Saudi Arabia’s big plans in aviation – economy

This is normally how it works here: You step out of the very cooled-down exhibition hall into the sun and are hit twice: by the heat on the apron, which still prevails here in November, and by the huge Airbus A380, which Emirates has parked in the middle of the square. The plane dominates – as if to demonstrate who is in the aviation sets the tone in the Persian Gulf. The Dubai Airshow has been the platform for this for decades.

This time the choreography is different. Anyone who walks through the large main exit in the direction of the aircraft on display will walk straight into a green and white pavilion belonging to the Saudia Group. Saudia, the national airline of Saudi Arabia, has been more notorious for its inefficiency than its competitiveness. The fact that it did not even play a significant role in the region was prevented by the cumbersome Saudi visa guidelines, which made traveling to the country difficult from the outset. If you turn right in front of the opulent Saudia chalet, after a few meters you will find yourself in front of the Riyadh Air representative office. This is set to become the country’s second major airline in the next few years. Riyadh doesn’t even have a license yet. But they show the others how Airshow works.

Until a few years ago, China was the dream of aircraft manufacturers – high growth rates guaranteed huge orders. But China’s aviation boom is over for the moment, the latest promises are India and Saudi Arabia. For decades, the ultra-conservative kingdom was not a travel destination – except for Muslim pilgrims. But Crown Prince Mohammed bin Salman, MbS for short, has fundamentally changed that with his “Vision 2030”.

In seven years, the airlines are expected to transport 330 million passengers, between ten and 20 percent of whom will be connecting passengers, and the airlines will fly to 250 international destinations. According to the General Authority of Civil Aviation (Gaca), this would make Saudi Arabia the fifth largest transfer hub in the world. One million jobs are to be created directly in the sector, and another two million in tourism. The state will pump around 30 billion US dollars into the aviation sector, and private investors will contribute another 60 billion to expand airports like the one in Riyadh, pay for the aircraft and create the entire logistics behind it. The King Salman Airport in Riyadh is to be expanded to a capacity of 120 million passengers annually, up from around 30 million so far, Dubai currently has 90 million.

Peter Bellew is one of the architects tasked with making the vision a reality. He comes through the door, slightly stressed, waving a business card. “Again someone who wants a new job,” he says. Bellew has been in the industry for around 35 years and has experienced a lot – he was CEO of Malaysia Airlines, operational boss at Ryanair and Easyjet. When Easyjet had to cancel thousands of flights in 2022 amid the flight chaos following the corona pandemic and the pilots withdrew their trust, Bellew had to go. He is an amateur guitarist and has just returned from a gig in Dubai where he filled in for a sick colleague.

Riyadh Air boss Tony Douglas, who walks through the chalet next door in a tailored and slightly daring suit, needed someone to organize the new airline for him. And the Irishman Bellew still loves nothing more than playing the guitar. He has just ordered new flight planning software, and next up is training concepts for the pilots. “We’re going into a lot of detail now because we want to show people that this is a company that you want to work for,” says Bellew. “The biggest challenge is getting good people.”

Saudia has long been viewed as a state-owned utility company with far too many employees

To get the airline up and running quickly, Riyadh Air, owned by the Saudi Public Investment Fund (PIF), has ordered 40 Boeing long-haul jets, and in the next few weeks he and Douglas will probably buy a large number of short- and medium-haul aircraft also at Boeing, because the waiting times are shorter than at Airbus.

Riyadh Air, as the name suggests, is supposed to fly from the capital Riyadh, the old Saudia from Jeddah. Why there should be two state-owned Saudi airlines in the future is a question that many observers are asking, especially since the two have just announced an alliance that, among other things, provides for joint flights on both (future) route networks. Saudia was long viewed as a state-run pension fund with far too many employees that had suffered horrendous losses for decades. Given the state’s wealth, it somehow didn’t matter.

Perhaps the rivalry between Jeddah and Riyadh, the always more cosmopolitan commercial metropolis and the hitherto much more conservative political capital, plays a role. Riyadh is now set to become more and more of an economic center; companies are being pressured to relocate or set up new branches in Riyadh. The city is literally exploding, and the traffic jams that form on the main routes across the seven million juggernaut, even late in the evening, are just a sign of how difficult it is to make the vision a reality.

