Bahrain Air Airline with Affordable Fares in Bahrain

In the Middle East overall 2008 passenger growth decreased to 7% from 18.1% in 2007.  Worldwide the aviation sector is facing a downturn. What is your frank assessment of the global and regional aviation sector?

It is certainly affecting the industry, and it is time for the airline industry to consolidate, whereby they will have to maintain their costs at an absolute minimum, because the profitability factor is not there anymore.  The only way to achieve your targets in terms of financial returns is to really contain costs.  During the time of the global downturn is the when we really need to consolidate.

The International Air and Transport Association recently announced that Middle East airlines will double their losses in 2009.  Profitability has become an even more difficult challenge in what has always been a tough business.  Do you see the airlines in the region being affected, and Bahrain Air in particular?

Yes, the entire industry is going through a difficult time now.  The problem that we’re having now is that we’re going through a low season coupled with the downturn in the world economic situation.  This makes it difficult for the airlines to downsize the amount of effects they are going through, especially for new, startup airlines such as ours.  We haven’t been through a full cycle yet so it is difficult to judge. The only determining factor is how good or how bad the airlines will do during the upcoming summer.

How do you assess Bahrain Air’s financial performance, and what are your emergency strategies and plans to overcome the crisis?

Bahrain Air is monitoring our financial performance very closely. Bahrain Air is small and lenient and that makes us quite flexible.  So whatever changes Bahrain Air introduced to overcome the financial problem the industry is facing, it is easier for Bahrain Air.  Unlike the major airlines where anything they do may have catastrophic repercussions on their financial results because of their size. In our case it is different and it is manageable.  What we’re trying to do is to look for opportunities outside of the gulf area; the gulf the area with the number of airlines we have now is loaded with airlines making the competition even more severe.  So for small airlines such as ours, the best thing to do is to look for bigger markets outside where the region is unspoiled as of now, what I call “virgin destinations.” For that reason we’re building some strategic choices and destinations that I cannot reveal now, but they are things that we have in mind.

Currently, local carriers account for 4% of the region’s airlines sales.  Do you see this changing in the future, and is the demand there?

This is definitely the case when you have economic problems.  Individuals will fly on local airlines, and also business people.  We hear from the market in Bahrain itself that lots of companies have specifically instructed their employees that when they travel – because they are trying to contain costs to the absolute minimum –they should use low cost carriers.  There’s a lot of room for improvement and increasing the market share of these low cost carriers.  It is cheaper, safe, flexible, and gives them a good value for their money.

Let’s say in 2012, what will be the market share?

The market is really for low costs.  As I said, it serves the business people, it serves the tourist industry, and it serves the overall traveling public.  They will be having problems of their own when it comes to higher costs like all other airlines, and the margin will become less and less as the competition gets more severe, especially in light of the fact that evened the full fledged airlines have lowered prices because they want to maintain their market share.  So the competition will be there, but I think that when you look at the future of the overall local airlines, it is in their favor, especially because their cost structures are smaller compared to the full fledged airlines.

Defying the economic downturn, Dubai on Monday launched a new low cost airline flying in June.  We see the competition between Air Arabia, Jazeera Airways and Fly Dubai intensifying in the future.  How are you going to stay ahead, and what is your competitive advantage?

The more you introduce low cost airlines concept, the better it is for the industry.  Why?  Because the low cost concept will be appreciated and understood not only by the traveling public but even for governments.  If you can acknowledge the fact that in the Middle East at large the markets here are still very protective.  So the more you introduce low cost airlines, the more the concept will be accepted, even in the eyes of the governments, whereby all this protectionism that is there will hopefully one day be lifted.  And this will be for the benefit of the low cost carriers.

In your opinion, are the local markets still conservative when it comes to low cost airlines?

