Saudi Arabia has launched the kingdom’s new “global airline” — Riyadh Air, a state start-up owned entirely by the nation’s sovereign wealth fund to compete directly from its Riyadh hub with neighbouring airline giants Emirates, Qatar Airways, and Turkish Airlines.
The kingdom is actively upgrading its aviation infrastructure as part of a broader strategy to diversify its economy and move towards its vision of becoming a global aviation transit point, targeting passengers flying between East and West, while encouraging stopovers to experience the fast-growing tourism sector of Saudi Arabia.
Riyadh Air, which will be based in the capital, aims to fly to 100 destinations by 2030, and the government announcement stated the carrier “will be a world-class airline, adopting the global best sustainability and safety standards.”
The airline is wholly-owned by the Public Investment Fund (PIF), which has more than $600bn in assets and is the main driver of the kingdom’s efforts to diversify its economy and wean itself off oil.
In its attempt to go on to replicate, and then build on the successes of its established Gulf hub airline neighbours, the new Saudi airline enters an increasingly crowded and competitive market – albeit much later than their regional neighbours. Going head-to-head in the battle for international transit passengers, Riyadh Air will face Emirates of Dubai, along with Qatar Airways of Doha, Turkish Airlines of Istanbul, Etihad Airways of Abu Dhabi, and other carriers in the region focused on flying passengers around the world via their respective Middle East hubs.
Over the last 20 years Middle Eastern airlines have leveraged their geographic positions as a gateway between Europe, Asia, and Africa. 80% of the world's population is within a 7-hour flight from Qatar and the United Arab Emirates, and brief layovers in the Gulf are common for many long-haul travellers. Riyadh Air is hoping to take a slice of the transit market by attracting passengers from competitor airlines with new aircraft, premium cabins, Saudi hospitality, and an aggressive tourism campaign to encourage stopovers in the kingdom.
The carrier will also face competition from established major airlines already luring passengers away from the traditional stopover concept by offering ultra-long haul, nonstop flights with new comfortable cabins, such as Australia’s Qantas, and Singapore Airlines.
Just last month, commercial aviation history was made when Air India announced the largest airline jet order in history, an agreement to buy 470 jets from both manufacturing rivals Airbus and Boeing, betting on a rapid expansion of global air travel, and positioning itself to offer the millions of passengers currently flying to/from India via the Gulf, a new aircraft experience, nonstop alternative.
In Saudi Arabia, Riyadh Air will operate alongside the existing state-owned national airline Saudia and will not replace it, the kingdom confirmed. It’s unclear if the two will go on to overlap each other in international markets, or if Riyadh Air will eventually go on to replace routes currently operated by Saudia.
Tony Douglas, who recently resigned from UAE’s national airline Etihad Airways, has been appointed CEO of Riyadh Air, and promised “the new airline reflects the ambitious vision of Saudi Arabia to be at the core of shaping the future of global air travel and be a true disrupter in terms of guest experience. Riyadh Air’s commitment to its guests will see the integration of digital innovation and authentic Saudi hospitality to deliver a seamless travel experience.”
Yasir al-Rumayyan, the governor of PIF, will be Riyadh Air's board chairman, and Peter Bellew, the ex-chief operating officer at Ryanair and easyJet, has been appointed into the same role at the Saudi airline. Bellew was most recently the chief operating officer at easyJet before suddenly quitting amid immense operational disruption and strike action in July 2022.
Following Riyadh Air’s launch announcement, the carrier’s leadership confirmed its first commercial airline jet order agreement, a purchase of 39 Boeing 787-9s long haul jets, with options for an additional 33 787-9s. The order was in addition to 49 Boeing 787s designated for Saudia. Boeing did not disclose a timeline for deliveries of the aircraft, but it’s expected the new jets will begin to be delivered in early 2025.
The White House said the order is worth almost $37bn, although that figure does not take discounts that airlines typically receive, especially for large aircraft orders, into account. Saudi Arabia’s ambassador to US, Reema bint Bandar al-Saud, described the new Riyadh Air Boeing order as “another step towards our vision of becoming a global transportation hub”.
As is becoming increasingly common with state-owned airline aircraft deals, America thanked Saudi Arabia at a state-to-state level for the choice by Saudi to “buy American” with the new jetliner deal. US Secretary of Commerce Gina Raimondo said, “I want to congratulate Boeing and the Kingdom of Saudi Arabia on finalising one of the largest commercial agreements in the history of the US-Saudi partnership. The announcement will deliver world-class passenger aircraft to the Kingdom of Saudi Arabia and power economic growth and job creation in both countries”.
She added “This is a clear win for American manufacturers and workers, supporting more than 140,000 jobs at over 300 Boeing suppliers across 38 states. Moreover, the Kingdom of Saudi Arabia has selected GE Aerospace’s GEnx engine to power the aircraft, providing billions more in US exports and supporting good-paying American jobs”. Under President Biden, America is experiencing a manufacturing renaissance, and agreements like the one announced today underscore the strength of America’s private sector, workers, and technology in the competitive global landscape.
While Boeing’s CEO Dave Calhoun stated “Boeing won this one”; Tony Douglas, CEO of Riyadh Air confirmed this week that there will be more aircraft orders on the way. Six months ago, Saudi Arabia was in advanced negotiations to order almost 40 A350 jets from Airbus, a deal that could still be in the works.
The author is an aviation analyst. Twitter handle: @AlexInAir
New Saudi global airline Riyadh Air to face Gulf neighbours in battle for transit passengers