Steven Greenway, the CEO of Saudi Arabian LCC flyadeal, talks about branching out into long-haul operations and being part of Saudi Arabia's ambitious growth strategy.
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Victoria Moores: Hello everyone and thank you for joining us for Window Seat, Aviation Week Network's air transport podcast. I'm Air Transport World Europe and Africa Bureau Chief Victoria Moores, and I'm delighted to welcome you on board. Now this week I'm joined by Steven Greenway, who is the chief executive of Saudi Arabian low-cost carrier flyadeal. Welcome Steven.
Steven Greenway: Thanks for having me. Nice to be in the window seat.
Victoria Moores: So to put a bit of context for our conversation, we've been seeing an awful lot of activity coming out of Saudi Arabia over the last couple of years. There's really been a strong presence in the air transport market of Saudi Arabia. Of course, that's very strategic for the Kingdom because you've got this Vision 2030 strategy where Saudi Arabia is looking to grow its air transport market to 330 million passengers and 250 destinations by 2030. Now obviously flyadeal is going to be playing a part in that growth. We've seen incredibly rapid development from you for the first half of this year alone. Your capacity has been 25% higher than last year in the first half. Meanwhile, we're also seeing a lot of growth from other carriers within the Kingdom. So for example, another low-cost carrier, flynas, we've seen them grow to 59 aircraft last year. They're looking to grow to 100 aircraft by 2027. Equally, you are looking to grow flyadeal from the 40 aircraft that you have at the moment up to 100 aircraft also by 2030. That is a lot of growth and I'm wondering whether you can just give us a bit of a feel for whereabouts you fit into that Vision 2030 for the Kingdom and where flyadeal fits within that wider context of these rapidly growing Saudi Arabian carriers.
Steven Greenway: Sure. There's many components to Vision 2030. A lot of people talk about the projects like Neom and stuff like that, which is fine. There's a lot of stuff we don't talk about like income equality, housing, lifestyle, longevity, all of that. Where we come to play, we touch many parts of 2030, but one of them is economy diversification, so moving away from a dependence on petrochemical industry and tourism being 10% of GDP over the next couple of years. So there's many facets to it that we plug and play into. What I would say in terms of just growth, because I often get questions about growth and is it sustainable and what have you, is effectively 15 years ago, Saudi Arabia was really not accessible. You couldn't go there on a holiday, you couldn't go there to go visit a friend if someone was living there, etc.
You could only really go for two reasons. One was business and that was very arduous—I did that before they freed up visas and what have you—and the other one was pilgrimage. So you'd come in for Hajj or Umrah and that was effectively it. So what you have is a huge domestic economy, 35 million people plus, that all of a sudden the Band-Aids have been ripped off and things have been opened up, OK. So we're not starting from a position of maturity. We're starting from a position of immaturity, and I don't say that with disrespect, but a market that was underdeveloped, huge amount of potential, a domestic market. Bahrain doesn't have a domestic market. UAE doesn't have a domestic market. Qatar doesn't have a domestic market, etc. And so part of the Vision 2030 apart from many other goals is take Saudi Arabia to the world and bring the world to Saudi Arabia.
So we plug and play into many facets of that. So we're starting from quite a low base. You talk about the growth, and the growth is very, very strong. I won't deny that. Domestically the market's growing at about 15% per annum at the moment compound. So that's quite high, one of the highest in probably around the world I would suppose, but it's really playing catch up and moving towards maturity and we've still got many years to go in terms of those, if that makes sense. I'll give one little statistic. Jeddah-Riyadh was not even close to being in the top 10 in terms of the highest capacity routes in the world. I think we're sitting at now number three, and we're probably number one in the next one to two years. We've come out of nowhere. And so when you look at some of the statistics, they are mind boggling and eye opening.
