Saudi Arabia PIF Flies High With New Flag-Carrier

The industry is about to have a new major flag carrier in the aviation business, thanks to Saudi Arabia’s Public Investment Fund (PIF), which is investing $30 billion in the new airline.

After Jeddah-based Saudia, RIA will be the Kingdom’s second national carrier, competing with the Gulf region’s other sovereign wealth fund-owned airlines. It is part of a $100 billion aviation investment under Saudi Arabia’s Vision 2030 initiative, which was envisioned by the Kingdom’s de facto ruler, Crown Prince Mohammed bin Salman (MBS).

When it launches, RIA will be the world’s 25th airline controlled entirely or partially by a sovereign wealth fund. According to Arabian Business, RIA will be based in Riyadh and will contribute to Saudi Arabia’s goal of increasing international transit passengers from around four million in 2021 to 30 million by 2030. According to reports, the new carrier plans to fly more than 150 foreign routes, putting it on a level with Emirates, which has 254 planes.

The announcement of a new airline comes only two months after the PIF created AviLease, an aircraft leasing firm that the fund describes as a “core element” of the Kingdom’s burgeoning aviation ecosystem. The business plans to “scale through purchase-and-lease-back transactions, secondary portfolio acquisitions, direct orders from aircraft manufacturers, and corporate acquisitions,” according to PIF. AviLease has been led by industry veterans, notably Edward (Ted) O’Byrne, former co-head of aviation at Carlyle Group and formerly CIO of Ireland-based AerCap, who was named CEO.

According to Global SWF research, SWF-backed airlines operate 2,817 planes and have received more than US$19.3 billion in capital injections since the start of the first global lockdown in March 2020, with four operators absorbing a third of this total: Turkish Airlines (Türkiye Wealth Fund), Qatar Airways (Qatar Investment Authority), Saudia (PIF), and Emirates (ICD). While many SWFs have shares in local airlines, some have also invested in other countries flag carriers, notably International Airlines Group (IAG), which comprises British Airways in the United Kingdom, Aer Lingus in Ireland, and Iberia in Spain, and is 20% controlled by QIA via Qatar Airways.