Saudi Arabia is starting a new, second national airline with plans to compete – and beat – Emirates. They are going to invest $30 billion in the effort.
It’s likely to be called RIA and will be based out of Riyadh. National carrier Saudia already hubs at both Riyadh and Jeddah.
“We are talking about a brand-new airline that aims to do what Emirates did in a quarter of the timescale. It’s unprecedented in the history of aviation. It’s also why they have yet to appoint a CEO – whoever takes this job will have to deliver the most ambitious targets you can imagine,” the source said.
It is understood that “RIA” has been submitted to the PIF as a preferred option, though the final decision is likely to be made by Crown Prince Mohamed Bin Salman.
Riyadh Airport
Saudi Arabia currently sees 4 million transit passengers per year. Their goal with this effort is 30 million transit passengers by 2030 by operating 150 routes globally, about the scale of Emirates. They’ll be targeting primarily transit passengers from Asia and Africa to connect to onward destinations through Riyadh.
- Their focus is on transit passengers. This does very little to promote Saudi tourism, or benefit Saudi Arabia in any discernable way. Visas are easier than they used to be, but still costs $117 and involves a… process, and not everyone can get one. And applying involves agreeing to the country’s public decorum rules.
- The continued challenge in getting a visa to visit Saudi Arabia makes this whole plan foolhardy. Who wants to transit a place they cannot enter, if their flight is delayed or cancelled and they’re forced to spend the night?
- Since the easier-to-enter U.A.E. already has a much better reputation, this new airline either needs to compete aggressively on cost or service. That means they need to be either cheaper or better than Emirates (and Qatar).
- Which also means that they are going to lose a lot of money. Once again, for transit passengers who for the most part won’t even enter the country.
- They’re not even using the existing Saudia to do it. Maybe Saudia doesn’t have the brand or reputation they want, but then why not just rebrand with a huge launch? Why cannibalize existing business, rather than using the infrastructure like route authorities that they’ve already obtained?
Wanting to put the country ‘on the map’ and open up to the world, shift away from a reliance solely on oil and build into other industries, and looking at models like what Emirates has helped to do for Dubai makes a certain amount of sense.
However it’s a money sinkhole – just ask Etihad. But even lighting $30 billion on fire, they aren’t going to get themselves very much. Transit passengers may help fill aircraft, and introduce a destination to more people who could stopover and visit enroute. But not if the country remains inward looking and closed off.
If they have this vision then they need to further loosen entry restrictions and welcome people to come as they are. The U.A.E. and Qatar have their laws, and they’re even enforced to some degree, but still allow Westerners to co-exist rather than assimilate. The Maldives even allows alcohol at resorts which are otherwise ‘uninhabited’.
At the end of the day Emirates already exists. Qatar can try to match, and lose money in the process. Saudi Arabia bankrolling another Gulf competitor means competing on service or price, and losing money either way, but without other changes inside the country it’s a path that doesn’t even have upside. If they succeed and shuttling traffic through Riyadh they’re only marginally better off at best.
Why would anyone want to fly through Saudia Arbia instead of Dubai? You don’t need a visa to enter Dubai, it is a good place to stop for one or two days, and then continue on to wherever you are flying. If in fact this does come to be, it will be interesting to see how much the Saudia government want to lose in order to get people to fly their airline?
I already have a advertising slogan for them – “RIA – a flight to dismember”.
Saudi regime won’t get my money.
This is a solution to the classic Petrodollar problem: where to put all the dollars while retaining Royal control with most of the assets mobile and ready to fly away to be liquidated if necessary. Some amount of losses are acceptable. I think few people realize how close Emirates has been to folding on several occasions were it not bailed out by Abu Dhabi . . . the amount of losses they can sustain isn’t limitless (but Saudi Arabia’s almost is).
You want find me in Saudi Arabia … until that place starts treating humans like humans no should step foot in there.
We can stop posting now. @Ron has won the thread.
I, too, won’t be spending money on RIA, Saudia, or anything else connected to Saudi Arabia. Add to that, I’m Jewish, and this is a closed subject.
(FWIW, I have flown EK several times, and enjoyed each flight.)
