Remember the crazy old days when there seemed to be no limit to Middle East carrier growth possibilities? It was completely insane. I mean, come on… Etihad effectively took over Alitalia and there’s nothing more insane than that. This madness may have fallen off, but the Saudis did not get the memo. Nay, they are ready to go ahead and build a new mega-airline. Why? I have no idea, but I’m going to take a swing at it anyway.
This newest airline will be called Riyadh Air, and it will be based in Jeddah. No it won’t. It would be crazy to call something Riyadh Air that’s not based in Riyadh, but then again, this whole thing is crazy, so I don’t blame you if you briefly considered the possibility.
The plan is for Riyadh Air to fly to over 100 destinations globally with at least 39 airplanes. I say “at least” because the first order from Boeing has been announced, and it includes a lot of options. We also don’t know how many more orders are coming, but they’ll need a lot more airplanes to get to that 100 global destination number.
Riyadh Air will be wholly-owned by the Saudi Public Investment Fund (PIF) which has more and more become Crown Prince Mohammad bin Salman’s (MBS) slush fund to diversify the Saudi economy away from oil. The press release says the plan will be this:
The new national carrier will leverage Saudi Arabia’s strategic geographic location between the three continents of Asia, Africa and Europe, enabling Riyadh to become a gateway to the world and a global destination for transportation, trade, and tourism.
Replace Riyadh with Dubai, Abu Dhabi, or Doha and you could use this to describe a whole bunch of airlines in that region.
The airline is not only recycling old ideas, but it’s recycling CEOs. Tony Douglas will take the helm at Riyadh Air. Tony’s primary background is on the airport side, but he did run the show at Etihad back in 2018 until late last year. The funny thing is that Tony was brought into Etihad to clean up the bloated, money-losing mess that James Hogan created (under the Emirate’s direction, to be fair). Now Tony is being asked to create his own bloated, money-losing mess.
But doesn’t Saudi Arabia already have a large airline? It sure does. That’s the airline that we’re once again calling Saudia these days. Saudia is a global airline…
And it’s a pretty big provider of domestic service as well…
In case it’s not clear, that point in the center of the country where a lot of the lines go? That’s Riyadh. In the month of May, Saudia will have 15,223 flights, of which 3,853 touch Riyadh. Yes, 4,220 touch Jeddah which is the airline’s home base, so Riyadh comes in second place. And let’s be honest, no self-respecting kingdom would have Riyadh served by a Jeddah-based airline. That’s just an outrage that desperately needed to be fixed.
Saudia has nearly 150 planes with orders to grow that by 50 percent. This includes a brand-spanking new order place this week for 39 Boeing 787s with options for 10 more. Bizarrely, this was a joint order in which Riyadh Air also ordered 39 Boeing 787s, but it has options for 33 more. So take that, Saudia.
If you’re confused by all of this, join the club. I’ve seen many people grasping at straws, trying to understand why this is happening. In all seriousness, here is my best guess.
Even though the PIF is supposed to be able to operate independently, it is truly a black box and the assumption is that MBS pulls the strings as he sees fit. And though Saudia is owned by the government, it is probably concerned more about fulfilling its mission of connecting domestic passengers and providing travel for Hajj and ʿUmrah. There’s probably too much actual mission there for it to fulfill MBS’s dreams of global hub domination, so he’ll just start over with a blank slate over which he can exert full control.
That may not be a great excuse, but it’s the best I have so far. And in case there was any doubt, Riyadh Air will be wildly successful. Oh sure, it will lose a ton of money, but like many airlines before, it will eventually bring millions of people into and through Saudi Arabia, feeding the country’s big ambitions. And then one day, the government will decide to shift is priorities, and Riyadh Air will become a burden. The only question is whether it will be big enough to stand on its own or if it will shrink to nothing when that time comes.
26 comments on “The New Saudi Mega-Airline Will be Wildly Successful… as Long as the Saudis Want it to Be”
Put down that crack pipe MBS. I thought I’ve herd crazy stuff in regards to the ME3, but this takes the oil drum.
Think the real interesting question here is how do you compete with an irrational competitor with unlimited funding?
EK QR EY especially but also MS RJ AI TK ET in the region competing for connecting flows.
Wonder how much the religious zealot reputation the Kingdom has will affect this venture.
No booze. Only male FAs. No practitioners of polytheistic religions. All Jews, Christians, and Zoroastrians must sit in the back and pay a 50% jizya tax on the cost of their ticket. All women must dress in hijab and veil which must remain on throughout the flight, and be accompanied by a spouse, parent, or guardian.
Yeah, sounds like a winner to me. Aloha snackbar.
Are they going to be a dry airline like Saudia? If so, I don’t see them becoming a big Middle East luxury carrier like Emirates, Qatar, etc…
If they were actually smart (which none of this seems to be) they would serve alcohol to provide a key differentiator from Saudia and be on par with the ME3. But no matter, this new carrier will be wildly successful, dry or not…
::eyeroll::
Saudia has some serious legacy hangovers cost-wise and operationally and an underwhelming service culture, so I can sort of appreciate not wanting to try to fix that if you have the money to just start over. But it is unclear how much this new venture can improve on those areas, especially if part of the goal is for this to be a domestic make-work program rather than hiring lots of chipper foreigners for most customer-facing roles as the ME3 have mostly done.
