Saudi Arabia spends £30bn on Boeing jets in race to dominate Gulf travel

Riyadh Air – Logan Cyrus/AFP

Saudi Arabia to spend £30bn on a fleet of 72 Boeing jets as it seeks to dominate the Gulf with a new airline.

Riyadh Air, which launched on Sunday, has agreed to buy the Dreamliners in the aircraft maker’s fifth-largest all-time order amid a race to eclipse neighboring flag carriers Emirates, Qatar Airways and Etihad.

British aviation executive Tony Douglas has been poached by Etihad to take over as chief executive of Riyadh. Peter Bellew, the former chief executive officer of Malaysia Airlines and former chief operating officer of Ryanair and easyJet, has been brought on board as chief operating officer of the new carrier.

Riyadh’s launch marks an unusual approach by Saudi ruler Mohammed bin Salman to start a new airline from scratch rather than invest heavily in Saudia, previously the country’s only flag carrier.

Riyadh will focus on handling services from the Saudi capital as part of efforts to make it a hub airport that rivals Qatar’s Doha. Saudia will focus on flights from Jeddah.

The deal was praised by the White House, which said it was worth nearly $37bn (£30bn), even though deals of this size typically attract big discounts.

Mr. Douglas oversaw the construction of Heathrow’s Terminal 5 before leading Olympic contractor Laing O’Rourke and heading up Defense Equipment & Support, the branch of the UK Ministry of Defense responsible for all military procurement contracts.

He said the new airline order “will serve as the foundation for our operations around the world as we build the largest network and connect our guests to Saudi Arabia and many destinations around the world.”

Tony Douglas - Etihad

Tony Douglas – Etihad

Yasir Al-Rumayyan, president of Riyadh and governor of Saudi Arabia’s giant public investment fund, said the new airline would fulfill Saudi Arabia’s aspirations to become a global transportation hub.

Delivery of the first aircraft is scheduled for early 2025.

The likes of Emirates of Dubai, Qatar Airways and the UAE-based Etihad have historically overshadowed Saudia as the Gulf state’s leading airline.

The new airline is claimed to add $20 billion to Saudi GDP and create more than 200,000 direct and indirect jobs.

Mr Bellew has resigned as easyJet’s chief operating officer after last summer’s travel chaos.

He was a senior executive at Ryanair between 2006 and 2015 before returning for a two-year spell in 2019. His departure to easyJet led the Irish low-cost airline to launch a legal case against his appointment over allegations that under the terms of his contract he was not allowed to work for another European airline for 12 months.

A senior US administration official said Boeing began talking to the Saudis about three years ago. It was previously reported that the Saudi sovereign wealth fund had been in talks with Airbus and Boeing last year.

Saudi Arabia’s ambassador to the United States Princess Reema bint Bandar Al-Saud said the deal with Boeing was part of “an economic and social reform project that is opening Saudi Arabia up to the world.”

The Saudi PIF was linked to a bid for Ferrovial’s 25% stake in Heathrow last year. Qatar’s sovereign wealth fund is the second largest investor in the airport with a 20% stake.

US and Saudi officials are trying to repair diplomatic ties after they plummeted over oil policies.

The new airline is part of the crown prince’s campaign to diversify the kingdom’s economy and make it less dependent on oil. The country agreed to re-establish diplomatic ties with Iran last week.

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