Gulf Air to Re calibrate Airline Network with a Planning of 25 Per Cent More Destinations in 5 Years, Cuts Unprofitable Routes

Sunday, October 6, 2024

Gulf Air, Bahrain’s national carrier, is undergoing a major transformation under the leadership of CEO Jeffrey Goh, who has spent the past nine months spearheading a wide-ranging network review. This strategic evaluation is set to result in a significant reshaping of the airline’s route map, with a focus on cutting unprofitable routes and expanding to 25% more destinations within the next five years.

Speaking during a keynote interview at Routes World 2024 in Bahrain, Goh outlined the airline’s plans to recalibrate its network in order to enhance profitability and position Gulf Air for sustainable growth. Gulf Air currently operates to around 60 destinations, but the airline is targeting a 25% increase in its network by 2029. Goh emphasized that this expansion will be selective, focusing on profitable and strategic markets in the east, west, and south, including key regions in Africa and the possibility of returning to the U.S. market.

“We spent the better part of this year so far really looking at our network,” Goh explained. “We expect, in the course of the next five years, to be growing approximately 25% more in terms of destinations.”

Strategic Network Reassessment

Goh’s review of Gulf Air’s network is driven by a desire to maximize efficiency and profitability. As part of this assessment, the airline has identified fresh principles for network development, which will see growth in markets that hold long-term potential while withdrawing from those that no longer align with Gulf Air’s strategic goals.

“There will be markets where we will withdraw from because they no longer make sense,” Goh said, although he did not specify which routes might be affected. All future routes will be required to meet profitability standards, “at least” on a variable cost basis. While Gulf Air remains committed to maintaining a robust presence in the Middle East, the airline is setting its sights on markets that offer better profitability, particularly in Africa and potentially North America.

Goh acknowledged that some tough decisions lie ahead in reshaping the network, but stressed that Gulf Air must ensure every route contributes positively to the airline’s financial health. This recalibration will involve optimizing routes that are high in demand, cutting underperforming ones, and expanding into markets where Gulf Air sees growth opportunities.

Fleet Expansion and Optimization

Gulf Air currently operates a fleet of 32 Airbus A320-family aircraft and 10 Boeing 787-9 Dreamliners. Goh indicated that the fleet would see a modest expansion in the coming years, with nine more A320-family aircraft and two additional Boeing 787-9s scheduled to join the airline. While the narrowbody fleet is expected to remain stable, Goh hinted at the possibility of acquiring “a few” more Boeing 787s, reflecting Gulf Air’s focus on expanding its long-haul capabilities.

“Subject to aircraft availability, you will see by the end of the next five years a different network proposition,” Goh noted. The combination of narrowbody and widebody aircraft will allow Gulf Air to enhance its regional connectivity while expanding long-haul services to key international markets.

Rebalancing Traffic and Boosting Local Tourism

As part of the network overhaul, Goh also aims to shift Gulf Air’s passenger traffic mix. Currently, approximately 70% of Gulf Air passengers are transiting through Bahrain to connect to other destinations. However, the airline plans to increase the proportion of local visitors, focusing on enhancing Bahrain’s appeal as a destination in its own right.

To achieve this, Gulf Air is creating a dedicated team to develop its holidays business, with the goal of attracting more stopover traffic. Goh’s vision is to encourage passengers to spend more time in Bahrain, boosting local tourism and helping to diversify the airline’s revenue streams.

“We want to create more opportunities for stopovers and increase the number of people visiting Bahrain,” Goh said. This move aligns with Bahrain’s broader strategy to promote tourism and economic growth through the aviation sector.

Financial Performance and Future Outlook

A critical component of Goh’s leadership is improving Gulf Air’s financial performance. The CEO acknowledged that it has been “some years” since the airline was last profitable, and he is committed to turning the company’s fortunes around. By focusing on profitable routes, optimizing the fleet, and growing the airline’s market presence in high-demand regions, Goh aims to position Gulf Air for long-term financial sustainability.

“The airline needs to be better than where it is today,” he remarked. “By the end of 2025, I think the message should be out there that our network is being recalibrated.”

Goh’s long-term vision for Gulf Air includes a more focused, efficient network that serves a balance of high-demand regional and international routes. By cutting unprofitable routes and expanding into new markets, Gulf Air will be better positioned to compete in the increasingly competitive global aviation industry.

A Return to the U.S.?

One of the most intriguing elements of Gulf Air’s future plans is the potential return to the U.S. market. While Goh did not provide specific details, he confirmed that the airline is actively evaluating opportunities to reintroduce service to the United States. Gulf Air has not flown to the U.S. in over a decade, but as part of its network review, the airline is assessing the viability of long-haul routes to North America.

If Gulf Air does decide to return to the U.S., it would represent a significant milestone in the airline’s expansion strategy and a vote of confidence in its ability to compete in the highly competitive transatlantic market.

Conclusion: A New Chapter for Gulf Air

Under the leadership of CEO Jeffrey Goh, Gulf Air is embarking on a bold new chapter in its history. The airline’s comprehensive network review and focus on profitability signal a shift towards more sustainable, strategic growth. With plans to increase its destinations by 25% over the next five years, Gulf Air is positioning itself to be a stronger player in key markets to the east, west, and south.

While some tough decisions lie ahead, Goh’s vision for Gulf Air’s future is clear: a more streamlined, profitable network that delivers value to passengers and stakeholders alike. As the airline moves forward, passengers can expect to see a recalibrated network that serves both regional and international markets with greater efficiency and focus.

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