The General Authority of Civil Aviation (GACA) will issue an international tender in May 2010 to develop Saudi Arabia's first privately owned airport.
The airport, which will be built next to the existing Prince Mohammad Bin Abdul Aziz Airport in Madinah, is expected to cost between SR7bn ($1.9bn) and SR8bn ($2.13bn).
The project is expected to be completed in two phases by 2014 and will eventually have a capacity of eight million passengers per year, according to arabnews.com.
The final contract for the airport will be awarded by the end of the year or the beginning of 2011, with work on the airport expected to begin a year later.
The old airport will be demolished once the new facilities are functioning.