Saturday, January 01, 2011

Gulf Air - will it Make Profits?

If Gulf Air starts to show profits again, in three years time, as a newspaper says in its front page report, (Runway to profit, Daily Tribune, 26 Dec), it will indeed be a great relief to the Bahraini government.

I sometimes feel sad that Gulf Air, which at one time was the brightest star in the region, is now at a state where it has to struggle hard for profits. After reading your report, I did a bit of searching on the Internet and wrote this down which your readers might find not only useful but, perhaps, inspirational in some way.

When, in the 1940s, the British pilot Freddie Bosworth started a flight-taxi-service from Bahrain to Doha and Dahran; and when, in 1951, this smart entrepreneur expanded it under the name “Gulf Aviation”, no one thought it would go higher.

But thanks to the oil drilling and refining operations in Bahrain, the need for speedier air travel was rising, and a joint venture with the British Overseas Airways Corporation (BOAC) was made. Bosworth, they say, tragically died in an air crash in 1951, at an air show.

But the joint venture lasted for more than twenty years, until it was eventually taken over, as 'Gulf Air’ in 1974, by the Gulf States—Bahrain, Qatar, Oman and the Emirate of Abu Dhabi.

The airline soon became a leader in the GCC, and a stronger political and economic union was formed with more countries; with newer stake holders, the new full set being Saudi Arabia, Kuwait, Qatar, Bahrain, Kuwait, the UAE and Oman.

But, one by one, as oil was found in these countries, and as they became richer to started their own airlines, they sold off their stake in Gulf Air, and withdrew. Obviously, their commitment to ‘Gulf Air’ reduced, and the regional competition increased.
I remember telling a friend when, in May 2007, I read the news that the last of the countries in the group, Oman, was also selling off its stake in Gulf Air, that it will be extremely tough for Bahrain’s ‘Gulf Air’ to give a strong fight, when all the once major stake holders have now all become competitors!

I am giving here the names of the other regional airlines, in the order of their formation, which have all made this region highly competitive - Saudi Arabian Airlines (1946), Kuwait Airways (1954), Emirates (1985), Oman Air (1993), Qatar Airways (1993), Etihad Airlines (2003), Air Arabia (2003), Al Jazeera (2007), Bahrain Air (2007), FlyDubai (2009).

With this highly competitive situation, I am really not sure if Gulf Air can make profits, without showing competitive advantage on many factors. I am skeptical about how far what your report says can be achieved. But I wish Gulf Air the best.

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