New Saudi airline Riyadh Air to intensify Gulf carrier rivalry

20 March 2023 2 min. read

Riyadh Air, a new airline launched on Sunday and owned entirely by Saudi Arabia’s Public Investment Fund, is set to cause waves in the market. The airline is run by CEO Tony Douglas, former CEO of Etihad Airways, and will see its first flights in 2025.

Saudi Arabia’s newest airline company will serve over 100 destinations, fighting with other Gulf region providers that already serve local and international passengers. The entry of the carrier is expected to trigger a price war with competitors.

Some of the existing airlines vying for long-haul passengers making connections include Emirates Group and Etihad Airways in UAE, Bahrain’s Gulf Air, and Qatar Airways based in Doha.

“A new airline with 100-plus markets being served will be fighting for every possible connecting passenger from Europe to Southeast Asia, from Africa to China and perhaps even to Australia over time,” said John Grant in discussion with Arabian Gulf Business Insight. Grant is a partner at British consulting firm Midas Aviation.

“When some of the established carriers still have over 80 percent of their traffic connecting through their hubs, competition will be increased – it’s inevitable,” said Grant.

According to Linus Benjamin Bauer, managing director of Bauer Aviation Advisory, the launch of a new competitor could disrupt the balance of power in the market and lead to increased competition with price wars across the Gulf.

The new airline company is seen as another step in the Kingdom’s move towards becoming a transportation hub. The drive to increase tourism is a major part of the Saudi’s transformative Vision 2030, a strategic framework designed to reduce the country’s dependence on oil and to diversify its economy.

One pillar of the tourism strategy is the development of the country’s Red Sea front. Bauer: “The vision for the Red Sea resorts is huge and well advanced. How that project is supported by air lift is important and we can certainly expect a lot of growth in that region.”

Pedro Ribeiro, general manager at property consultancy firm CBRE, said that the new airline will also help cater to broader growing demand for travel in and out of Saudi Arabia. “As the ease of doing business continues to improve in Saudi Arabia, alongside improvements in its quality-of-life rankings, it will continue to attract businesses and employees.”

In preparing their new fleet, Riyadh Air has agreed to buy 72 Boeing 787-9 Dreamliner jets from the US manufacturer.

Meanwhile, plans for a major renovation at Riyadh’s King Khalid International Airport saw the Kingdom turn to global consulting firm Egis for design and construction management services.