Riyadh Air CEO Tony Douglas is the rare executive who gets to build an airline carrier from scratch, unencumbered by decades of old systems, aging infrastructure, and dated processes that bog down so many other airlines. And he's doing so under tremendous pressure. His marching orders since his March hire have been to create a world-class airline that will play a central role in Saudi Arabia's efforts to improve its global image and diversify its economy beyond oil with a big tourism push.
Douglas, whose long career in commercial aviation includes stints as CEO of Abu Dhabi-based Etihad and as a senior executive at British Airways' parent BAA, will also be duking it out with big, well-established incumbents like Qatar Airways, Emirates, and Saudia, the domestic airline that serves the country from Jeddah. Riyadh Air, based in Saudi Arabia's namesake capital, a conurbation of 8 million people, will commence flights in 2025, aiming to serve 100 cities by 2030. Douglas has already ordered 78 Boeing 787 planes.
The airline's launch comes as Saudi Arabia looks to connect more deeply with the rest of the world. Related efforts include launching LIV Golf, a Professional Golfers' Association rival with which it signed a complex partnership agreement in June and the Saudi Pro League that has poached European soccer stars like Cristiano Ronald. To that end, Crown Prince Mohammed bin Salman, a controversial figure for allegedly approving the murder of regime critic and journalist Jamal Khashoggi in 2018, has directed the Saudi sovereign wealth fund to pump $100 billion into the country's aviation infrastructure. Saudi Arabia is constructing a mega-airport in Riyadh and investing $30 billion in Riyadh Air.
Douglas sees an opening for a startup airline in a crowded aviation space. As a vast, fast-growing country, both demographically and economically, Saudi Arabia offers an underserved domestic market of young people wanting to travel more but seeking a more high-tech flying experience, rather than the app fails and in-flight wifi shortages common on many carriers. Also key for the young Saudi population he's wooing, Douglas says, the airline has to demonstrate that it operates sustainably. "Any commercial airline that doesn't take environmental sustainability seriously will not sustain itself. It's as simple as that."
This interview was edited and condensed for clarity.
Fortune: Gulf region travelers already have Qatar Airways, Emirates, Etihad, and Saudia. Who needs a new airline?
We're talking about the Kingdom of Saudi Arabia, which has the second fastest-growing economy in the world. It's a large landmass with a fast-growing population of 36 million. The country's leadership is investing billions into its global tourist destinations, attractions, Red Sea resorts, and so on. We have a young population that is digitally native, and so the national carrier mandate is to make sure the nation has far better connectivity globally. The capital city, Riyadh, is today underserved.
Why not just take Saudia and expand it?
The nation's opened up enormously in the last seven years under the wise leadership of the king and crown prince, and as a consequence, inward and outward demand for air travel has gone off like a fire hydrant. Saudia has done a great job of building additional capacity, but we need to develop an awful lot more.
Saudi Arabia is a conservative country with stringent rules about alcohol and what women can wear publicly. In contrast, visitors to Dubai can enjoy drinks in private and go to the beach in bathing suits. What does tourism look like in Saudia Arabia?
Saudi Arabia is the second most-searched destination online, and that's driven by curiosity, given that over the last seven years, the nation has opened up at a phenomenal pace with large-scale investment in tourist attractions like AlUla, which is the country's first UNESCO World Heritage site, as well as Dadan. Some places that were closed for decades are now available to tourists. There are things like the [recent music festival] MDLBEAST (pronounced "Middle Beast.") There has been a Formula 1 race in Jeddah, and (soccer star) Cristiano Ronaldo is moving to Riyadh.
So tourism won't be about benders and showing skin at the beach, then?
It's about culture and nature.
You said Riyadh Air would be a digitally native airline. What does that mean? People everywhere use the web and apps to book flights and select seats or meals. What will be different?
When you walk on board, your face will be your ticket. We will pay obsessive attention to detail, so if we know you're left-handed, we will place the fork and knife accordingly when we serve you lunch.
What about things that are not consumer-facing? With Southwest's mass meltdown during bad weather this winter, we saw how antiquated information systems patched together can fail spectacularly.
We have the chance to start with a clean slate and not a 1986 operations scheduling system, a 1994 guest experience system, a 2006 website, and a 2014 web app.
Your Gulf region competitors and airports regularly rank among the best in the world, well above those of Western countries where many airports are shabby, and airlines get lower scores for customer experience. Why do you think that is? Is it because of oil money?
Emirates is the most mature airline in this region, almost 40 years old. Qatar is the second oldest at around 30, and Etihad is at 20 years, but they are all pretty new by European or North American standards, so they aren't as linked to legacy infrastructure and systems. At the same time, there are super high expectations regarding service standards.
The topic of extreme heat has been front and center this summer. Do you worry that people concerned about climate change will be less inclined to travel by plane?
Any commercial airline that doesn't take environmental sustainability seriously will not sustain itself. It's as simple as that. Yes, commercial aviation is a whipping boy, and it's only 2% of global carbon dioxide emissions, but that's irrelevant given perceptions. If you look at newspaper stories in the last two years, you see stories saying, 'If only the airplane manufacturers did this,' that would solve the problem. Or if engine manufacturers do so and so. The reality is that fixing the climate problem needs all of the above and everyone on board.
So what does Riyadh's contribution to solving it look like?
The 787s we've ordered are composite aircraft with the most modern engines that are 21% more fuel efficient than their predecessors in this size aircraft. We will be doing work to reduce condensation trails (long thin lines of a cloud of exhaust seen behind an aircraft) and looking at the electrification of the vehicles we use, route planning, and so on.
You're not worried about people wanting to fly less because of environmental concerns?
Look at the traffic volume this summer. Demand is not going anywhere.