Right. Saudia’s terrible service culture is overwhelmingly due to its (male) Saudi citizen employees, who are notoriously surly and lazy. (Reports abound of male Saudia flight attendants simply lounging in business class rather than working during their assigned flights, leaving their foreign female colleagues to do all the actual work.)
This problem may be hard to overcome, even with a new business entity, if they plan to hire many locals. Public sector jobs in Saudi tend to be patronage positions, and ultimately Riyadh Air will still be a public sector entity.
Brett,
Are you able to see what kind of loads SV runs?
I would expect many of these routes are pretty empty, but I may be surprised.
Bravenav – No, I don’t have load info for Saudia. Could probably find it for its few US routes, but it’s not going to tell anything useful.
Who will fly them? Do they have a domestic supply of pilots to fill those seats? Saudi Arabia is a tough sell for expats, and this is very much not a good time to be competing to hire pilots.
> This newest airline will be called Riyadh Air, and it will be based in Jeddah. No it won’t. It would be crazy to call something Riyadh Air that’s not based in Riyadh, but then again, this whole thing is crazy, so I don’t blame you if you briefly considered the possibility.
<> Alaska: “Yes, that would truly be a ridiculous notion!” <>
Delta: “Indeed. Thank heaven people have long forgotten about the origin of my name.” <>
southwest has left the chat
Don’t forget how Cebu Pacific’s biggest base is actually Manila, or how Ryanair is biggest in Stansted despite being an Irish airline.
CF – I think you’re being ever so slightly harsh on RIA. When Dubai and the UAE pulled out of Gulf Air, people scoffed and laughed, but Emirates came good. I have no idea as to whether RIA will work or not…. but with a competent CEO, at least have an open mind on the possibility that some of RIA might turn out right
The problem you have is that there is a hell of a lot of competition now for the new entity. You’ve got Turkish air connecting over Istanbul, Qatar connecting over Doha, Emirates connecting over Dubai, and Ethihad connecting over Abu Dhabi. And that’s just the Middle East area, not counting the European aiirlines. This new entity needs to have EVERYTHING go right to make a profit. The odds are not in their favor.
I think it was Abu Dhabi that was part of Gulf Air, Emirates had always been its own thing. It’s why Etihad exists now, because Abu Dhabi pulled out.
I’m surprised to learn that only 53% of Saudia flights touch Jedda or Riyadh. Sure, there’s some point-to-point domestic, but the network appears to be concentrated on Jeddah and Riyadh. Internationally too, these are the main gateways. Where do the other 47% of flights go?
Ron – You know, those numbers from Jeddah and Riyadh need to be doubled.
It shows departures only, not arrivals. These are the flights in May that don’t touch those two hubs.
SHW AHB 9 TIF AHB 8 MED CAI 32 MED CGK 13 NUM DMM 5 TIF GIZ 9 MED IST 31 MED KUL 12 NUM LHR 5 CAI MED 31 CGK MED 13 IST MED 31 KUL MED 12 DMM NUM 4 LHR NUM 4 AHB SHW 9 TIF SHW 9 AHB TIF 8 GIZ TIF 9 SHW TIF 9
This makes much more sense. So Saudiya flights that don’t touch Jeddah or Riyadh fall into three categories:
– Domestic point-to-point (all sub-daily)
– International to Medina (daily round-trips to Cairo and Istanbul, sub-daily to Kuala Lumpur).
– Weekly London—Neom—Dammam and back.
The last one is really weird. I could understand London—Dammam, because Dammam has many destinations on foreign carriers (though not London, surprisingly). But Neom?!
And you didn’t even mention Neom Airlines, the THIRD full service carrier being launched by PIF… https://www.ch-aviation.com/portal/news/125606-saudi-arabias-neom-airlines-to-launch-by-1q25
I always thought there was a missed opportunity in that part of the world. Long before Emirates, Etihad and Qatar appeared on the scene, we had Egyptair, Saudia, MEA, Kuwait Airways, Royal Jordanian, El Al, Gulf Air… who could have developed a major hub to take you from anywhere to anywhere just like the new boys do. But didn’t.
Remove El Al from the list. Until recently, it couldn’t overfly most of its Arab neighbors’ airspace, which would have nixed any global hub ambitions. Plus its extreme security protocols would also hamper that aspiration.
Good point. Not thinking!
The 20+ years ago before the big three became significant, aircraft didn’t really have the range to operate super long flights. You could get anywhere in Asia, Africa, or Europe, but Australia, South America, and most of North America was out of reach for nonstop flights. There probably was potential for more of a hub, but if you had to connect multiple times anyway for many destinations there were other decent options for that.
I don’t know if this is the case for Saudia’s other destinations, but it may be worth noting that at least to Southeast Asia a lot of its traffic is actually migrant workers who are traveling to Saudi Arabia. I know that the Philippines and Indonesia have many people who live and work in the country, so that’s a lot of their traffic already. To be fair, Indonesia and Malaysia are also deeply Muslim nations, so maybe you’re also right about the pilgrim market thing.