The 6th Formula 1 Grand Prix of Bahrain this weekend is causing enormous excitement here in the Kingdom of Bahrain – and so it should. This small Gulf state is quietly proud to be the first country in the region to host one the world’s greatest motor races.
The title sponsor of the race is home carrier Gulf Air, and its Swiss chief executive Bjorn Naf is outlining how far the airline has come in the past year or so.
Nobody is under any illusions that there is a lot of work to re-establish the Gulf Air brand, and make the carrier profitable. Describing Gulf Air’s ambitious “realignment strategy” Naf notes: “We are trying to catch up from times when we have lost a little bit of market share, lost a little bit of our image.”
Naf is seen below left with Gulf Air’s chief people officer Ahmed Al Banna.
This involves a completely new fleet, starting with Airbus A320s replacing its older ones this year, and then the delivery of A330s and later the first of 24 Boeing 787s.
One of Gulf Air’s frustrations has been an inconsistent in-flight experience across its fleet. “We are working on a new in-flight product – it will be rolled out this year,” says Naf. “It is part of the plan we are setting out to bring Gulf Air back to its glory days.”
But Naf knows going head-to-head with local rivals Emirates, Etihad and Qatar Airways is madness. The carrier is simply too far behind to do that.
So the message from Naf is Gulf Air will be “smarter, not bigger – we are not just looking to compete on size”. It is “offering value, not excess”.
“We will be a global premium carrier,” says Naf. However, the first priority is to build its network to support business travel in the region and from Bahrain. This means making Bahrain the most convenient hub with fast connection times (30 minutes is promised) and making Gulf Air the carrier of choice with double-daily frequencies that allow a day’s business at the leading Middle Eastern destinations.
The target is to offer a product that travellers within a flying time of 3.5 hours from Bahrain will select. After developing a network that does this Gulf Air then looks for the East-West transfer traffic that is so important to the region’s big three. Naf describes the ability to offer these connections as a “byproduct of the network”, but ranks its importance behind the regional mission.
In 2008 Gulf Air carried almost six million passengers. “If I can increase this on a steady base I’m sure we will become a profitable carrier,” says Naf.
But like all carriers Gulf Air is feeling the pain from the global recession and seeing a shift in travellers from its premium cabin to economy. “We are challenged,” he says. Traffic on its UK route for example is down while “India is obviously tanking, but it will come back”. Gulf Air has suspended several Indian routes as it waits for India to rebound. It has shifting capacity to more profitable Middle Eastern routes.
“We are managing on a very tactical basis,” says Naf.
For now, route expansion is on hold. “It is very risky and very costly to go into new markets, so therefore we rather increase freqencies in existing destinations,” says Naf. “We will not open a new destination in 2009.”
Gulf Air is also reviewing its short-term fleet needs. This includes deciding to only keep four Boeing 777s wet-leased from India’s Jet Airways for six months and not extending the lease as originally thought. Then there is the decision over the future of its A340s. “We’ll see how that goes, we may sell or sub-lease them,” says Naf. “This is a very dynamic process, we are not there yet.”
Naf doesn’t have a magic wand, or unlimited funds to restore Gulf AIr’s fortunes overnight but here is one determined Swiss gentleman. As he says to his senior staff when he really wants a solution to a problem: “Fix it.”