Saudi Arabia aims to tap tourism demand with new Riyadh Air
Saudi Arabia will launch another state-owned airline in early 2025, entering an already crowded field as Gulf states turn to tourism in a bid to decrease their dependence on oil revenue. Riyadh Air, which will be based in the Saudi capital, aims to fly to 100 destinations by 2030 and capture a large share of the Asian market, according to the CEO Tony Douglas, who spoke with Nikkei Asia. Riyadh Air has agreed to purchase 39 Boeing Dreamliners, with options for 33 more jets. The airline is expected to add $20b to Saudi Arabia's non-oil GDP growth and create over 200,000 direct and indirect jobs. The carrier is an important part of the Saudi Vision 2030 economic diversification strategy, Douglas said. But Riyadh Air, which will be owned entirely by the Saudi government's sovereign wealth fund, the Public Investment Fund, faces intense competition from well-established long-haul Gulf rivals including Emirates, Etihad and Qatar Airways. Gulf airlines have leveraged their strategic geographic positions between Europe, Asia and Africa. Layovers in the Gulf are common for flights between Europe and Asia, particularly since the war in Ukraine has made many flight paths longer, with airlines avoiding Russian airspace. There is debate over whether a new long-haul Gulf carrier would spark a price war. Douglas told Nikkei Asia that "airline fare prices are dictated by market conditions correlated with supply and demand." Riyadh Air, he added, will be "a full-service provider, with an obsessional attention to guest experience, offering Saudi hospitality, and the world's first digital native airline." Tarek Fadlallah, CEO at Nomura Asset Management, Middle East, told Nikkei Asia, "The skies over the Gulf region are getting crowded and it is unlikely that another new airline will help improve the sector's profit outlook." It is unclear, moreover, how a new Gulf carrier would capture market share in Asia and compete with the likes of Cathay Pacific. McKinsey & Co. forecast that mainland China would see 4m air passengers a month by April, pushing air travel back up to 40% of pre-COVID-19 levels. McKinsey's report also states that Chinese carriers are well prepared and that there are over 200 large aircraft China can reactivate quickly for international flights.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-03-28/unaligned/saudi-arabia-aims-to-tap-tourism-demand-with-new-riyadh-air
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Saudi Arabia aims to tap tourism demand with new Riyadh Air
Saudi Arabia will launch another state-owned airline in early 2025, entering an already crowded field as Gulf states turn to tourism in a bid to decrease their dependence on oil revenue. Riyadh Air, which will be based in the Saudi capital, aims to fly to 100 destinations by 2030 and capture a large share of the Asian market, according to the CEO Tony Douglas, who spoke with Nikkei Asia. Riyadh Air has agreed to purchase 39 Boeing Dreamliners, with options for 33 more jets. The airline is expected to add $20b to Saudi Arabia's non-oil GDP growth and create over 200,000 direct and indirect jobs. The carrier is an important part of the Saudi Vision 2030 economic diversification strategy, Douglas said. But Riyadh Air, which will be owned entirely by the Saudi government's sovereign wealth fund, the Public Investment Fund, faces intense competition from well-established long-haul Gulf rivals including Emirates, Etihad and Qatar Airways. Gulf airlines have leveraged their strategic geographic positions between Europe, Asia and Africa. Layovers in the Gulf are common for flights between Europe and Asia, particularly since the war in Ukraine has made many flight paths longer, with airlines avoiding Russian airspace. There is debate over whether a new long-haul Gulf carrier would spark a price war. Douglas told Nikkei Asia that "airline fare prices are dictated by market conditions correlated with supply and demand." Riyadh Air, he added, will be "a full-service provider, with an obsessional attention to guest experience, offering Saudi hospitality, and the world's first digital native airline." Tarek Fadlallah, CEO at Nomura Asset Management, Middle East, told Nikkei Asia, "The skies over the Gulf region are getting crowded and it is unlikely that another new airline will help improve the sector's profit outlook." It is unclear, moreover, how a new Gulf carrier would capture market share in Asia and compete with the likes of Cathay Pacific. McKinsey & Co. forecast that mainland China would see 4m air passengers a month by April, pushing air travel back up to 40% of pre-COVID-19 levels. McKinsey's report also states that Chinese carriers are well prepared and that there are over 200 large aircraft China can reactivate quickly for international flights.<br/>
