Gulf Air Bahrain Premier Air Carrier in Bahrain

Worldwide, the aviation sector is facing a downturn. How do you see that affecting airlines in the region and Gulf Air in particular?

I think it’s a very challenging year for all the airlines worldwide. I think the Gulf has not been hit as hard as other regions, mainly the US, Asia, Europe. We’re flying to 42 destinations in 26 countries so it’s a global challenge. Regarding Gulf Air, we have aligned our network to the challenges of the market. We have reduced capacity to certain markets, put capacity into seasonal markets, we have strengthened our network to the summer peak in this region. The Middle East is still growing, positive, not contracting, but for our industry as a whole it is certainly a very challenging time.

You mentioned “we will be a global premium carrier.” Is this the right strategy, especially faced by the global economic downturn?

Yes, I don’t see why not. Bahrain is a growing a Kingdom, it has a strong vision for 2030, we are part of the development of the kingdom, so we need to make sure to connect to businesses. We still have the strongest Middle East network that is geared to the business needs of business travelers. We offer morning departures and evening returns for business people. We connect to strategic locations around the globe; Europe is very important, Asia-Pacific is very important for trade and business relations with Bahrain. Bahrain is positioning itself as a premium brand, as a business friendly kingdom, we support that and are a strong ambassador of Bahrain, so we have to build a premium, quality product, delivering on the basics of an airline, which are punctuality, reliability, friendliness, and a good on-board product. That is where we want to position ourselves. That does not say that we want to have a global network with 100, 150 destinations, no. It means we fly into destinations that make sense for us and for Bahrain so that we connect the Middle East to Bahrain, or the Middle East via Bahrain to the world and the world via Bahrain to the Middle East.

Can you comment on your expansion plans; your the strategic targets, growth, profitability, number of destinations, and services?

I believe that as a company you have to make profit, you have to add value. You cannot always run on losses, so you have to actually grow and produce a return. We have three new aircraft and destinations a year, and we’re aiming at about 10% growth. This year, the challenges are a little bit different, we are going for consolidation, we are making sure to continue in our initiatives to turn the company into profitability which needs three years. This year we are not growing to three destinations, but obviously Gulf Air will continue to expand its network. We want to be profitable, our target was 2010, we have 59 aircraft on order and will be coming in over the next ten years. We currently have a fleet of 30 aircraft and we’re gong to replace them because we want to have a younger, more modern fleet. We want to have a newer product and less operational costs, a better carbon footprint, less maintenance costs, and so on. That’s why currently we are realigning the company to trim it again for when the world picks up in growth and the economies come back, Gulf Air will then successfully fly into these markets profitably.

Do you see the competition between Emirates, Etihad, Qatar Airways and other regional emerging airlines intensifying in the future? How would you like to differentiate Gulf Air from other regional airlines?

Yes, of course. It is a highly competitive environment. It is certainly a region where a lot of carriers have grown over the last couple of years quite aggressively and with premium products, I must say. I think you see the best products in the world here in the Gulf, modern aircraft, very innovative products, business and first class on a very high standard. I think Gulf Air wants to reposition as well. I must say we have been the innovator. It has almost been 60 years around this region, we have been the founding carrier for the Gulf aviation industry. I think the market is big enough for all to grow. Yes, you have to be careful and see what we can do best and we have to strengthen these elements to become a carrier of choice, and position the carrier to add value for our customers, so customers choose us because we do something better than the others. Competition is healthy, it is a good thing and keeps us on our toes, it makes us better and better every day. I think that the region is under-developed in terms of transportation systems; you don’t have a railway system or a sophisticated highway system. It’s a growing region, people need to travel and want to travel and the only means of transportation so far is aircraft. The aircraft coming into the market will be felt and all the carriers around us will obviously have part of the pie.

One of Gulf Air’s frustrations has been an inconsistent in-flight experience across its fleet. Is this still a major concern to you or has it been improved?

