Is Riyadh Air A Bet On Modernity For Saudi Arabia And The Mideast?

When Riyadh Air was first announced, I was very skeptical of a brand new airline in the Gulf. It would compete for low yield connecting traffic with Emirates, Qatar, and Etihad. And the Saudi Arabian government already had a global airline with a hub in Riyadh – and Jeddah – in Saudi. Why give it competition?

They went out and hired Tony Douglas from Etihad as CEO. Douglas of all people has the experience to know what they’re getting into. Etihad brought him in to stop the bleeding that came from competing as a global airline with a hub 75 minutes from Emirates in Dubai.

I’ve written that their strategy confuses me, but to be honest it doesn’t confuse me anymore. They know full and well that the airline is likely to lose money on its own. They have a CEO with direct experience in managing that! But for Saudi Arabia it’s a loss leader, an investment in their country’s future. Is it a wise play?

So far they’ve ordered 39 Boeing 787-9 aircraft, with options for 33 more. There’s an expectation of a large narrowbody aircraft ordering coming. And the airline is slated to launch in 2025.

CEO Douglas gave an interview to the Financial Times where he makes clear,

  • Riyadh Air will focus on point-to-point traffic, not low yield connecting passengers

  • Saudia will remain the carrier for “the millions of religious pilgrims who visit Islam’s holiest sites in the kingdom” who generate low yields.

  • Riyadh Air in contrast will be a super premium airline with “absolutely obsessional attention to detail” on board, with the airline representing the brand for the country, “For many international guests in the future, the first impression they’ll get is at 38,000 feet with Riyadh Air.”

Riyadh Air is about modernizing Saudi Arabia. There’s been a strong expectation that Riyadh Air will be allowed to serve alcohol, creating a need for a separate brand and airline (Saudia) which does not. Domestic politics drives the need both for the airline and for retaining the existing one.

Emirates helped put Dubai on the map, but Riyadh Air could be a piece of something much more substantial. Saudi Arabia is at an inflection point, still hanging on both to consequences of absolute rule that many in West find troubling and also to a religious conservatism that shuns the West, while also pointing towards liberalization (woman can drive!) and economic growth. Here is what’s at stake,

MBS is gambling that the fruits of openness and modernity can be reaped on Saudi terms, and that prosperity, stability, and a recharged, secularized sense of national purpose won’t shatter existing norms or generate dangerous civic appetites. The reforms have created a rising class of ambitious executives, entrepreneurs, and artists, and for now almost everyone seems to accept the idea of a national horizon defined by the wisdom and vision of a single family, and perhaps even a single man. His program has created an atmosphere muggy with floating potential, as the palace carries out an uncertain experiment on tens of millions of people. MBS’s subjects could be the engine and the beneficiaries of the only successful 21st-century governance project in any populous Middle Eastern state—or they could mark the disastrous limits of utopia declared from on high.

And what about the nation’s public investment fund investing $38 billion in online gaming?

If the bet is that a drive towards modernity requires a modern airline, then the investment in Riyadh Air is actually small relative to the total effort. And if the country is to manage that drive, they may need to keep certain trappings of the old order for a period of time.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Until there is a major change government policies I would not fly through Saudi Arabia. I would not want to have a flight delsy that requires a hotel stay. There is no benefit…

  2. MBS killed Jamel Khashoggi. He got caught. The only way to get the Americans back on his side was to bribe them by buying Boeing aircraft. That seems pretty straightforward to me.

  3. Will it fly higher than Jeddah Tower, previously known as Kingdom Tower? Seems a risky business venture. It seems more like a specialty airline, or a boutique airline; and not really a worthy ME3 competitor. I’m curious what will fly.

  4. @ Tony & Joseph: What about LIV bought out PGA ?Green God reigns supreme.

    Saudi Arabia only has oil revenue on its side. But only human resources dictate the country’s destiny, wealth and strength. Saudi now strengthens its diplomatic relations with Russia to lessen its dependence on the US. I cannot see how it will be successful on its pursuit to surpass Qatar & UAE.

