Simpler Gulf Air fleet is least-risky option: chief executive

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Gulf Air's management considered five restructuring options in its review of the carrier before deciding that nothing short of an extensive overhaul was necessary to make the Bahrain-based airline profitable.

Two alternatives - involving efficiency measures and cutting loss-making routes - failed to address the root cause of the airline's problems, says Gulf Air chief Samer Majali, and a do-nothing option was simply "not realistic".

The two remaining "more radical" approaches, dealing with the business structure, centred on a mixed fleet or a simplified fleet for the carrier.

Gulf Air's mixed-fleet option would have imitated the strategies of the carrier's competitors, using long- and short-haul aircraft to serve a range of destinations in the Gulf and beyond.

Majali says this was a "higher-risk" approach because it was "too dependent" on transit passengers. "These types of customers add little to the national economy and continue to drive the price-discounting model," he says.

The strategy would also have put the airline head-to-head with the competition, and left it with relatively high maintenance costs.

In contrast the simplified-fleet plan chosen by Gulf Air primarily uses narrowbody types - with the Airbus A320-family at the core - to serve main routes, with a number of long-haul aircraft assigned to financial centres.

"The simplified fleet has some technical challenges and high unit costs but, on balance, provides increased flexibility with reduced maintenance and organisational costs, limited total exposure, and would be more attractive to potential commercial partners," says Majali.

Speaking to ATI today, Majali said that the current Gulf Air fleet - consisting of Airbus A320s, A330s, A340s and Boeing 777s - effectively included several additional aircraft types because of differing configurations, which made the operation "difficult".

Gulf Air is aiming to build a genuinely simpler fleet structure with a single regional jet type, a short-haul operation based around the A320 family, and a single-type long-haul fleet.

While the airline has both Boeing 787s and A330s on order, Majali points out that the two were "not supposed to be together" and that the 787 was designed to be the longer-term option, succeeding the A330.

Gulf Air is intending to increase its A320 order but is still in discussions regarding the number of A330s and 787s it requires.