New Saudi airline plans to gain momentum

Plans for a new Saudi Arabian airline appear to be gaining momentum, according to several sources close to the anticipated development. Supporters of the move hope it will strengthen the country’s air transport sector in its struggle to compete with more successful carriers in neighboring Gulf states such as Emirates, Etihad and Qatar Airways.

“Plans for the inauguration of the new airline and its leasing company will progress as planned,” said Abdullah Aljawini, CEO of Riyadh-based aviation consulting firm Dawli Aerospace. AIN.

On June 30, the Saudi sovereign wealth fund, the Public Investment Fund (PIF), announced the creation of a new aircraft leasing company, Avilease, but, to date, no official statement has been made on the airline’s plans, AIN understand. At the time, PIF said its assets under management amounted to $620 billion.

AviLease will provide leasing, trading and asset management services for the latest generation of aircraft from major manufacturers,” the PIF announcement said. “The company will scale through purchase and leaseback transactions, secondary acquisitions of portfolio, direct orders from aircraft manufacturers and corporate purchases.”

An outfit with ready access to the new metal would certainly accelerate plans for a new airline, an entity that would be more or less mandatory if Saudi Arabia is to achieve the goals it is setting itself. The expectation is that after an initial flurry of narrow-body deliveries, the new airline will have a preference for wide-bodies.

“Friends at PIF say it’s serious; they have already renamed the planes for the new airline Neom,” said a Western lawyer based in Saudi Arabia, speaking to AIN condition of anonymity. Neom is one of three massive tourism and lifestyle projects planned for the country’s barren northwest Red Sea coast.

“Once the new carrier is officially announced, I’m sure you will [find] the right people to talk to,” said Fahd Al Cynndy, CEO of maintenance group Saudia Aerospace Engineering Industries (SAEI). AIN in January at a company conference in Dubai. “Right now, it’s still a work in progress.”

According to the Saudi-US Trade Group, the development of the airport will be a key aspect of Saudi Arabia’s plans to increase passenger traffic. “Saudi Arabia has earmarked $147 billion to upgrade its airport facilities to serve 330 million air travelers by 2030, expand its transportation sector and push ahead with plans to launch a new route national airline along with established Saudia, Flynas and Flyadeal,” he said this month.

a new oneSaudi Airport Exhibition‘ will take place in the capital, Riyadh, in November. Appetite for international events in the country is high, said a local source AIN that a military air show outside Riyadh in March was as big, if not bigger than, the Dubai Airshow last November.

of Saudi Arabia the national investment strategy it calls for an investment of $7 trillion over the next decade, and the manufacturing, renewable energy, transport and logistics, tourism, digital infrastructure and healthcare sectors are expected to receive major attention.

Aljawin said AIN Last year the airline would help Saudi Arabia reach a target of 100 million tourists a year, modeling itself on Etihad Airways, Emirates or Qatar Airways. In May, Saudi tourism officials announced plans to spend $1 trillion over the next decade to meet this goal by 2030.

The ‘new airline’ model was the advice of professional consultants tasked with advising on whether Saudia could be saved, concluding that it had too negative an image to compete with Emirates or Etihad. In PIF, mixed feelings remain as to whether the new investment is sound,” said the lawyer.

The perception is that the existing flag carrier has been unsuccessful in matching the range and quality of service of the “Big Three” Middle Eastern airlines. However, with a fleet of over 150 aircraft, over 90 of them wide-body, it’s too big to ignore. Low-cost carriers Flyadeal and Flynas are engaged in building their fleet and are doing well both domestically and regionally, but have yet to reach an international scale. Between them, the three have 130 aircraft on order, but only three of them are widebodies.

“From what I heard, Saudi was asked to move its headquarters from Jeddah to Riyadh, which it resisted; hence an internal decision at high levels to repurpose Saudia for pilgrimage only and replace it for all other purposes with a new airline modeled after Emirates,” the lawyer said. AIN last year. “It’s been quiet in recent months, although there’s no reason to believe that doesn’t remain the plan.”

In addition to tourism, Islamic pilgrimage is also expected to be a draw. By 2030, Hajj and Umrah events are expected to be responsible 30 million tourists per year. PIF said in a strategy document that it joined other investors to buy a 55 percent stake in French company AccorInvest, an owner and operator of hundreds of hotels worldwide, mainly focused on Europe, in 2018.

Technical know-how is also growing in the country. Saudi Arabian military industries have signed memorandums of understanding with defense contractors Boeing, Lockheed Martin, Raytheon and General Dynamics. There is also signed joint ventures with what she called “top global companies,” including L3 Harris of the US, CMI of Belgium and Thales Group of France.

Talk of the new airline has sparked a flurry of interest on Internet pilot forums. “[De facto ruler, Crown Prince Mohammed bin Salman] foresees Riyadh becoming a global hub by 2030,” said a poster on a forum. “In terms of East-West connectivity, the nation is a sleeping giant. Imagine how much revenue the 1-2 percent of passengers traveling each year between the West and the East will generate in 2030 when more than 25 percent of the world’s population is Muslim.

Aljawini said a number of prominent challenges faced the Saudi aviation sector while considering a new airline. “What will make it or break it is meeting in time the challenges associated with upgrading the infrastructure of our international airports to match the expected future growth in air traffic,” he said. Such air traffic is expected to be generated by the formation of the new airline, other existing airlines based in Saudi Arabia and international airlines.

Saudi Arabia has four international airports in Riyadh, Jeddah, Dammam and Medina. Aljawini is calling for a change in the revenue models these airports use. A preferred revenue framework was one that involved not only reducing airport charges and fees, but also included the formation of a number of other revenue generation points that were designed to minimize the impact on the airline’s bottom line. or in passenger budgets. traveling through Saudi international airports, he said.

“I believe that such a best practice business model should be examined by the relevant authority and executed as soon as possible in an effort to increase the competitiveness of Saudi international airports against other international airports in the region, ” he concluded. “At this point, changing business models is a necessity and not a luxury.”