Although a precise timeline for the production of sustainable aviation fuel (SAF) in Saudi Arabia under the kingdom's Vision 2030 development plan remains a work in progress, aircraft lessor AviLease aims to "bundle" the fuel with aircraft leases when the time comes, CEO Ted O’Byrne said in an interview on the eve of the Paris Airshow. The bundling of a lease contract with a separate agreement on the supply of SAF throughout the term of the lease would theoretically ease operators' task of securing access to the fuel over the long term.
“We are talking with several parties within Saudi Arabia as part of this project,” he told AIN. “We, and a number of other industry participants, think that SAF is the only solution for the medium term to decarbonize our industry. We think in particular that synthetic fuels—power to liquids—is a solution that is scalable.”
O'Byrne thinks that the region and Saudi Arabia stand well-placed to become large-scale producers of synthetic fuels due to their ample feedstock of the ingredients needed to create SAF.
“We’re saying we are a financier to airlines,” he said. “We are effectively a distribution channel of financial products to airlines; so why not bundle SAF with them, and use our distribution, sales, and marketing network to bundle it with our leases? We have the customer touch points with global airlines to distribute this. We’re now working with the players in the country to come up with the production and business plan.”
O’Byrne wouldn't speculate on a launch date for Saudi SAF production. “I’m not going to pin down dates, because I literally cannot,” he said. “I’m certainly spending quite a few resources on this so that we can go from idea to reality as soon as possible. We have a pretty clear path towards, frankly, being the most advanced leasing company in terms of environmental commitments in the industry. We are going to commit serious capital to this.”
In February, AviLease announced it had signed an MoU with Saudi Investment Recycling Company (SIRC) to launch the production and distribution of SAF to airline customers around the world.
Meanwhile, AviLease has committed to the world’s most efficient aircraft, O’Byrne stressed. “Our fleet strategy is focused, although not entirely, on new generation [Airbus] A320neos and A350-XWBs and [Boeing] 737 Maxes and 787s—a real and clear bias towards lower fuel-burn, high-end, lower-emission aircraft,” he said.
Saudi Arabia’s Vision 2030 entails a tripling of passenger traffic to about 330 million passengers by the end of the decade and, as of January, passenger traffic was back to pre-Covid levels. Since its launch at Farnborough Airshow last year, AviLease has committed to acquire 32 Airbus A320neos with two local airlines, Saudia and Flynas. It has also started to look at expansion through investments in international airlines and is actively working to extend fleets with international operators.
O’Byrne, who would like to see his firm grow into a place among the top 10 largest lessors by 2030 with a fleet of 250 to 300 aircraft, aims to create a feedback loop into the local economy through lower cost of debt, know-how, and attracting the right talent pool. “We need to be a global-scale player,” he said. “Scale matters in our industry; with scale comes diversification. You can diversify the number of credits and airlines you do business with and assets you own.”
City Pairs and New Routes
Regionally and globally, AviLease has entered discussions with a number of airlines. “We are talking about Asia,” he said. “I just came back from Singapore, Kuala Lumpur, Jakarta, and Manila. I’m going to go back to India soon. I will go to Japan and China. We’ll do some business in Europe, Latin America, and North America. A lot of new entrants—domestic and international, as well as many regional, airlines—are starting to fly into Saudi Arabia. We need more city pairs for Saudi Arabia. Last year there were 28 new routes flying into the country. You can expect to see plenty more of these city pairs.”
O’Byrne declined to talk about the fleet composition of new Saudi airline Riyadh Air. “I can’t talk about [its] business plan,” he said. “I can only tell you what they have obviously announced already on the Boeing 787. We are certainly very interested in looking into this aircraft type. We like the aircraft. We think that this is going to be the cornerstone of Riyadh Air, but also many other airlines’ fleet strategies.” The March announcement of Riyadh Air's launch accompanied a memorandum of understanding covering 39 Boeing 787-9s.
Experienced Team
O’Byrne claims deep OEM know-how within his management team, both from Airbus and Boeing sides. “We know how to manage OEM backlogs; we also know how to take aircraft out of fleets and remarket them elsewhere and that’s a pretty powerful tool to reorient airlines’ fleets,” he said. “That is a big differentiator between us and any other leasing company in the world. The other key differentiator for us is our approach to sustainable aviation. Our SAF project is something that is very unique in the marketplace. I don’t think anyone else in the industry is thinking about doing this or committing that level of capital to that product.
“We are a fast-growing lessor with global ambitions,” he said. “By July, we will probably have closed a number of other transactions. We are absolutely a global leasing company, but our core DNA is industrial, and our mandate is to help develop the Saudi aviation ecosystem.”