  5. Saudi is what I term a ‘frienemy’. I personally disdain much that they’ve done; and it’s beyond murder of the Washington Post columnist. Unofficially there’s plenty to link them to financing most of the hijacker pilot training etc. tied to 9-11. Recently they acquiesced to getting friendlier with Iran; even though never responding to the drone attack on their refinery storage. Now they are invited to join the BRICKS group, which obviously envisions closer ties to China. Yes India is too; but generally a bit more transparent. Riyadh simply can’t be trusted; although I suspect they’ll make a deal with Israel, beyond the so-far safe overflights by Israeli jets (really helps in flights to Asia). Anyway there’s nothing trustworthy about dealing with SA.

  6. @globetrotter I agree with your analysis completely. I don’t think this will be successful either (I’d take the “under” on the bet described in Gary’s post) but I think it is indeed the play they’re trying to make.

  7. Saudis will consider it a success if the competition just reduces profitability of UAE and Qatari airlines. They probably feel slighted by their attention, and this is payback.

  8. If they wanted to position themselves as more open and modern, they could have played this as JeddahAir, which used to be (relatively speaking given this is about Saudi Arabia) the most progressive, modern and outward-looking of Saudi cities before Riyadh increasingly grabbed power and marginalized others within.

    The Saudi ruling establishment of the insanely large royal family and its royal tools are no less committed to authoritarianism and backward thinking than they used to be, but they want a rehabilitated image to be able to access their favorite global playgrounds more easily in the future than already.

    Much the same can be said for the double-dealing, backstabbing Emiratis. No surprise that they both are increasingly in bed with Netanyahu, Modi and China and make friendly with Putin while at it. A real den of rascals we are dealing with in from SW Asia to South Asia to East Asia.

  9. OK, early on a Monday morning, feeling slow, spell this out for me – when I read “Riyadh Air will focus on point-to-point traffic, not low yield connecting passengers”, is that to be interpreted as them saying they believe the money is in O&D from Riyadh, or that they’re taking a strategy heavily focused on 5th freedom flights?

  10. Saudi Arabia is definitely positioning itself for substantial growth in western tourism, and establishing an airline with a different image from Saudia with its focus on Muslim pilgrims and worker transfers makes sense. Sure it’s a despotic state with some awful social and political policies. It’s perfectly valid if people want to decline to go there for that reason. But I question singling out that country in a world with a plethora of dictatorships. It’s a country which is certainly changing in some ways and should be encouraged to pursue such change, as should the other Gulf states. Go to the Visit Saudi website and you’ll see pictures of tourists in western clothing, no head scarves in sight. Granted it is not revealing western clothing, but again there are dozens of countries where you wouldn’t wear revealing western clothing.

  11. My BIL and his GF went to KSA in January this year and said they had a fantastic time there. I was frankly shocked to hear him say this, but it has me intrigued. The only place his GF covered her hair was in Medina, but they thoroughly enjoyed Jeddah and AlUla. So ymmv?

  12. DaveS,

    I will continue to single out Saudi Arabia. It’s had a tremendously corrosive effect across Muslim-majority countries as a whole by undermining democratic aspirations in Muslim-majority countries and in brainwashing too many Muslims into thinking the Saudi Wahhabism is the “true Islam” and throwing money and playing all sorts of dirty games to undermine traditional Muslim structures and practices that were more locally based before Saudi Arabia became a major player across so much of “the Muslim world” in a way that it just wasn’t in the 1970s until Carter and Reagan jumped on board fighting the “Godless Soviets” with a holy war mentality that counted not on spiritual jihadis but on violent jihadis. Once the Saudis created that magic genie and fostered it with mounds of money and other measures, it has become impossible to put it back into the bottle and seal it.

    A pox on the House of Saud (as a ruling establishment) is what I say.

  13. A well written article.
    What is disturbing though is the amount of hatred and ignorance shown in the comments by some.
    I live in Saudi. During my 63 years of living across many continents, I have not seen any country with such positive energy, and a young population of believers in a bright future driven by a clear vision.
    Kudos to Saudi Arabia.

  14. Strange the symbol of modernity is booze.

    @ all of you who are pure of heart: Joe ran on making Saudi a “pariah.” has not worked out.

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