Friday, October 26, 2012

Gulf Air At A Crossroads

Earlier this month the Government of Bahrain announced a 185 millions BD (490 millions USD) injection into Gulf Air. Any fund allocations by the airline have to be approved by the government prior to disbursement. Earlier in May the parliament rejected a 664 millions BD (1.76 billions USD) financial package for Gulf Air.

Gulf Air has been affected by political instability in the country for almost the last two years and the suspension of flights to Lebanon, Iraq and Iran in March 2011 which are among the most popular and profitable. Beirut has been reinstated since June 2012 and Iraq flights resumed in September/October 2012 while flights to Iran planned for October had to be suspended indefinitely due to the lack of clearances from the Iran government. The Arab Spring contributed to a reduction of air travel to Egypt and Syria and other countries. Rising fuel prices added to the financial pressures.

The proposed bailout will come with a deep restructuring and downsizing of the airline, but that is nothing new and a few years back such plans were opposed by the labor unions.
In 2009 the Trade Union opposed a 272 reduction of Bahraini staff until an agreement was reached. However, the current plan calls for halving the workforce from 3800 to 1800 and the fleet from 39 to 20 aircraft. Amid the uncertainty, staff are leaving to other airlines in the region. The Trade Union affirmed in a statement prior to Eid Al Adha that no restructuring of the workforce or fleet should affect the staff employment interests and rights (Click for more). This is not a numbers game, if the airline fails to retain qualified staff, it will be very hard to operate efficiently and productively to effect a change.

Similarly in 2009, the new CEO declared that Gulf Air will not compete with the Global airlines of the region and it will concentrate on the region, Europe, Africa and Asia. Now the airline may have to reduce its flights to Europe to only two destinations London and Paris, curtail its expansion into Africa and concentrate more on MENA and India. It already has a code share with Royal Jordanian, whereas all flights between Amman and Bahrain are operated by Gulf Air and of course Gulf Air is a contender for the third Air Operator Licence in Saudi Arabia. A license, if awarded to Gulf Air may ease its fleet downsizing by diverting some aircraft to the new airline.

Senior management in Gulf Air understand that bail outs are not sustainable and restructuring is a necessity, however there maybe a lack of understanding among politicians of the social, political and economical impact of this restructuring.

Wednesday, October 17, 2012

Air Rail Alliances

Royal Jordanian signed a code share agreement with Via Rail Canada providing passengers with a rail link beyond Montreal to Toronto and Ottawa, the first code share for Via Rail. Tickets can be purchased from RJ's website, offices or travel agents. Via Rail offers wi-fi and meals onboard (within the fare if travelling business while snacks and drinks are sold in economy). I have travelled on via-rail several times and it is a nice experience that allows one to see the countryside up close. 

Exciting, but Air Rail link ups are nothing new and are common with Deutsche Bahn, SNCF, SBB and a few others. 

They go under different programs mainly (for more details click here):
"Dedicated Services" similar to Code Sharing covering certain destinations;
"Entire Network Access" which is service that includes the entire train network. Deutsche Bahn offers this from 16 German airports to almost every carrier that flies into Germany with 10 carriers having Rail & Fly on their website;
"Night & Fly" which is an agreement between Swiss International Airlines and City Night Line providing overnight trips to 10 cities in Switzerland, Netherlands and Germany; and finally
"Airline-Rail Re-protection" agreements which provide train travel in cases of flight cancellations, Via Rail and Air Canada and between Deutsche Bahn and Lufthansa and Airberlin which came in handy during the 2010 eruption of Eyjafjallajokull volcano in Iceland.

Tuesday, October 9, 2012

Left Out.....

The last few months and certainly weeks have seen mega activities by the Global Airlines of the Gulf.
It seems the critics and adversaries of yesterday are the partners of today. A fact all airlines should heed.

It is official and in spite of Mr. Al Baker's earlier denials, Qatar Airways is joining Oneworld. Qatar Airways is a massive addition to the Oneworld network, considering that the airline has massive aircraft orders which usually translate into additional destinations.

Etihad has just signed with Air France - KLM a code share agreement. Airberlin also signed a similar  code share arrangement. There is also discussions about joint procurement and closer cooperation. 
Etihad seems to be working equally comfortably with both Oneworld and SKYTEAM alliances.

Emirates and Qantas, a Oneworld member, signed a code share agreement that has Qantas shifting its Singapore base to Dubai and terminating a long term agreement with BA its Oneworld partner.

Currently Qatar Airways has several code share agreements with Star Alliance airlines (Lufthansa, United and ANA among others), but nothing on the scale seen above (equity stakes, alliance joining and long term agreements).

Is Star Alliance (the largest of the three in terms of member airlines) being left out by design or just a coincidence? Only time will tell...


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