Hello All,
Around the time of the Dubai Air Show, press articles revealed that Saudia, Saudi Arabia’s flag carrier, was in discussions for a significant new twin-aisle aircraft order. The figure could reach 100 aircraft. An order is expected next year.
The Kingdom of Saudi Arabia is trying to emulate its neighbors and diversify its economy away from oil production and exports. Increasing tourism is part of the plan to diversify the country’s economy. It is worth mentioning that, until a few years ago, tourism to Saudi Arabia was banned with the exception of the Mecca Pilgrimage for Muslims.
Separately, the Kingdom is considering launching a second carrier, based in Riyadh, the country’s capital.
In this blog post, we will analyze what order would make the most sense.
Twin-aisle advantage Boeing
Below is Saudia’s fleet, including its low-cost subsidiary, Flyadeal:
Including its low-cost subsidiary and freighters, the carrier operates 166 aircraft (76 single-aisle). It has 62 A320neo family aircraft on order, and three 787-10s. Note that a portion of A320neo family aircraft is going to Flyadeal.
Saudia’s fleet is also very young, with the exception of the 747-400F freighters. The oldest single-aisle aircraft is from 2009, and the oldest twin-aisle aircraft is from 2010. An order would mostly be for fleet growth.
Saudia mostly operates Boeing twin-aisle passenger aircraft (51 vs. 32), so the American OEM has an advantage on paper.
More 787s, A350 vs. 777X
Since Saudia already operates the 787-9, it makes sense to replace the A330-300s with the Dreamliner. Therefore, expect Saudia’s order to include a significant number of 787s.
The more interesting part of the twin-aisle order is for the 777-300ER, 777F, and 747-400F replacement. Saudia can either choose the A350-1000, including the newly launched A350F, or the 777X, which is also expected to have a freighter variant soon.
Whether ordering the A350 or 777X family makes the most sense depends on the carrier’s network, which we will now investigate.
A multi-hub system
Saudi Arabia has several cities with large populations: Riyadh (5.1m), Jeddah (3.4m), Mecca (1.5m), Medina (1.1m), and Damman (0.9m). Jeddah is Saudia’s main hub, which also serves Mecca. Saudia operates long-haul flights out of those four airports.
The below chart highlights flights the carrier operates that are at least 2000nm long. We flag those that had at least a daily frequency pre-pandemic. In light of the hot operating conditions, we flag flights as suitable for the A321XLR if they have less than daily frequency and are shorter than 3000nm. Saudia ordered the A321XLR.
Given that Saudia operates a large portion of its long-haul flights with less than daily frequency, the A350, which is smaller than the 777X, is more suitable for the network on paper.
However, it is worth noting that Saudia operates numerous flights to destinations that aren’t “business-heavy”. Those flights are for the numerous foreign works that live in the Kingdom when they visit their families. Therefore, numerous markets aren’t that sensitive to frequencies. Lastly, Saudia already operates the 777-300ER and 777F, so Boeing could have a potential advantage on paper.
Conclusion
To summarize, Saudia’s network seems to suggest (in this blog’s opinion) that the A350-900/-1000/F is a more sensible choice for the carrier than the 777-9/-8/-XF (if the latter two are launched). The carrier should also place a large Dreamliner follow-up order. The A330 pilots can be transferred to the A350 and the 777 ones to the 787.
However, the political element plays a large part in such orders. The Saudi Arabian government might push the carrier to order the 777X instead of the A350.
EPSILON AVIATION 
When evaluating the topic it is also interesting to see international air traffic movements for the kingdom. Per UN World Tourism Organization some 15-18 million overnight tourists are recorded per year, thereof 80% by air, or 12-14.4 million people per year. Of these, just 2.5 million are muslims that go to Mecca for Hajj, and maybe 0.5-1 million also go at other times of the year for similar purposes. Of the total of 15-18 million, just 6% declare tourism as the main purpose of their travel, or 0.9-1.1 million per year. Airport traffic is reported (pre Covid) at 20 mln people (double this for pax) for JED, 13 mln for RUH, 5 mln for DMM, and 4 mln for MED, for a total of 42 million people/year. All other cities are quite small. WTO also reports some 15-20 mln overseas trips per year by Saudis. That adds to 32-33 million people per year. We see that just 9-10 mln of Saudi air traffic is domestic. The kingdom has a really huge amount of migrant workers, 2.5 million Pakistanis, and a similar number of Indians, Bangladeshis and Filipinos, for a total of 10 million, out of a population of 35 million. We can estimate that they go home on average once a year, or that a relative goes to visit them. Saudi statistics counts them as tourists, so we have 14 million essentially low cost travellers. Saudia with 83 widebodies in service already has a capacity of some 9 million people per year, and their single aisles if used internationally and twice a day that adds 3 million. Therefore they roughly have a 25% market share. Then there is Flynas, a Saudi low cost with 40 A320s. Of the foreign carriers Emirates is among the biggest, but pre-Covid they just transported 1.5 mln people per year, or 4,000 per day, say 13 planes with 300 pax each. This just to compare with Saudia’s 83. They actually brought half the planes per day using A380s. Drawing a 3,200NM circle centered in JED we see that all of Europe, most of Africa and Asia all the way to Bangladesh is included within the range of single aisles. That excludes Malaysia and Indonesia with their muslims and Phillipines with their migrants. China, Japan, Korea, USA and Japan will not be big routes for Saudi Arabia. So new purchases will be dictated more by route volume rather than by distance, and here we see a very scattered market in Europe, northern Africa, the Arab world, Pakistan, India and Bangladesh. Maybe they want to go more for A330s or 787s than for the bigger A350-1000s or 777Xs.
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thanks for this analysis. At the end you wrote “A330s or 787s”. Did you mean “A350-900s and 787s” instead? They already operate 787s so not sure it makes sense to order A330neos if you already are a Dreamliner operator, given their size similarity.
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Yes, sorry for the confusion. But ultimately as you say, the Saudi monarchy will decide as they see fit. Privileges of absolute power…
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I’m expecting major 787-10 order. They already operate 787-10 and it will be good for their network
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Hi, I agree that the 787-10 is an excellent aircraft to replace the A330-300s. Note though that in the Gulf’s hot environment flights to Europe and Indonesia are probably the limit in terms of range on the 787-10 without significant payload restrictions.
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To be fair. That is most of their network. I think the -10 is probably the most efficient aircraft flying. I think it’s quite low risk for the major revenue potential it offers. In Saudia’s config the -10 sits 357 passengers. That’s a lot for an aircraft that burns just a few more tonnes of fuel than the -9
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