I think we have done a lot in the past few years when the new management and new board took over. We have invested heavily in a new fleet so we are rolling with new aircraft in. We are getting Airbus 320’s and will redesign our product. We have worked hard on punctuality and reliability as well as on harmonizing the fleet. We currently have a full Airbus fleet in operation, yes we have a few Whitley’s aircraft Boeing 777 but after the summer peak they will go back to the owning company. I think what we can see is that the initiatives we have taken in the last 1.5-2 years have reposition Gulf Air. The employees believe again in Gulf Air, the Kingdom of Bahrain is fully committed to the success of this company, the management team, the employees, and the board are committed. We have done a lot of good things which were internationally recognized last year, we reduced costs by about 30%, we renegotiated contracts and revamped our network, we have centralized everything around the airport here in Bahrain so the network is much more geared towards the business needs of the business traveler. It is a step forward in our goal of breaking even in three years, which is 2010. Maybe because of the global recession at the moment it will be 2011.

What is your policy towards sustainable development and the environment?

It is very important for Gulf Air. Last year we launched our Corporate Social Responsibility Program. Part of that is clean air, water, and waste. For an airline, you have to continue your initiatives on sustainability. Once you buy an aircraft, it normally stays in your fleet for fifteen to twenty years. Our first step forward in that direction is when we signed a purchase deal with Boeing for a Boeing 787B Airbus and we bought new Airbus 330’s and new Airbus 320’s. These aircraft operate with much less fuel consumption and carbon footprint, and they operate more efficiently and effectively. That helps, not only to lower costs, but to fly an environmentally friendly fleet. It’s very important that Gulf Air is not holding back on this. We have signed a memorandum as well together with Boeing and Yale University and a few other airlines to be in a working group to develop other means for fuel. This is an early stage, we have someone who is in that group so that we’re working with a team to come up with something to replace A1 jet fuel hopefully within the next five years, to have something that is sustainable, giving a smaller carbon footprint, and to make sure that Gulf Air is once again an innovator and leader in that regard. I think that comes along with the Kingdom of Bahrain’s initiative. Here in Bahrain there is a financial harbor, it is a world trade center that has three big propellers outside and they power about 25% of the energy needed. That shows as well that the kingdom is committed to sustainable models. Gulf Air is responsible in the kingdom to support these efforts, and hopefully right now we are leading the next generations.

Emirates and Qatar are heavily supported by oil rich governments, while Bahrain is not an oil country, so you don’t get the same kind of support. How do you characterize the edge you have?

I cannot talk about the airlines, all I can say is that what we’re trying to do here is add value via profitable company. We did lose money last year, but it was a very very challenging year; we had high fuel prices, $147, and we were not hedged at that time, so I think it is very hard to turn a company around when the fuel or oil prices are that high. This year we are hit by a global recession, we have a challenge in our premium cabin; there are not as many business travelers as there used to be, but it is a clear goal that we are independent from government subsidies and support. We want to break even and make a profit, and that’s a strong commitment from us and the board that this will happen. Now we are looking very carefully as to what to do to preserve cash, but in 2010 and 2011 we have to be able to walk on our own feet.

Finally, what is your dream for Gulf Air; how do you imagine the airline 5 years down the road and its role in developing the economy of Bahrain?

We want to be a strong ambassador of the Kingdom of Bahrain. It is important for us that the Kingdom is going forward with its strong Vision 2030 implementation; we want to support that and position ourselves in the niche to be a premium product, a strong ambassador of Bahrain, making sure we add value to what we’re doing, and be the carrier of choice for the region with a strong customer base that chooses us based on reliability, punctuality, and friendliness, as well as one the aspect of being able to sell time to the business customers. I think there is a very visionary leadership in the Kingdom which has clearly laid out its vision for the Kingdom and that is to go forward, to diversify the economy, to attract international companies and businesses, foreign direct investment, it is a very business-friendly kingdom, it is easy to set up businesses here. I think it’s the freest economy here in the Gulf and the Middle East; it is family-friendly, I have family here myself. The Kingdom has strong positioning to be a niche player to invest smarter, not just be bigger; it is making sure that what is being done here is leading in industry, there’s a strong financial industry here, strong hospitality, even tourism. The Kingdom is well-positioned to be growing very strong in the future.