Daily Memo: Saudi Arabia’s Vision For 2030—Reason To Worry Or Opportunity For All?

When it comes to pure aviation matters in the Middle East, there is nothing more exciting than discussing the future role of Saudi Arabia in the market.

After all, the government has allocated $30 billion in funds to developing airports, airlines, and their surrounding infrastructure. The Vision 2030 pushed by Crown Prince Mohammed Bin Salman could truly be seen as a frightening scenario for all the other airlines operating in the region, not least the current Gulf carriers based in Dubai, Doha, and Abu Dhabi.

In that context it was interesting to note the views expressed at the Arab Air Carrier Organization (AACO) annual general assembly, held in the Saudi capital Riyadh. “We are the inverse of the super heavyweights,” Riyadh Air CEO Tony Douglas told attendees. “We are not here to become another global connector” like Emirates or Qatar Airways. “We are not here to create artificial competition.” Riyadh Air will be “here primarily to serve Saudi Arabia,” therefore, other airlines should not be “unnecessarily worried” about its launch, Douglas said.

To recap, Riyadh Air is one important cornerstone of the new Saudi aviation strategy. The airline has placed its first big aircraft order for 40 Boeing 787s and is expected to announce a narrowbody deal at the Dubai Airshow in November. Riyadh Air plans to begin flying in the first half of 2025 when it takes its first aircraft. At the same time, the current national carrier Saudia is to be transformed as a business to be profitable in the next financial year and has also bought 40 787s for starters.

Douglas pointed out one major difference between the Gulf carriers and Riyadh Air, which is the dependence on connecting traffic. Current traffic into Riyadh airport is 93% point-to-point. According to the Saudi aviation strategy, that will not change a great deal: 10% of the 300 million annual passengers targeted for 2030 will be transiting through either Riyadh or Jeddah. Of course, given the expected growth, the sheer numbers of connecting passengers will grow sharply.

Douglas’ rivals actually seemed to agree. The plans “will increase business for all of us,” Emirates Airline Chief Operating Officer Adel Al Redha said. “The region is going to grow. We will have to deal with competition through the product.” Royal Jordanian CEO Samer Majali argued that the government-backed rise of new competitors is a fact of life in the region that everyone else has to deal with and should not be spending much time on complaining. Of course, Majali has much bigger worries these days, with the Israel-Hamas war in the vicinity. That has had a major impact on tourism demand into Jordan already and creates operational challenges: Royal Jordanian aircraft have to fly south and then across Egypt first on their way to Europe and the U.S. given that going North and West is not possible currently. “We are quite hemmed in,” he said.

For Saudi aviation to achieve its 2030 goal will be a huge challenge in its own right, although strong government backing is a good start. But there are factors outside of its control. As Al Redha noted, Riyadh is trying to launch at a bad time, given the constraints in the aviation supply chain and continued delays in aircraft deliveries.

And inside the country, a lot needs to happen, too: While Jeddah’s new terminal has transformed the passenger experience, that exercise needs to be repeated in Riyadh and at a much bigger scale. Air traffic control also needs to become more efficient. Access to talent is another challenge. The country needs to build a new generation of aviation professionals—and fast.

Regulation is another issue to be dealt with. Saudi Arabia’s General Authority of Civil Aviation (GACA) put out a new aviation policy document Oct. 30 that is to support the 2030 goals. New rules for airport privatization are being put in place, and the country’s ground handling and air cargo markets will be opened up for competition.

The biggest open question is to what extent Saudi Arabia will be prepared to agree to more liberal bilateral or comprehensive air service agreements the way the United Arab Emirates and Qatar have done in many cases. “I have seen the advantages of open skies; no country should be afraid of it,” Al Redha said about Dubai.

Of course, Dubai is more easily protected by the hub carrier being a single point destination whereas opening up Saudi Arabia would, in theory, expose the local airlines to more geographically dispersed competitive threats. The point about open skies stimulating the overall market is still valid.