But if you're on the ground and you realize where you are coming from in terms of the starting point being relatively immature market and then opening the market up to the rest of the world and even allowing Saudis to just move around domestically, there's still a huge amount of growth to go and new market segments as well. A good example, I always have a smile on my face when I see young females at the boarding gate getting onto a flight to Dubai. There would've not been, couldn't do that five, 10 years ago, but they're off going and shopping and having a good time by themselves. There's no escort or someone keeping an eye on them or what have you. So that's a new market segment as an example. So there's many different market segments that simply didn't exist a couple of years ago that now do exist and they're really flourishing and that's really driving a lot of the growth in the market, I suppose.
Victoria Moores: For people less familiar with the Saudi market, I think it's worth mentioning the domestic market that's currently where you've got 80% of your traffic, but looking at that domestic activity, obviously you've got widebody aircraft now on order and you've got 10 [Airbus] A330neos coming in from 2027. You are also branching out far more into international services. How do you see that network mix shaping up and where might we see you operating those A330s?
Steven Greenway: So another good illustration of how dynamic things are: I think we're about 75% domestic now. So even within a year we've nudged 5%, we'll probably 50-50 in the next couple of years. That's our aim. We'll continue to grow domestically, but most of our biggest growth, double digit growth, will be internationally, number one. Number two, I think I break it down very simplistically. You've got domestic and domestic is very much your Ryanair slash easyJet-esque point to point, very much LCC, very much digital experience. So if you came to Saudi Arabia and just went between Jeddah and Riyadh, you'd sit there and go, oh, this is just like going between London and Amsterdam or whatever the case may be. It would be something very familiar in terms of an experience. The next stage for me is what I call the backyard strategy, which is the Middle East.
We still have a lot of white spots, or black spots or however you want to call it, in the Middle East that we don't fly to. Bahrain is a good example. We don't fly to Bahrain, we don't fly to Doha, etc. So we've still got to fill a lot of those in. And then bearing in mind, we've only been flying internationally for the past two, three years, so it's not that long and our biggest markets are basically Egypt and Turkey and what have you and the UAE. So it's our backyard strategy, but in that is sort of a subcategory which really, really excites me is those markets that have really opened up in the past six to 12 months, which I never would've dreamed we could do. Iraq as an example. So we're doing Baghdad, Erbil and Najaf in Iraq. I hope that Syria will continue to be open for us, so we’ve just started flying to Damascus.
We're looking to fly to Aleppo now that of the civil war there is over, and I hope that continues and peace and stability continues and we can continue growing there as well. Libya don't fly there yet, but I'd love to get into Libya over the next six months, and I think I have high hopes that we can do that. Iran, we don't fly to Iran at the moment, but again, I hope that we can do Iran over the next six or 12 months. So there's markets that I would've never imagined six, 12 months ago we could fly to, and now starting to open up, there's a bit of stability across the region and so forth, so it's quite dynamic. Then there's the medium-haul picture, I suppose. We've just gone into Pakistan. We now have five destinations in Pakistan. The fifth one, Lahore, we just opened up India next year as well.
So you're looking at about a four- or five-hour stage length, so going that sort of medium-haul, at least medium-haul for us. And so opening up those markets, particularly to the subcontinent and also Southeast Europe as well, so Italy and so forth next year. And then you refer to the A330s in terms of long-haul and that really is long-haul. That's changing the narrative completely and we're getting ready for that. But that's Malaysia, Indonesia, the Philippines, and all the way west to the UK and France. So that really pushes the boundaries in the next couple of years. On the latter, we already have widebody wet lease aircraft that are operating some of those routes. So we opened up Bangladesh about three or four weeks ago. Indonesia, Jakarta will open up next week. Malaysia will open up in December. So we're already doing it on a wet lease widebody basis just to get our feel for the market and how it operates and make sure that we're experienced enough that when our own aircraft come, we've got a good degree of experience and knowledge to start that.
Victoria Moores: What is it that you've wet leased in and how long will they stay for?
