‘Super aggressive’ Riyadh Air to focus expansion on Saudi market

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Saudi Arabia’s newest airline, Riyadh Air, plans to focus on the niche market for flights to and from the kingdom rather than competing with its Gulf neighbours’ vast hubs, its chief executive has said, in an explanation of its “super aggressive” growth plans.

Tony Douglas was speaking after the airline in March announced its first aircraft order, for at least 39 Boeing 787 wide-body jets, with options for 33 more. Riyadh Air is also in talks with manufacturers for a fleet of narrow-body jets, which Douglas said should allow Riyadh Air to serve more than 100 destinations by the end of the decade.

However, Douglas, a former chief executive of Abu Dhabi’s Etihad airline, said Riyadh Air would not use the aircraft to take on directly Qatar Airways or Dubai’s Emirates, the region’s top two carriers. Both airlines, as well as Etihad, have grown by offering connecting flights through their huge home airports to and from destinations in other parts of the world.

Douglas said Riyadh Air would instead focus on carrying passengers going to and from Saudi Arabia, which has been wooing tourists and investors.

“If we look at our closest neighbour, Qatar, obviously Qatar Airways have got an incredible international network, global reach, and a population of give or take 2mn people,” he said.

Qatar’s population was “relatively small” and Qatar Airways did a “brilliant job” of offering its home country “world-class connectivity”, Douglas added.

But he said: “A very substantial percentage of that traffic is transfer. Very little of it proportionally is point-to-point.”

Riyadh Air is owned by Saudi Arabia’s PIF sovereign wealth fund. However, the airline’s creation has led to questions about whether the kingdom needs another carrier alongside Saudia, the existing flag-carrier, and the budget airline Flynas.

The $650bn PIF, which is chaired by day-to-day ruler Crown Prince Mohammed bin Salman, has taken on an outsized role in the economy, with involvement in everything from video gaming to tourism, sports, electric vehicle manufacturing, camel milk production and nicotine vapes.

Douglas accepted that the airline’s plans were “super aggressive”. But he insisted it would be a commercially viable company and that there was an abundance of demand for the new airline.

“The demand for its citizens to have better connectivity around the globe is obviously growing,” he said of Saudi Arabia, adding that more tourists and visitors were expected to come to the kingdom.

Saudia is expected to shift towards catering to the millions of religious pilgrims who visit Islam’s holiest sites in the kingdom.

Douglas insisted Riyadh Air would offer “absolutely obsessional attention to detail” about the “guest experience” on board.

“For many international guests in the future, the first impression they’ll get is at 38,000 feet with Riyadh Air,” he said of the airline’s importance to Saudi Arabia.

Douglas did not address the issue about alcoholic drinks but officials insist Saudi Arabia can attract tourists despite the country’s religious conservatism, and its strict ban on alcohol. There has been some speculation about a move to permit beverages in tourist areas and Saudi’s new business district, although plans have yet to materialise.

The airline is meant to receive its first 11 jets from Boeing in 2025 and more incrementally as they come off the assembly line.

Douglas said recent supply chain shortages in the aerospace industry after the Covid pandemic were worrying. The sector has struggled to cater to the rapid rebound in demand for air travel following a severe fall in passenger numbers during coronavirus lockdowns.

Resurgent demand has been particularly strong in the Middle East. According to an Oliver Wyman forecast, fleets in the region are expected to grow by 5 per cent annually over the next decade.

“Seats, airframes, engines . . . the supply chain for the last three, four years internationally has been challenged at the extreme,” Douglas said.

Douglas said he hoped the problems could be resolved as Riyadh Air built its fleet but said the airline was keeping a careful eye on the aerospace industry. “I can see everybody put a huge amount of effort into skills development, recruitment, and retention right now,” he said.