Yes, it is still very conservative and there’s still a lot of protectionism in favor of the flag carriers.  We as low cost carriers, although we are national carriers, do not enjoy any sort of benefits.  We pay as much as all other airlines pay; there is no financial support for us, we have to rely on our own internal resources.  We have our own unique situation where we have to provide good service at minimal return, while in fact other flag carriers sometimes get support from their shareholders, especially if they are flag carriers or governments.

How are you perceived by the public, not the private sector?

I think those who have used our services like us. In fact, a few days ago I was asking some of our crew whether they could see the same faces returning to our flights or not and they confirmed that they could.  That is a good indication that those who try us like our prices, our on-time performance, and most importantly, they like the service.  They are beginning to accept the fact that I will provide them with the lowest fare possible for the service that will take them from point A to point B, but anything they want they have to pay for it.  So they will share the low cost with everyone but if you want anything on top of that you’ll have to pay for it.

At the same time, it is still a new concept, even for the public.

Yes, it is gradually being accepted, and they just like it.

How do you differentiate yourselves vis-à-vis other low cost airlines in the GCC?

In our case, we do not consider Bahrain Air a low cost airline specifically.  We consider ourselves a carrier with affordable fares. We’re not really a typical low cost carrier, nor are we a full fledged airline; we are in between.  For some sectors we do offer a modest meal, but in other sectors we charge for it.  We are very flexible, it depends from one market to the other.

Bahrain Air celebrated the arrival of a new A320 aircraft which will be the fifth in your fleet.  What are the expansion plans of Bahrain Air?

Bahrain Air will be adding another three aircraft within the coming three weeks.  The 6th one will join us within about one week’s time, and between the 15th to the 25th of June we will be adding another two brand new Airbus 320’s.  So we will have by mid June 2009, eight aircraft, and by October 15th of 2009 we will be getting the ninth aircraft.  In total there will be nine aircraft in 2009.  This coming summer, Bahrain Air will be introducing a daily service to Mumbai in India plus two flights to Istanbul.  Following that, in October we will be going to six destinations including Riyadh in Saudi Arabia, Addis Ababa, Sana’a in Yemen, Lahore and Karachi.  All in all there will be six more destinations, plus we will be adding more services to our current destinations.  We see ourselves by the end of this year having at least 24 destinations.

Are these some of the virgin destinations you mentioned earlier?

No they are not; there are more to come.

It must be very challenging to grow amidst the crisis.  How do you manage this?

I know that we are going against the current, and now it is time to capitalize on the current local situation in terms of acquisition of aircraft.  Just one year ago it was a seller’s market, now it is a buyer’s market.  During this downturn you might as well use the situation to your advantage and acquire more aircraft, so that when it is a good time you have the assets that will support your expansion plans.

Don’t you think that everyone thinks this way; that you have to expand during the economic turmoil?

Yes, everyone must be thinking the same way, but they might have their own internal problems that might not make them think positively that way.  In our case we have the resources to capitalize on the current market situation and that is what we’re doing.

We are delivering a Green Award for the company that that has the strongest strategies and policies toward the environment and sustainable development.  As you a new carrier, what is your strategy towards that point particularly?

Bahrain Air is for anything that protects the environment.  I think that when you are going for low costs your waste is less. When your waste is less you are producing less harmful problems to the environment.  I think that will say a lot.

How do you envision the airline five years down the road?

I see Bahrain Air in five years time as being a very strong company, a company that we all feel very proud of, for the mere fact that we carry the name of the country.  I see it’s becoming very strong and going all over the place, within at least the circle of 5 hours.  I see it very profitable, and something that my colleagues and I will feel very proud of.  Destination-wise, we talked about a minimum of 14 destinations five years from now.

Can you give our audience in message about Bahrain as a final destination?

Bahrain is a beautiful island.  It has the most friendly people on earth. I would say to those who have not heard or seen or witnessed Bahrain, let them try.  They will come and see it and love it.  For us as an airline, we will support that and we will make their travel as comfortable as possible.