Steven Greenway: At the moment, we have approximately three or four aircraft all year round, and they predominantly do charter aircraft. They're A330s and they predominantly do charter for Hajj and Umrah. In the Hajj period, which is the peak religious movement, we typically go up to six or seven widebody aircraft, but for the whole year we're now trending at about three or four aircraft just dealing with the Umrah and labor traffic that goes all year round. Hajj is the specific time of the year, but Umrah is all year round and that's what we keep the aircraft for.
Victoria Moores: Obviously we're talking about new aircraft coming into the fleet for the A330s. Obviously you're a low-cost carrier. What kind of product are you planning on having on board?
Steven Greenway: Yeah, it's a bit of a hybrid and mainly because of the mission set we're talking about. If you get down to Southeast Asia, we're talking about 11, 12 hours. So it's not even your seven or six, six or seven hours, it's 11 or 12; its quite long-haul and so we have the layout is 420 seats, so the seat count is 400, so it's quite high for an A330. It's not the 459 seats that Cebu Pacific has, but they've taken all the galley out and crew rest out to do domestically we're slightly different. So we have a hybrid and we'll have a small premium economy cabin simply because of the stage length. There will be a demand for a premium economy cabin and then the rest of it is economy. But we also have done a lot of provisioning for galleys and crew rest. Why? Galleys are big enough that we can cater out and cater downwind so we don't have to do catering downwind and that saves money and we have crew rest because we can fly to places like India and the subcontinent in Europe and bring the crew back on the same flight.
So you're saving [on] hotels and so forth as well. So we wanted something that was not ultra, ultra-low-cost in terms of the super pack, which is the North Star, but neither did we want a full-service carrier. 420 seats with the utility that we've got in terms of crew, rest, galleys and everything else in between and still have a seat count at 420—I think that's a fairly compelling proposition in terms of unit cost.
Victoria Moores: And you're planning on having some form of premium economy as part of that?
Steven Greenway: Yeah, absolutely. It's only small cabin. It's only 14 seats, so it's going to be quite small. We can flex it if we want to. If the popularity is through the roof, fantastic, but at the moment it'll start at 14 seats, and I think it'll do reasonably well. There will be demand irrespective of the routes that we fly on, there'll be demand for that cabin. Sure.
Victoria Moores: Obviously when you are bringing in new aircraft, that adds complexity to the business. At the moment, bringing in more of the same aircraft is already complicated enough.
Steven Greenway: Yes.
Victoria Moores: What can we expect in terms of deliveries for your delivery timeline over the next couple of years with the supply chain being quite constrained and what are your thoughts on the supply chain in general to get aircraft in?
Steven Greenway: I’ll just asked the question back, Do you know any better than I? I think we're we're all in the dark to a certain degree. I think a couple of things that I sort of see on the horizon, and this is specific to us, number one is the delays we've had recently in the past two years, or at least while I've been at flyadeal, had been predominantly because of engines. There was only one instance where we had late seats, inductive seats that we had a delay on an aircraft. We had two aircraft delayed about three or four months at the start of the year because there had no engines. So it wasn't the airframe manufacturer in terms of Airbus, it was actually engine issues or a seat issue
Victoria Moores: And you were CFM-powered on your aircraft?
Steven Greenway: On the LEAP. And so I actually think we've been doing reasonably well and so I'm not happy, but we're doing reasonably well. So the A320 as far as we're concerned, the A320, not A321, is relatively stable. I think behind we're now ahead of the curve in terms of our engines being at line fit and so forth. And the issues, I don't foresee any issues like we did at the start of the year, which was quite problematic. So that's the A320, I'll put that to one side, the A321s, we are meant to start seeing an induction of the A321s next year. That doesn't look like the case. It looks like they've been delayed over a year.
Victoria Moores: Over a year.
Steven Greenway: Specific manufacturing issues, again with the airframe, not with the engine.
Victoria Moores: So a bit more on that, what are the manufacturing issues?
