These new aircraft bring the state-backed carrier closer to its stated goal of reaching 200 in-service fleet by 2020, the same year it is aiming to complete its restructuring process and achieve profitability.
How close the carrier is to its 200-fleet objective will depend on how many of its current 119 in-service fleet needs to be phased out between now and 2020.
Saudia said it will launch a low-cost carrier, Flyadeal, in mid-2017. It is foreseeable that some of the older aircraft and the remaining units on order could be transferred to the new airline.
Some would say the timing of the new deliveries couldnt be better – the kingdom is seeking to expand its non-oil economy, stimulate private sector participation and build technical expertise among nationals. A new fleet provides opportunities to train and hire new pilots and engineers, new business for aircraft lease and for maintenance, repair and overhaul (MRO) companies. Equally important, the carrier can increase frequency of flights to underserved regions across the kingdom helping expand economic activities in those areas or to expand its international routes, depending on what fits its strategy going forward.
Others, however, would argue that Saudias move has come a little too late; after years of double digit growth in its airport passenger movement, there is a possibility that the growth could slow this year, if the decline in the number of the most recent hajj visitors is anything to go by.
Not only will an expanded Saudia fleet be met by potentially fewer passengers; the pie wil have to be shared with two or three new potential competitors that could be entering the market over the short-to-medium term.
Another major change that could disrupt the current state of play in the kingdoms aviation sector is the pending relaxation if not removal of fare caps that have kept the domestic fare artificially low. This could work both ways: it will help the airlines and service providers maintain a healthy revenue based on the actual cost of providing the service; but it could also potentially dampen demand, especially if one takes into consideration that the upward adjustment in fares will be taking place while a widespread economic uncertainty is gripping the kingdom and the wider GCC region.
The dissolution of a fare cap potentially requires withdrawing or limiting the alleged fuel subsidies to Saudia, which means it has to change its revenue model altogether, an issue that Saudias transformation team must be hard at work in addressing.
All these changes will refocus the entire industry from cheap air tickets to service and efficiency, which will have to go beyond the passenger experience with the airlines to the ground facilities and services at airports, promptness of flights, as well as the quality of road network and rail infrastructure that passengers require for their journey.
The bad news is that updating the policies, regulations and infrastructure require time and resources, both of which are not in abundant supply. The good news is that Saudia seems to be taking concrete steps to reform and become more competitive. Such change could set the pace for the entire sectors future development.