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

Riyadh Air - Logan Cyrus/AFP
Riyadh Air - Logan Cyrus/AFP

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

Riyadh Air, launched on Sunday, has agreed to buy the Dreamliners in the plane maker's fifth biggest order of all time amid a scramble to eclipse neighbouring flag carriers Emirates, Qatar Airways and Etihad.

British aviation executive Tony Douglas has been poached from Etihad to serve as Riyadh’s chief executive. Peter Bellew, formerly chief executive of Malaysia Airlines and ex-operating head at Ryanair and easyJet, has been hired as the new carrier’s chief operating officer.

The launch of Riyadh marks an unusual approach by the 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 running services from the Saudi capital as part of efforts to make it a hub airport that rivals Doha in Qatar. Saudia will concentrate on flights from Jeddah.

The deal was praised by the White House, which claimed it was worth almost $37bn (£30bn) though contracts of this size typically attract large discounts.

Mr Douglas oversaw the building of Heathrow’s Terminal 5 before leading the Olympics contractor Laing O'Rourke and heading up Defence Equipment & Support, the branch of the UK’s Ministry of Defence in charge of all military procurement contracts.

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

Tony Douglas - Etihad
Tony Douglas - Etihad

Yasir Al-Rumayyan, chairman of Riyadh and governor of Saudi Arabia’s giant Public Investment Fund said that the new airline would deliver on aspirations for Saudi Arabia to become a global transportation hub.

The first planes are scheduled for delivery in early 2025.

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

It is claimed that the new airline will add $20bn to Saudi GDP and create more than 200,000 direct and indirect jobs.

Mr Bellew stepped down as chief operating officer at easyJet following travel chaos last summer.

He was a top executive at Ryanair between 2006 and 2015 before returning for a two-year stint in 2019. His departure for easyJet led to the Irish budget airline launching a legal challenge against his appointment over claims that under the terms of his contract he was not allowed to work for another European airline for 12 months.

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

Saudi Arabia’s ambassador to the US, Princess Reema bint Bandar Al-Saud, said the deal with Boeing was part of “a blueprint for economic and social reform that is opening Saudi Arabia up to the world”.

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

American and Saudi officials are trying to repair diplomatic ties after they plunged to lows over the oil policies.

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