Steven Greenway: I can't go into detail and it hasn't been confirmed, but I suspect that that's what's going to happen. We've been told unofficially that we're going to see a delay in the aircraft and that's incredibly disappointing. There's obviously the A321 is a slightly different airframe than the A320. Specifics on that and so forth have fallen behind and there seems to be a bigger delay on the A321 and the A320. As I said, the A320 seem reasonably stable at the moment. A321s are more problematic. So we're expecting a delay of up to a year on the A321s, which is a very big disappointment.
Victoria Moores: When were you originally expecting the A321s?
Steven Greenway: I don't even want to go back to the original dates because they were way before, but the most recent dates were the middle of next year. So we were meant to start seeing them come through in 2026 and I don't think that's going to be the case and we're planning for 2027. If they do turn up early, which I don't think is going to be the case surprise, but I just don't think so. A321s are problematic and seem to be moving around quite a lot. Then the A330s less of an issue, or at least we see less of an issue in so much as they're a low rate production. So they're only pumping out two or three at the moment. I think they're going to go up to four in the next couple of years, but they seem to have relative control over the A330s and there doesn't seem to be too many delays, but let's just see if our first one turns up in July of 2027 and then we can see if the bet's paid off.
What I would say is a couple of things. You talked to me about supply chain. I'm on record saying that I don't think any of this is going to go away for another three to five years. So I think anyone who thinks that somehow we'll get into 2026 or 2027 and everything's going to be wonderful and resolved, it's not going to happen. I think we're going to face these challenges for at least the next three to five years from all sorts of areas in terms of engine reliability and durability all the way through just to the sheer magnitude of throughput that the manufacturers are trying to push through at this moment in time and so forth as well. So for me, it's going to be with us for many, many years. I think we're somewhat insulated as an LCC mainly because I mean the airframe we’ve spoken about—the engine we can speak about in more detail—but then it's also the interior of the fittings and finish as an LCC. Ours is all basic and not bespoke and not heavy premium or what have you that requires a specific design. So we haven't suffered like full-service carriers that have got a very specific design to their interior, what have you. So I'm very thankful for that. Most of our stuff was off the shelf and we haven't, apart from the one seating ship set, which wasn't halted, it wasn’t design, it was just delay—we haven't had any issues with interior fittings or anything, whereas other airlines, particularly full-service carriers have.
Victoria Moores: And obviously this is a market-wide issue that we're talking about with the supply chain and an awful lot of the aircraft at the moment are being directed towards the Saudi market with the growing order book that's been formed. How do you fit in with that picture? Because obviously we're seeing so much growth coming out. If your parent company is Saudia Group, you've got flynas within the market as well. We've got Riyadh Air coming online, there's a lot of activity there is. How do you not overlap with either Saudia or the other airlines within the market? How do you do that coherently?
Steven Greenway: We certainly do, but we don't, you said coherently at the end of that. We don't sort of coordinate per se. I mean everyone has a slightly different business model, so we'll go from top to bottom. Riyadh Air is to connect the world over Riyadh, if that makes sense. OK. Saudia is moving very much upmarket and focusing now on Jeddah, moving away from Riyadh as Riyadh Air builds up, but still has a very big domestic footprint and also religious footprint and labor traffic footprint and so forth. A little bit more diversified than Riyadh Air is. Flynas is effectively a hybrid. They have a business class, they have lounges and what have you. They go after slightly different market segments. And then we sit at the bottom. And I'm not ashamed of saying that we’re the easyJet or a Ryanair or what have you of Saudi Arabia.
So you can sort of see everyone sort of playing in their own space. And there is overlap, but Jeddah-Riyadh, all of us fly up to 75 flights a day between Jeddah and Riyadh. So there is overlap and you'll go on Saudia and you'll be flying on a [Boeing] 777, you'll come on us and you'll fly on an A320. So there is somewhat overlap, but there's also a focus on the huge international market growth that I've spoken to. So I've spoken about what flyadeal is doing internationally. You've got flynas, which is very much already 50-50, 50% of the network is international. They really have focused on places like Berlin and Barcelona and all of this stuff. And they're doing stuff that we've focused predominantly on domestic and we're number two in terms of market share domestic. And that's where we wanted to get that foundation really, really strong before we started going internationally, if that made sense. So yes, there's overlap, but you can sort of see that depending on everyone's got their own individual strategies, which sort does different things in the market, if that makes any sense.
