RIYADH, May 21 (Reuters) - Saudi Arabia has begun

courting Archer Aviation ( ACHR ), following the electric air

taxi company's announcement of a partnership with economic and

regional rival, the United Arab Emirates.

The competition between the countries to become the top hub

in the region is leading to big spending, benefiting new

companies like Archers.

Last month, Archer signed a pact with the Abu Dhabi

Investment Office for multi-million dollar investments to speed

up planned commercial air taxi operations in the UAE.

"Since we made our first several announcements in the UAE

that has piqued interest" across the region and especially in

Saudi Arabia, said Nikhil Goel, chief commercial officer for

Archer.

Now, Goel said Archer was in talks with Saudi on potential

partnerships in Riyadh, Jeddah, and some of its multi-billion

dollar projects in the kingdom.

Archer Aviation ( ACHR ), backed by the likes of Chrysler-parent

Stellantis (STLAM.MI), Boeing (BA.N), and United Airlines

(UAL.O), is developing electric vertical takeoff and landing

(eVTOL) aircraft that have been touted as the future of urban

air mobility.

The oil-rich region's deep pockets make it a promising

frontier for the eVTOL industry which must also overcome

certification hurdles to ensure its future.

As part of its plan to wean itself off oil, Riyadh is

pouring billions into its aviation industry to become a regional

hub. It announced an order for 105 Airbus narrow-body aircraft

on Tuesday, launched new airline Riyadh Air last year, and

announced a massive six-runway airport in 2022.

Long-time aviation center Dubai has announced its own big

orders and has plans to boost Dubai International Airport's

capacity to 120 million passengers a year by 2026, up from 100

million today.

The competition is creating an aviation boom that Goel

believes will benefit new companies like Archers.

The eVTOL industry is growing fast and promises to redefine

urban transport. But analysts and industry leaders say only a

fraction of the 200 or more startups is expected to survive the

competition.

The United States' Federal Aviation Administration (FAA),

gave Archer the green light for flight testing of its

demonstrator aircraft 'Maker' in 2021.

But certification deadlines for eVTOL makers keep getting

readjusted, underscoring the challenges that need to be

addressed in the nascent sector.

The Gulf offers the possibility of a quick launch, although

Goel said all safety requirements would be rigorously respected.

NEOM, the kingdom's flagship giga project, has already

launched a joint venture with eVTOL company Volocopter in 2021

and invested $175 million in the company in 2022.