Friday, January 22, 2010

In The Image of RJ

I have been closely involved with Gulf Air (GF) since 1996. I went through the years of decline of the airline dealing with maintenance issues.. For years the leadership of the airline was a political issue. We used to joke, every problem with Gulf Air was a diplomatic incident. I saw the airline go from an example of Arab cooperation to the flag carrier of Bahrain. I watched GF maintain a 5 million passengers annual uplft as Emirates, Qatar Airways and others eroded its market share.

Then enters James Hogan who transformed GF into little Ansett. I am not a great fan of the man but he did manage to increase the passenger uplift to 7 millions annually, rebranded the airline new paint scheme, Chef in the Air, Nanny in the Air and Bahrain F1. Then James Hogan bailed out to Etihad, but that is another story. Several CEOs came and went amidst political interference from Parliament, internal turmoil and accusations of corruption.

August 2009 enters Samer Majali, ex CEO of Royal Jordanian. He left RJ with a mid year net profit of 15 Million USD in the worst global recession. He privatised the airline and took it into One World. No small feat.

So, enters the new CEO, and the following events unfold
1. Government declares it can not subsidise GF forever.
2. Iraq operation started a month later (a very lucrative and profitable route)
3. Cut down on several losing routes and reopened new ones
4. A review of the airline structure is done looking at manpower and fleet.
5. A decision made to become more of a Middle East Airline.
6. A decision to sell the 5 A340 owned by the airline.
7. A decision to take delivery of new A320s (20) at the rate of one per month.
8. And lately a decision to lease ERJ170s and look at acquiring up to 10 Regional Jets.

The parallels with Royal Jordanian are so similar. (substitute A340s with A310s and L1011s, EMBRAER ERJ170/190, Iraq operation, route structures)

Gulf Air's legacy should be preserved. Gulf Air has been the dominant carrier in the region for decades and every airline aspired to emulate their 5 Stars service. Further, every airline in the GCC has senior managers who have worked for Gulf Air and contributed to the success of their respective airlines. Similarly every airline in the GCC has several ex Royal Jordanian employees contributing to their success.

Two carriers, different regions may end up with the same model, robust enough to compete with the heavily branded carriers of the Gulf and survive in an ever changing global market.




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