Victoria Moores: So it's about forming an ecosystem of aviation?
Steven Greenway: Absolutely, and choice. Yeah, the government wants choice; they want [tourists], they want Saudis. They want people who are coming into the country to have choice. If you want something that's cheap and cheerful and always on time and what have you, that's us. If you want a little bit of bells and whistles, maybe that's flynas. If you want something that's more at the top end, that's again Saudia or potentially Riyadh Air. So you've got that choice and we're all catering to different markets, if that makes sense.
Victoria Moores: Talking of activity within the market—not your home country, but the Dubai Airshow is coming up. I'm wondering: we've seen so much activity in terms of orders coming out of Saudi Arabia, do you think that we are going to see more activity from either yourselves or the other carriers within the Saudi market at the Dubai Airshow, or do you think that there's enough in the pipeline already?
Steven Greenway: I think there's been a lot of announcements over the past 12 to 18 months, including ourselves, particularly with the A330s and the top-up order of A321s and A320s. For us, no—for us it's very much a workman-like show, which I'm looking forward to. So meeting with the CEOs of CFM, Safran, Airbus, etc., to talk through our supply chain issues that we’ve just touched on. As for the other carriers, I won't speak on behalf of them, but I think there's been a hell of a lot of announcements that have been done prior to the show. I'd be a bit surprised, but you never know. Surprises are always good—but at least for us, no, we're not planning to make any big announcements at the Dubai Airshow.
Victoria Moores: And one final question: What might be the next big announcement that we might see from you coming up?
Steven Greenway: I think it is more for us about the expansion of the network. We are really lucky. I've never been in an airline that has a lot of the components already locked in. We have a great fleet order, all firm, very nice, all financed. We have a burgeoning network. We are building a lot of the infrastructure out for the airline to be able to support all of this, particularly our long-haul endeavors. We just opened up a new integrated control center the other day, which is fit for an airline 10 times the size we are today—investing heavily in all that. It's not the very sexy stuff that you talk about in the news or what have you, but all of that is coming online, which is very satisfying as a CEO to see. But I think more for us, we're really focused now on going through that network phase that I spoke of in terms of our domestic, our backyard, the regional in terms of India and Pakistan, and then the long-haul. That's what we're really focused on—getting that network and getting that network working more importantly and profitable. I think that's what you're going to hear from us repeatedly over the next couple of years as opposed to new aircraft orders, considering that we're going from 43 today to over 100 in the next three years—we've got a lot on our plate, so let's just focus on that. If anything, maybe a top-up order of the A330s, just as we evaluate our network and what we want to do. Because even at 10 aircraft, if we just operate them all down to Southeast Asia, which we're planning to do, that eats through the 10 aircraft that we've got initially anyway. And we see a lot of other markets like Bangladesh we've opened up very successfully that weren't in the plan. We're sitting there going, well, hey, Bangladesh is working now and it's not in our plan. What do we do? And so there may be a top-off of that, I think. So if anything, it'll be a top-off of what we have as opposed to a new mega order or a standalone order or something like that.
Victoria Moores: So working on the idea of filling up that new ops control center as rapidly as you can.
Steven Greenway: Absolutely. Absolutely. With big screens, a lot of people trying to work out what's going on with the weather and everything else and scaring me, but we'll work it out—it'll work out in the next couple of years.
Victoria Moores: Brilliant. Thank you. Well, it's been a pleasure hearing about what's been going on and your strategy for the next few years. Thank you so much for joining us today.
Steven Greenway: Thank you very much.
Victoria Moores: And I'd also like to thank our producers Guy Ferneyhough and Cory Hitt, and of course a huge thank you to you, our listeners—make sure you don't miss us each week by subscribing to Window Seat on Apple Podcasts or wherever you listen. This is Victoria Moores disembarking from Window Seat.
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