This is what happens when you have too much money: you buy Twitter and creating needless airlines.
Don’t hold back Gary!
Nothing strange here … after all they gave all that money to Kushner “to invest”.
Welp, I’ll take a little bit of a different angle. I view this as a simple segmentation play – targeting passengers who are culturally aligned with Saudi Arabia but whose countries do not have strong national airlines. From an outside-in, market-sizing perspective the projected passenger volumes are not necessarily unobtainable. Think Indonesia, Pakistan, India, Nigeria, etc. – look at the current and estimated future populations of those countries and relevant segments within.
If RIA becomes the global transit airline and Saudia (with a more inherently domestic branding vis a vis the name) becomes the O&D airline, I don’t see that as necessarily cannibalizing a lot of existing volume, and of course there could be revenue / code sharing, joint loyalty programs, etc. Given the ability of the parties involved to resource this and the size of the addressable market, I’m not writing this off as quickly as Gary is. Just because you or I won’t be chomping at the bit to fly this doesn’t make it “insane” – it’s a big world out there.
Insane? Dont you mean, perhaps, overly ambitious? Why the negative connotation of “insane”? If they want to spend 30 billion to compete with Emirates/Qatar for a transit passengers how is this bad, let alone insane, for the average transit passenger?
The Saudi Terrorist Organization will never see any of my money.
Women do not have any rights under the crown prince dictator.
Can see the CEO if fails to get this airline to beat Emirates will be sent straight to chop chop square or something like Khashoggi
I’m not sure why everyone here can’t see this new airline (if it happens) for exactly what it is: a massive transfer of weath out of Saudi Arabia to the rest of the world.
– An airline of this size will place orders for tens of billions of dollars worth of aircraft; the US and Europe produce the world’s only large western commercial aircraft. Airbus and Boeing will benefit handsomely.
– Saudi Arabia might have some citizens that can staff this airline but the majority of employees, just as for Emirates, will come from outside the country andmany of those employees will send their money back home
– the airports and facilities that need to be built will be done largely by S. Asians, the people that build the Middle East. The reason why Emirates got started in the first place was to shuttle S. Asians to the UAE to build it. Millions of families in S. Asia will be better off because of Saudi Arabia’s investment.
Does this add enormous competition to the Middle East airline scene? Absolutely but it isn’t just about Emirates. It is also about Etihad, Qatar and Turkish – all of whom are vying for a huge piece of the connecting traffic that can potentially flow over the Middle East.
European airlines made the mistake of not taking on the ME3 when they had the opportunity; the restart of travel post-covid provides yet another opportunity for legacy global carriers to ensure that ME3 carriers do not return to their previous strength.
Add in the internal competition among the ME4 (including Turkish) and western airlines have a good chance of cutting Saudi Arabia’s airline dreams off at the feet – but let them spend tens of billions of dollars to the west’s benefit while trying.
Oh Ron you slay me!
Perhaps its a play against Qatar. Saudi hates Qatar, so trying to wreck the economics of QR (the pride and joy of Doha) is a credible idea.
I will leave people to their own moral judgments as to whether they wish to fly this airline, but Gary’s point that they need to compete aggressively on cost and/or service means that passengers may benefit from the new player in the market, even if they don’t fly it, as the incumbent carriers react. I do think further loosening of visa requirements is likely. Remember that up to a couple of years ago it was almost impossible for western tourists (as opposed to business visitors) to get in. Now it’s not.
@SMR
How do they not treat people like humans?
Etihad should channel Wallace Shawn in Vegas Vacation by approaching RIA, offering RIA to take half of the 30 billion in exchange for kicking them in the nuts, and the Saudi government still gets to keep half their money. Win/win.
The new airline would likely ban alcohol onboard like Saudia. The added competition would be great for fares. I bet this venture never gets off the ground, as it were.
Love Ron’s comment!
It could be kind of nice for all the LIV golfers to fly without having to pay extra to check their clubs.
Unrelated to this story… Where did your posts go that leaked the rumored Marriott Bonvoy cards due at this end of this month? …specifically the Bonvoy Bevy Amex card and the Bonvoy Bountiful cards? They do not appear to be on your site anymore. I was hoping to see some updated comments.
