Saudi Arabia’s Plan For A New Airline Is Insane

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.

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