x Abu Dhabi, UAEFriday 28 July 2017

Struggling Gulf Air ceases operations on four more routes

Gulf Air, Bahrain's national carrier, cut another four routes from its network yesterday because of the challenging business environment for airlines.

Gulf Air, Bahrain's national carrier, cut another four routes from its network yesterday because of the challenging business environment for airlines.

Service to Damascus will stop from March 2, while flights to Athens and Milan will be halted from March 12. The Kuala Lumpur service will cease on March 25, said the airline.

The announcement follows Gulf Air's axing of its Entebbe and Geneva services last month, and news that the airline and its main shareholder, Mumtalakat, Bahrain's biggest sovereign wealth fund, are considering whether to sell off or undertake a wholesale restructuring of the struggling carrier.

Samer Majali, Gulf Air's chief executive, said the decision to close the routes was "pragmatic and commercial" and aimed at "focusing services on routes with higher passenger traffic".

Mr Majali said the current business environment was challenging for airlines around the world.

"Our commercial strategy, developed in 2009, delivered significant gains in 2010, but last year has been challenging," he said. "Therefore, we are now adapting our approach to address the challenges on an urgent basis."

The move comes as the airline seeks to address the high price of fuel and low passenger numbers, as well as the local and regional political situation. According to analysts, Gulf Air, which once had the biggest network in the Gulf region, has been struggling to compete against its GCC rivals, including low-cost airlines such as flydubai and Air Arabia.

In a statement last month, the airline said: "Gulf Air has faced challenges in recent times, in common with other carriers around the world, and combinations of unprecedented regional and economic factors have made business increasingly difficult. Given this, Gulf Air, its shareholder Mumtalakat and the government, both through the cabinet and parliament, are all working towards a common goal - to secure Gulf Air's long-term sustainability and to actively address the airline's loss-making position.

A range of strategic options are currently under consideration."

Saj Ahmad, the chief analyst at StrategicAero Research, said that major changes would be needed to save the carrier, with one option being the injection of more state aid.

"After all, Emirates, Etihad and Qatar Airways have all started life through state aid and are currently among the world's fastest-growing carriers … and so there is a perception that Gulf Air can and should emulate its GCC peers and stage some sort of recovery with a new management focus," he said.

The International Air Transport Association recently forecast that Middle East carriers could post a total profit of US$300 million (Dh1.1 billion) this year, down from a previous forecast of $700m, with conditions in long-haul markets likely to deteriorate, particularly in Europe.

dblack@thenational.ae

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