The Metamorphosis of Gulf Air
Last week El Al and Gulf Air jointly announced that they had signed a memorandum of understanding (MOU) to seek opportunities for cooperation and collaboration. The agreement makes good sense. The two airlines are about the same size – each serving something of a niche market, squeezed between the “superconnector” giants of the Gulf, and addressing the commercial interests of their home markets, Israel and Bahrain.
It wasn’t always so. In the way back, before there was an Emirates Airline or anyone had ever heard of Qatar Airways or had learned how to pronounce “Etihad”, Gulf Air reigned supreme in the region. In 1974, the airline coalesced around four state owners -- Bahrain, Qatar, Abu Dhabi, and Oman, and created an integrated air network connecting the four countries with each other, along with a considerable international route network.
The pride and joy of Gulf Air was its much-vaunted “golden falcon service”, highlighted by its flagship fleet of Lockheed L-1011 TriStars with Rolls Royce Engines. The rest of the fleet comprised Vickers VC-10s (!) and Boeing 737-200s. By 1976, the route map stretched from London to Hong Kong, and included Amman, Amsterdam, Athens, Baghdad, Bombay, Bangkok, Beirut, Cairo, Colombo, Delhi, Dhaka, Jeddah, Karachi, Khartoum, Larnaca, Manila, Paris, Ras al-Khaimah and Sana'a.
Historically, multinational airlines have a checkered record of success. East African Airways was a joint venture owned by the governments of Kenya, Tanzania, and Uganda. It managed to last almost three decades. Air Afrique was a similarly structured entity representing the interests of as many as 14 (depending on the year) francophone West African countries. The airline fared a little better, operating from 1960 until 2000, before succumbing the inevitable political rivalries and infighting.
Gulf Air seemed to have the magic formula that proved the exception. In fact, in a 1993 article, Air Transport World saluted “the profitable carrier owned by Abu Dhabi, Bahrain, Oman, and Qatar (as) proof that a multinational (airline) can be successful”. But it too would eventually succumb to the same factors the dogged other multinational airlines.
Qatar jumped ship and exited the partnership in 2003 to start its own national carrier. Next came Abu Dhabi in 2005, as it decided to go its own way with the launch of Etihad. And finally, Oman abandoned ship with the introduction of Oman Airways in 2007. That left Bahrain as the sole remaining owner. It did solve the airline’s perpetual problem of how many hubs to have – and where to put them Now, the carrier would be focused solely on its Manama Airport base.
Since receding to a Bahrain-focused operation, the airline has been through numerous transformations. The carrier saw several consecutive years of losses. CEOs came and went and the expansive network which once stretched to Sydney and Johannesburg was pruned back.
Gulf Air had to let go of grand ambitions of being another Gulf-based intercontinental superconnector. There’s barely room enough for three of them, let alone four! Instead, the carrier settled on right-sizing the operation to focus on serving routes to connect Bahrain with key commercial and leisure destinations in Europe, the Middle East, Asia, and East Africa.
Accordingly, the fleet has also transitioned over the past two decades. Boeing 767s would replace the L-1011s for long haul flying. The airline would later shift to an Airbus emphasis, acquiring A320s, A330s, and A340s. In 2008, Gulf Air concluded an agreement with Boeing for 24 787s. The 787 fleet, which was ultimately reduced to just 10 airplanes, replaced the Airbus widebodies. Today, Gulf Air has simplified its fleet with just two types – A320s for short and medium-haul flying – and 787s for regional and long-haul.
2020 marks the 70th anniversary of Gulf Air (including all the earlier incarnations of the airlines). While its golden era may be behind it, the company remains focused on refining the business model for long-term sustainability. Selective growth is part of that plan. Gulf Air received the first of its order for eight A321neos in July. Another nine A321LRs are on order. The new aircraft will be placed on European routes where the airline is opening several cities next year, including Milan, along with a number of destinations which will be served seasonally. To the east, Kuala Lampur will be added to the network.
But the biggest surprise – that no one could have predicted a year ago -- will be the new service to Tel Aviv, to begin in January 2021. Further details of the recently announced MOU with El Al are in work.