@Chris is correct — this move is, at worst, overly ambitious. If they do develop an airline to compete with Emirates it will obviously serve alcohol and, most likely, they’ll change the entry requirements, creating Maldive- (or Emirati-, for that matter) like zones of relative freedom to attract tourists.
The Emirates have had spectacular success using this model. Their human rights record when they got started wasn’t that much better than Saudi Arabia’s (still isn’t for the most part). The Maldives is not too dissimilar.
The need to maintain the existing Saudia as a means of transporting people the Haj makes it logical to operate this business under a different brand.
Will it succeed? Who can say? Any endeavor of this scope has got to have the odds against it — but with the odds on one side and $30 billion on the other, I can see it going either way.
More competition is good for the passenger, no?
If threaten journalists and travel bloggers with being sawed into pieces, they might be able to get better reviews that Emirates without better prices or service.
I can’t wait to see the inflight wine list!
There are literally billions of people(and growing) in Asia/India/ME/Africa that will use this airline especially if its heavily subsidized discounted pricing.
Clearly they are not targeting this at the very tiny and mostly irrelevant in the world of aviation US market.
@ Bob, are you sure? There are also tens of millions in North America who originate from those parts of the world, have disposable income, and travel home readily for holidays, family marriages and funerals, etc. While North America won’t be the primary focus, the airline will need to run competitive routes to U.S. and Canadian cities with large concentrations of people from those regions if they really want to compete globally with the others.
I’ve long found your comments about the Etihad and Emirates, and now this proposed Saudi airline to grossly misunderstand the dynamics of that part of the world. Without going into detail — and although I have decent knowledge I wouldn’t hold myself out as an expert, I will predict that (1) lots of people, although probably not Americans, will fly this airline, even if they have no connection to Saudi Arabia, and (2) the Saudis will consider this a successful venture even if the airline loses money (which, as you point out, is likely). On the latter point, I don’t recall that you’ve ever acknowledged how significant Etihad is to the Abu Dhabi economy even though the airline loses money.
@Ian – we agree that people will fly the airline! They will fly it because it will be priced cheap, which will be necessary to fill planes. But connecting passengers just aren’t going to be significant to the local economy unless they profitably support local flights that wouldn’t otherwise exist and bring people to the country who wouldn’t otherwise go.
Etihad of course was a play at elevating the emirate, but never worked the way that Emirates does, indeed having two global hubs about an hour’s drive apart – one without being as much of a draw in any case – did not work and of course Etihad has scaled back its global ambitions when the al nahyan family stopped wanting to pay.
I know their slogan.
Come fly with Ria unless you gay lesbian bisexual transgender, speak your mind, believe in women rights, think a king is not supreme, ever had sexual activity out of marriage , drink, use drugs are a female
@ Tomri
There are hundreds of thousands of Moslem women who wear their scarfs as a sign of identity who will fly this airline with glee.
The market here is not secular North Americans for whom no booze is a deal breaker.
@Gary you seem to be fixated on this venture’s contribution to the local (Saudi) economy; however I see it as a much broader strategic play to create global alignment and intertwinement between Saudi Arabia and broad swaths of the (largely developing) world. It is one of many things that would make sense if the Saudis are thinking about how to preserve their relevance in a post-oil or less oil-dependent world.
I think your entire premise is wrong. Where did you get the impression this is about transit passengers. Saudi Arabia has recently announced massive tourism initiatives, including building hundreds of new hotels and everything that I read is that the plan for the new airline is to serve O&D traffic demand that they hope will be generated. For example, today’s WSJ reports on SA’s $1 trillion bet that they can generate tourism. Whether they are successful in creating a tourist destination is another story entirely, but that has nothing to do with your criticism.
This is BS. By which i mean Bone Saw.
@john: “The new airline would likely ban alcohol onboard like Saudia. ”
No.
Gary’s anlysis is static. This is Emirates, redux.
I am not sure who they are trying to attack to fly this new airline. I don’t feel many if any Americans would go out of their way to fly it, when they have to great choices in Emirates and Qatar. I personally would not fly any airlines that fly through Saudia Arabia.
Buzz saw museum, where and when?