x Abu Dhabi, UAEFriday 21 July 2017

Gulf Air focuses on short hauls

The company will buy aircraft better suited for shorter flights as it withdraws from long-haul market.


Gulf Air is evaluating proposals from three jet makers for the purchase of small regional planes, as the Manama-based airline withdraws from the long-haul travel market dominated by Emirates Airline, Qatar Airways and Etihad Airways.

The airline is looking at buying up to 10 Bombardier CSeries, Embraer E-Jets, or the Airbus A318, said its chief executive, Samer Majali.

The introduction of the small, regional jets, which seat about 100 passengers each, will help the airline's transition towards the regionally focused operation introduced by Mr Majali on his arrival to the airline last year.

"We can use [regional jets] for opening new routes with the smallest possible risk and build up frequencies faster," Mr Majali said at the Arab Air Carriers Organisation event in Cairo last month.

"We don't want it to be a one-horse race," he added, saying the competition was "down to the finishing line" and should be completed by the end of the year. Gulf Air has spent the past decade accumulating losses and undergoing management shuffles as it sought to find a niche for itself in a Middle East market dominated by Emirates Airline. Last year, the airline's losses rose 22 per cent to US$502.9 million (Dh1.84 billion), according to its parent company, the Mumtalakat sovereign wealth fund.

This year, the airline hopes to cut those losses to $300m, Mr Majali said recently, with aspirations to break even or post minimal losses in 2012. The Gulf Air chief executive previously headed Royal Jordanian, which he successfully turned into a regionally focused airline serving only traffic to and from Jordan, rather than serving long-haul transfer traffic.

Gulf Air recently introduced two Embraer 170 and two Embraer 190 on a lease basis to test the smaller aircraft, which seat between 90 and 110 passengers.

But Mr Majali said Gulf Air customers had found it difficult to make the transition to smaller aircraft. "People still want to travel for an hour, or an hour and a half, with the biggest wide-body."

Many Gulf Air travellers have been used to carrying heavy luggage but have had to adapt to the limited cargo space of smaller jets. Saj Ahmad, an aviation analyst at FBE Aerospace in London, said other Middle East airlines had overlooked opportunities serving the regional market.

"Emirates, Qatar Airways and Etihad have continued to focus on their international operations," Mr Ahmad said. "They have equally bypassed the regional GCC market and this is where Gulf Air is looking to leverage its own strength."

Airbus was bound to be a front-runner, he said, as Gulf Air already operated the larger A320 aircraft.

There were grounds for Airbus to pitch in with the A318 to fend off competition from Bombardier Aerospace and Embraer while touting greater efficiencies and economies of scale in the existing fleet, he said.

Mr Majali said the move to smaller, less expensive jets made good business sense and he called Embraer's operating costs "quite attractive."

Elsewhere in the region, Oman Air and Saudi Arabian Airlines have ordered regional jets from Embraer, while Qatar has been in discussions with Bombardier to become one of the launch customers of its composite CSeries jet. The jet is due to undergo flight testing in 2012, with service entry in 2013.

Bombardier is able to create an aircraft for Gulf Air that deploys a lightweight business configuration and could fly "all the way to London City from Bahrain," Ben Boehm, the vice president of commercial aircraft programmes at Bombardier, told Flight Global magazine.