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.
We are delighted to unveil the first of two #RiyadhAir livery designs, a perfect blend of cutting-edge technology and timeless elegance.
— Riyadh Air (@RiyadhAir) June 4, 2023
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.