New Saudi carrier to create a new aviation hub

A new airline, Riyadh Air, will soon take off to realise Saudi Arabia’s Vision 2030, it was announced by the Public Investment Fund, Saudi Arabia’s Sovereign Wealth Fund which is injecting US$100 billion in the Kingdom’s aviation and tourism industry that will help diversify the country’s economy and reduce its dependence on hydrocarbon.

Riyadh Air will create a new passenger hub in the Kingdom’s capital city and together with the Jeddah-based national flag carrier Saudia – these two airlines will create two large aviation hubs that will help bring millions of tourists to the largest Arab economy that is injecting billions of dollars to develop its infrastructure and tourism industry.

Public Investment Fund (PIF) named Yasir Al-Rumayyan, Governor of PIF, as the airline’s Chairman and Tony Douglas, former CEO of Etihad Airways, as the CEO of Riyadh Air. Tony Douglas left Etihad Airways in October last year, after bringing the Abu Dhabi-based UAE flag carrier into profitability through a transformation programme that saw the loss-making carrier navigate through the Covid-19 pandemic and also become profitable.

The airline will be based in Riyadh – the capital city of the Kingdom – which is currently the focus of a massive infrastructure development. PIF recently launched a large master-planned mixed-use township in Riyadh that will expand the city limit to accommodate a larger population.

Riyadh Air is expected to play a catalyst’s role in boosting air traffic in and out of the Saudi capital city that will become a major transit point for international travellers criss-crossing the world through Riyadh Air – the same way Emirates Airline, Etihad Airways and Qatar Airways serve Dubai, Abu Dhabi and Qatar respectively and contribute to the economies where the airlines are based.

“Operating from Riyadh as its hub, the airline will usher in a new era for the travel and aviation industry globally. Riyadh Air will be a world-class airline, adopting the global best sustainability and safety standards across its advanced fleet of aircraft equipped with the latest cutting-edge technology. The airline is expected to add US$20 billion to non-oil GDP growth, and create more than 200,000 direct and indirect jobs,” a PIF statement said.

“As a wholly owned PIF subsidiary, the new national airline is set to benefit from PIF’s investment expertise and financial capabilities while expanding on the company’s operations to become a leading national carrier. The new national airline represents PIF’s latest investment in the sector, along with the recently announced King Salman International Airport masterplan.”

Riyadh Air aims to enhance customers’ journey while connecting them to over 100 destinations around the world by 2030; through offering an exceptional experience with an authentic Saudi hospitality at its heart, the statement said.

“The airline will provide tourists from around the world the opportunity to visit Saudi Arabia’s cultural and natural attractions. Riyadh Air will also serve as a catalyst for the Saudi National Transport and Logistics Strategy and the National Tourism Strategy by increasing air transport options, raising cargo capacity and, in turn, growing international passenger traffic,” PIF said in its statement

The establishment of Riyadh Air is part of PIF’s strategy to unlock the capabilities of promising sectors that can help drive the diversification of the local economy. It will enable a more financially resilient aviation ecosystem in Saudi Arabia, supporting the industry’s global competitiveness in line with Vision 2030.

It is however, unclear what would be its relationship with Saudi Arabian Airlines, popularly known as Saudia – the Kingdom’s national carrier – which uses Jeddah as its main hub. Flynas, the low-cost airline partly owned by Prince Alwaleed bin Talal bin Abdulaziz’s Kingdom Holding, uses Riyadh as its hub.

Riyadh Air will reinforce Riyadh’s position as the most popular and most visited city in Saudi Arabia – once it expands it operation to destinations across the world. However, it is expected to accelerate passenger traffic to Saudi Arabia and create a healthy competition in the market.

Air transport market in Saudi Arabia is forecast under the “current trends” scenario to grow by 126 percent in the next 20 years, according to International Air Transport Association (IATA).

“This would result in an additional 54.8 million passenger journeys by 2037. If met, this increased demand would support approximately US$82.3 billion of GDP and almost 1.2 million jobs,” IATA said in a research report on Saudi Arabia.

“The air transport industry, including airlines and its supply chain, are estimated to support US$20.2 billion of GDP in Saudi Arabia. Spending by foreign tourists supports a further US$16.2 billion of the country’s GDP, totaling to US$36.5 billion. In total, 5.6 percent of the country’s GDP is supported by inputs to the air transport sector and foreign tourists arriving by air.”

Riyadh Air is part of the Saudi Government’s economic diversification plan that will see tourism industry creates additional wealth for the Kingdom.