Saudi Arabia launches the challenge in the skies to Emirates and Qatar Airways-Corriere.it
A hundred billion dollar investment, a new airline, a maxi-order for the purchase of new Boeing 787s, the expansion of an airport to bring the runways to six. Saudi Arabia wants to disengage more and more from the oil economy, launches the challenge to the neighbors of the Persian Gulf and is preparing to shift the center of gravity of world air transport from the Emirates and Qatar to Saudi Arabia, thus trying to question the domination of Emirates, Qatar Airways, Etihad Airways. Whether this will succeed will only be discovered in the next few years.
In recent days, the Saudi kingdom presented Riyadh Air, the state carrier that will start flying in 2025 based in the capital, without thus interfering in the hub of the other public company, Saudia, in Jeddah. To bet on the new airline Public Investment Fund (Pif), one of the richest sovereign funds in the world (620 billion dollars of assets), whose governor Yasir Al-Rumayyan will also be the president of the carrier. Leading Riyadh Air will mainly be the managing director Tony Douglas, torn from Etihad Airways, and the head of operations Peter Bellew, former number one of Malaysia Airlines and former Chief operating officer of easyJet and Ryanair.
The order with Boeing
Two days after the presentation, Riyadh Air bought 39 Boeing 787-9s and optioned another 33 for a total value - according to the price list - of over 21 billion dollars, although in this case the US manufacturer should have applied a 55% discount , bringing the actual expenditure to less than half. The new carrier, which will receive the first aircraft at the beginning of 2025, aims to have a network of over 100 destinations by 2030. Interviewed by the Courier for further clarifications, a spokesman for Riyadh Air has not yet revealed the cards on the connections and if there will be Italy and suggests that soon there will be an announcement on the purchase of other planes, for short and medium flights.
The Saudi project
In parallel, the kingdom has ordered 39 Boeing 787s (and optioned another 10) for the other Saudi carrier, Saudia, which will continue to exist even after the birth of Riyadh Air. These investments are part of Vision 2030, the economic package that aims to make Saudi Arabia a world aviation hub, tripling passengers to 330 million in seven years. A 100 billion dollar package that also includes the expansion of King Khalid airport in Riyadh which will be called King Salman, will have six parallel runways and expects to transit 120 million passengers in 2030 and 185 million in 2050.
The kingdom will thus have two major airlines: Saudia based in Jeddah and Riyadh Air in Riyadh. To which are added the local low cost company Flynas (operating mainly in Riyadh) and the Saudia division Flyadeal (in Jeddah). The European low-cost carrier Wizz Air - which has its own company in Abu Dhabi - has decided to expand in the country, and Jazeera Airways, a low-cost carrier from Kuwait, will also open a branch with its main base in Dammam. Considering the presence, nearby, of Emirates (Dubai), Qatar Airways (Doha), Etihad (Abu Dhabi), Oman Air (Muscat) the market is starting to become decidedly crowded also in the Middle East.
For the experts we are in the midst of the territorial battle to have the largest number of passengers in transit. Having spent most of my childhood in Riyadh and having witnessed the speed of development I have no doubt that they can be successful, comments Stuart Hatcher, chief economist of Iba Group, a company specializing in the aviation sector. This could trigger a Middle Eastern power play in which Emirates, Etihad and Qatar will try to counter Saudi growth to destabilize the profitability of European and Asian carriers hoping to regain the market. The three Gulf carriers have a combined fleet of 465 passenger aircraft in service, 95 parked or in storage, and have an additional 307 on order. I have the impression that, given their budgets, they will continue to grow at any cost.
The geographical advantage
To help them - compared to European companies - the geographical position. Nearly 80% of the world's population is within a 7-hour flight from the Arabian Peninsula. For this reason, in recent years - thanks to a product of a superior class to its European and American rivals and also thanks to cheaper tariffs - the East-West flows have increasingly stopped in Dubai, Doha or Abu Dhabi (as well as Istanbul). Within a few years it will be known whether part of that traffic will have moved into the middle of Saudi Arabia. Meanwhile, according to CEO Douglas, more than 73,000 people have sent their resumes on the Riyadh Air website.
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The Economy Opinions and the Economy 6 pm
Mar 19, 2023
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