Mohammed bin Salman Al Saud is not known for understatement.
Saudi Arabia’s de facto ruler has spent liberally since rising to power in a bid to modernise the Kingdom, including plans for a $500bn city in the desert.
So when MBS, as he is known, decided he wanted to transform Saudi Arabia into an aviation superpower, he was not shy in his ambitions.
Rather than invest in the country’s existing flag carrier, he announced plans to create a whole new airline from scratch.
Riyadh Air wants to become “a new world-class airline that will shape the future of aviation,” prospective job candidates are told.
Officially unveiled a week ago, Saudi Arabia days later spent £30bn on a fleet of 72 Boeing jets for the airline in what was the manufacturer’s fifth biggest order ever.
The launch of Riyadh Air is the latest twist in Gulf rivalries, as the Saudi Kingdom vies to take on the UAE’s Emirates airlines, Abu Dhabi flag carrier Etihad and Qatar Airways.
“Pure competition,” says one senior executive that has worked closely with the MBS and the Saudi regime. “It’s: ‘mine is bigger than yours’. And it’s driven by the crown prince and his ego.”
Saudi Arabia’s pedigree in commercial aviation outdates its neighbours.
Original flag carrier Saudia was launched in 1945, more than half a century before Emirates, nearly 60 years prior to the unveiling of Qatar Airways, and almost seven decades before Etihad.
Yet the three rival airlines have quickly established themselves as international heavyweights, unlike Saudia.
Emirates, for instance, is the world’s biggest international airline.
Qatar, meanwhile, owns 25pc of British Airways’ parent company and its sovereign wealth fund has a 20pc stake in Heathrow.
Etihad has helped build its reputation globally through the sponsorship of Premier League champions Manchester City, whose 53,000 seater stadium is known simply as “The Etihad”.
Another industry insider says of Riyadh Air: “It’s saying to the world: ‘Look up and take note. You’ve ignored us for ages, but we’ve got buckets of money and we can outspend you’.”
MBS has poached Briton Tony Douglas from Etihad to run Riyadh Air, while the Saudis have also recruited Peter Bellew, Michael O’Leary’s one-time right-hand man and former operating head at easyJet. (For Everton-supporting Douglas, the switch means he will no longer have to watch Manchester City on corporate days out, though Saudi Arabia’s sponsorship of Newcastle United means he may have to still watch rivals.)
The crown prince’s plans are not simply restricted to a new airline. King Khaled airport in the Saudi capital is also being transformed, it was announced in November.
The new airport will boast six parallel runways and be designed to accommodate up to 120 million travellers by 2030 – some 50pc more than even Heathrow boasted at its peak in 2019.
Willie Walsh, the former British Airways boss, warned in December that any new major hub airport must not be “in close proximity to Dubai and Doha”.
The inference was clear: far from being complementary, the crown prince’s new airport will provide competition to existing regional hubs.
Robert Boyle, former strategy chief at BA parent IAG and now an independent consultant says “the local market doesn’t in any way justify this scale of capacity”.
“Do we need another one [airport]? No,” he adds.
“Making King Khaled a success is “going to be a really, really difficult task,” Walsh said.
“If anyone can deliver on that ambition … it probably is Saudi Arabia, because you’ve got a vision for the future that is being supported by the finances being made available and a clear determination to achieve it.”
The new airport and airline are major planks of Saudi’s “Vision 2030”.
Economically, this means diversifying the country away from oil towards tourism, infrastructure, and entertainment. MBS also wants Saudi to be a major trade hub that connects Europe, Asia and Africa.
The unveiling of MBS’s plans for Riyadh Air came just 48 hours after a Beijing-brokered détente was agreed with Iran.
Having Iran onside was critical. Shia-majority Iran and Sunni-majority Saudi Arabia have been at odds with one another since 2016, when Saudi Arabia executed a prominent Shia scholar.
In response, protesters invaded Saudi diplomatic posts in Iran.
Tensions in the region between the two countries would have made Saudi plans to take control of the skies above the Middle East difficult.
Social reforms are also key to MBS’s “Vision 2030” plan.
Seasoned foreign observers claim that adherence to strict Islamic values is being curtailed, albeit at a slower pace than many in the West would like.
Basic human rights such as the recognition of the role of women in society has fundamentally changed over the last decade.
However, Washington non-profit Freedom House still scored the country just 8 out 100 for political rights and civil liberties in its latest audit.
Just last week, Fifa was forced to drop plans for Saudi Arabia to sponsor the 2023 Women’s World Cup following complaints from co-hosts Australia and New Zealand.
“The country is still seven or eight years behind the likes of Dubai,” says one businessman that has regularly visited the country for years.
Then there is the fact that throwing money at an airline – even in vast quantities – does not guarantee success.
Etihad had to go through a painful restructuring under Tony Douglas despite Abu Dhabi’s riches. A five-year turnaround plan resulted in Etihad’s staff numbers reducing from 29,000 to 8,500.
“We’ve had [to perform] open-heart surgery on the balance sheet,” Douglas told the Telegraph last July.
Boyle explains that Emirates, launched in 1985 and run by another Brit, Sir Tim Clark, “was a great idea and a massive success”.
But he adds: “History suggests there was room for one more [airline].
“Saudi has all the money. That didn’t really help Etihad in the end, but you know what they say: quantity has a quality all of its own.
“Saudi Arabia has big plans to diversify the economy and build a tourism business. They certainly have a ‘brand positioning’ issue to overcome, but big dollars could offset that over time.”
Other than its order of 72 Dreamliners – funded by Saudi Arabia’s gargantuan Public Investment Fund (PIF) – MBS is keeping the finer details of Riyadh Air close to his chest.
It is claimed that the airline is expected to add $20bn of non-oil GDP growth to Saudi Arabia, and create more than 200,000 direct and indirect jobs.
Riyadh Air is part of plans to transform the Kingdom into a “gateway to the world and a global destination for transportation, trade, and tourism”.
Despite capacity constraints at Heathrow, MBS’s new airline has a potential clear run at three pairs of take-off and landing slots.
When British Airways acquired British Midland International, the UK flag carrier had to give up some slots to satisfy competition regulators.
The slots were doled out to competitors, but could only be used on certain routes. By coincidence, one of those routes is London to Riyadh.
As of today, Saudia has possession of these slots.
However, there are already murmurings that Saudia will be ordered to pass them over to its sister airline as and when it is ready – handing Riyadh Air a vital toehold at one of the world’s most sought-after airports.
For Douglas and Bellew, an Irish veteran who was also previously Malaysian Airlines’ chief executive, there is plenty to be optimistic about.
Whether Riyadh Air can climb high enough to meet MBS’s lofty ambitions, however, remains to be seen.
Source : Yahoo Finance