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Politicisation 'hurting Gulf Air performance’

Manama, April 15, 2012

Politicisation of Gulf Air is hurting the national airline of Bahrain, and unless a credible survival blueprint is produced quickly, it could be too late, said a report.

The government’s bail-out fund is getting bigger and bigger, but the future need not be bleak, said the report in our sister publication the Gulf Daily News, which quoted key sources.

A sustainable airline for the Kingdom is possible in the next two to three years if the airline is allowed to operate freely without outside influence, the report said.

Only 18 months ago the carrier was on course to expand and hugely reduce operating losses. Then local unrest and the 'Arab Spring' hit it badly. Lucrative routes to Iran, Iraq and Lebanon were scrapped following a government decision.

This meant that profitable destinations including Tehran, Mashad, Isfahan, Shiraz, Baghdad, Najaf, Erbil and Basra were wiped off the route map - representing 25 per cent of revenue, said the report.

The missing revenue from route closures is estimated at BD40-50 million ($106-$132 million) per year (including network revenue). Instability in the region has also led to suspension of routes to Athens, Damascus, Entebbe, Geneva, Kuala Lumpur and Milan.

Then strict visa checks were imposed; this killed the number of visitors almost overnight.

'Even Saudi Arabia and the UAE, which have major political differences with Iran, fly to Tehran,' the source said.

Most key management figures at Gulf Air hope that funding will come through very soon, along with a credible vision for future growth.

'We cannot reduce the size of Gulf Air because it would become unviable as a business.

It needs critical mass to be a player in this tough regional market,' said one source, according to the report.

It was also stressed that every Gulf airline records a loss from its core business. They are fed by revenues from duty free outlets, aircraft maintenance, catering, airport profits, etc.

Gulf Air stands alone, and the feeling is that BAS, and other airport facilities must be included as part of final overall profit and loss figures, the source said.

'Gulf Air represents the lungs that Bahrain breathes with and connects it to the rest of the world. It will lose life if these are cut,' said another source.

Services like two daily London flights are essential for the business community, even with a price tag attached.

The good news is that a legacy of institutionalised corruption in top level management has been eradicated at Gulf Air. Any wild talk about secretaries earning BD7,000 ($18,566) a month is just that, the source said.

The general feeling is that much can be saved and the airline reborn, providing speedy government decisions are made to both re-finance and leave alone.

'Politicians cannot run airlines; it must be left to the professionals,” the report quoted the source as saying. – TradeArabia News Service




Tags: Gulf Air | Bahrain | Airline | government | Politics | Bail-out |

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