship with private aviation covers operations, safety and regulations.

The crackdown's impact on the business community and private enterprise, which are already reeling from and weakened consumer confidence, has shattered investor confidence and contributed to a sense of uncertainty around the policies of Crown

The idle aircraft, which one of the sources estimated at up to about 70, include and Gulfstream jets, the sources said. There are also larger and aircraft that are more commonly associated with commercial airlines but are often used in the as private jets.

A 737 MAX or A320neo can cost up to $130 million, though the final cost depends on how the jet is fitted out with technology and amenities, including private bedrooms, meeting rooms, and even

The number of registered private jets in stood at 129 as of December 2018 compared with 136 a year earlier, according to FlightAscend Consultancy data.

Private jets offer users flexibility as, unlike commercial airliners, they are not constrained by arrival and departure time slots. They also enable users to travel more discreetly.

UNDER THE RADAR

Saudi Arabia's minister, Mohammed al-Jadaan, said last month the state had collected more than 50 billion riyals ($13.33 billion) from settlements reached under the

Most of the detainees held at Riyadh's in November 2017 were released after being exonerated or reaching financial settlements with the government, which said it aims to seize more than $100 billion in total in either cash or assets.

It is unclear how the government would transfer ownership of the jets grounded across as many are owned through offshore firms or are mortgaged, two of the sources familiar with the matter said.

Three of the sources said it was likely that the jets were still registered in the kingdom.

Two of the sources said the government could absorb the aircraft into existing fleets used by ministries and state-owned corporations. A third source said the government had been looking to set up its own private jet company made up entirely of seized aircraft.

The anti-corruption campaign launched by Mohammed has won widespread approval among ordinary Saudis, partly because the government has said it will use some of the funds to social benefits.

Critics have said the purge was a power play by the as he moved to consolidate power in his hands.

There have been few private jet flights in Saudi Arabia over the past year, largely because there are fewer planes readily available, including for charter, three of the sources familiar with the matter said.

compared it to the situation in where an anti-corruption crackdown has also weakened the private jet market.

"It's not really politically great to be seen flying privately at the moment, particularly owning your own aircraft," he told

Some wealthy Saudi elite are taking commercial airlines to the United Arab Emirates, and other destinations and then chartering private jets to avoid government scrutiny, two of the sources said.

Plane manufacturers said the appetite for business jet sales in Saudi Arabia has dropped since the anti-corruption crackdown was launched in November 2017.

"Political instability does not help consumer confidence in any way, shape or form," told

($1 = 3.7507 riyals)

(Additional reporting by Allison Lampert in Montreal; Editing by Saeed Azhar and Timothy Heritage)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 10 2019. 18:45 IST
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