“The place has completely changed since January,” says Bellew. Many of the strict rules – “family areas” only for women in restaurants, for example – have been abolished, and there are parties and cinemas. Many of the women walk the streets uncovered, something unthinkable not long ago. And the new freedoms in social life can also be felt in the travel industry.

It’s three in the morning and in Riyadh’s domestic terminal it feels like 3 p.m. in this country. Families with children walk through the building and wait at the gates; the shops are well stocked. Ronaldo jerseys from the Al-Nassr FC shop are popular. The airlines fly to almost 30 destinations in the country from here. For a few years now, Saudia has lost its monopoly, there are now also low-cost airlines like Flynas, and it has become very crowded. Over there, in the building for international departures, it’s even tighter.

And everything is happening at breathtaking speed: Saudi Arabia has just relaxed its visa regulations. Waiting for weeks for entry approval is a thing of the past; instead, for many nationalities there are visas on arrival or an online application. Gaca has now decided to allow even more competition, especially on routes that are particularly in demand, but also in ground services at the airport or in maintenance. Comparatively restrictive air traffic agreements are still preventing free growth in many target countries, including Germany. But Saudi Arabia has strong economic arguments. Anyone who wants to get a share of the many billion-dollar tenders will not be able to isolate themselves.

Ibrahim Koshy stands in front of a golden cube in the middle of the Saudi desert and beams. The thing is supposed to reflect the surrounding mountains, and now dozens of people are standing in front of it taking selfies in front of the facade. But you wonder what’s actually inside the monster, because it’s still forbidden to enter. You can also go hiking here in the mountains, and the tents back there at the end of the valley are part of a luxury hotel that opened here a while ago.

Koshy, originally a pilot and still Capt. in the organizational chart. Ibrahim Koshy, recently became head of Saudia. He has just welcomed a delegation from the Arab Air Carriers Organization (AACO) with one of his new Airbuses A321neo fly to Al-Ula in the province of Medina. The tombs of the Nabataeans, who also settled in Petra in Jordan, are part of the world cultural heritage. Al-Ula was also a place of trade for centuries. Two of the tour guides are women, and they explain the antiquities in fluent English.

Now the place is to become a tourist center. The Nabataean settlement is currently being excavated, and archaeologists are also working in the current location. There are souvenir shops and, seriously, a Starbucks café, but the Arabic coffee and freshly baked bread next door in the Saudi open-air restaurant are much more delicious. Koshy should not only fly tourists here with his Saudia, but also conference participants, because the golden thing in the desert, as it turns out at some point, is a conference center.

Conferences, tourism, the millions of pilgrims, an extremely young population – 70 percent of the 30 million Saudi Arabians are under 30. “The Saudi Arabians have all the ingredients to make the vision a reality,” says Omar Arekat, Boeing- Head of Sales for the Middle East and Africa. “The commitment is very real. And Saudi Arabia is no longer the same country as it was five years ago. A lot of things are changing in the right direction.”

“There are a lot of plans and visions,” says a consultant who is traveling a lot in Saudi Arabia these days. “It will take time, but they will get a lot of the things done.” The question is whether the industry can meet the tight schedule set by Mohammed bin Salman. Many people don’t really believe in it yet, because many structures are still being set up and no one else has achieved such rapid growth at that time.

The Matarat airport group, which operates the large airports, is currently being separated from the aviation authority. Matarat quickly hires expats to quickly build up the necessary knowledge. However, the experts are missing elsewhere, especially in the provinces. The rapid growth is also arousing desire among Saudi Arabian employees. Many move quickly from the airlines to the airports or into government administration when new jobs open up, leaving gaps where they go.

The other giants in the Gulf – Emirates, Etihad and Qatar Airways – are wondering whether Vision 2030 will be to their detriment or not. For the moment they act relaxed. Emirates airline boss Tim Clark, for example, believes that in the end everyone will benefit because the Saudi Arabian airlines alone cannot cope with the volume caused by the many foreign skilled workers and managers who are now coming into the country.

The huge new terminal at Jeddah Airport at least offers a foretaste of what is to come. The building sits like a trapezoid between the runways and the many Saudia jets are parked all around it. If the walk is too far to change, you can take the escalator to the basement and take the train there. After all, the dimensions are very reminiscent of Dubai.