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19 May, 2003

All-Economy Airline, Gulf Traveller, Launched

DUBAI: Gulf Air, the Bahrain-based carrier owned by the governments of Bahrain, Oman and the United Arab Emirates (UAE), has launched the Middle East region’s first all-economy class airline, Gulf Traveller.

The airline is to start flying on 1 June 2003 out of a new hub to be developed in the UAE state of Abu Dhabi using six single-class Boeing 767-300s. It will serve cities in India, Pakistan, Bangladesh, Nepal, Sri Lanka, Tanzania and Zanzibar. Cities within the Gulf countries of Kuwait, Qatar and Saudi Arabia could be added later, along with secondary European destinations.

The new airline is the brainchild of James Hogan, Gulf Air’s President and Chief Executive, the first Australian to run an airline in the Middle East. The 47-year-old former chief operating officer of bmi British Midland, said he has patterned Gulf Traveller along the lines of Australian Airlines, the new low-cost but full-frills subsidiary of Qantas Airways.

Abu Dhabi is the capital of the UAE but has been overshadowed over the years by the rise of Dubai, which has become the de facto gateway to the UAE. Abu Dhabi’s population of 1.21 million comprises a labour force of 693,000 people, more than half of whom are working class people from the Indian subcontinent .

Their annual home-leave requirements alone generate enormous economy class traffic. The main airline, Gulf Air, is presently flying from Abu Dhabi to some Indian subcontinent cities but the routes have low levels of business class traffic. These routes will be largely taken over by Gulf Traveller under the same traffic rights entitlements.

Mr Hogan said the product, too, will be tailored to meet the needs of largely South Asian customer base. Menus will accommodate various cultural palates and religious requirements. In-flight entertainment is being selected to include culturally appropriate films and audio channels in a range of languages understood by the native speakers of destinations from Kathmandu to Kerala.

“ In effect, we have tailored an airline to address just a single segment of the broad multi-segmented market in which we operate,” he said.

Mr Hogan added, “The introduction of low cost or single class carriers in the Middle East market was inevitable at some point.” He said Gulf Air had “pre-empted this trend.”

Gulf Traveller is a critical component of a three-year plan for the recovery of Gulf Air, which has been losing money for years. Mr Hogan took over in May 2002 and in December 2002 was given a US$90 million cash injection by the three Gulf governments to return the airline to profitability.

As of April 2003, the airline reported a loss of 40.6 million Bahrain dinars (about US$107 million), roughly 8.4 million Bahrain dinars less than projected. Yield for the three-month period ended 31 March 2003 had risen by an average of 7.8%, mainly due to improved management of capacity and network, while unit cost per passenger had been cut by 5.9%.

Mr Hogan told the board of directors, “Our real challenge at present lies in countering the cumulative effects of the conflict in Iraq and the detrimental impact of SARS on the global airline industry to sustain the turnaround and meet our target to reduce Gulf Air’s losses to BD20 million by the end of 2003.”

While Gulf Traveller goes for the economy-class segment to the Indian subcontinent, Gulf Air is going for the premium-class traffic on its European routes. System-wide business class traffic was already up by 18% the first three months of this year, before the Iraq war.

In the next few weeks, Gulf Air is planning to introduce another package of goodies targetted at the frequent business traveller on all flights operating out of Abu Dhabi, as part of plans to build it up as a hub to compete with Dubai.

The new Business Plus package will include a range of ‘fast track’ services for outbound and inbound premium-class passengers. Vice President for Sales and Marketing John Butler, also an Australian, says that passengers travelling on any of Gulf Air’s 15 non-stop flights between the UAE and London, Frankfurt or Paris, will be met kerbside at the airport and sped through all check-in, immigration and customs formalities. Travellers will only need to check in 40 minutes before departure.

A fleet of Jaguar saloon cars have been launched to transport First and Business class passengers between Abu Dhabi airport and any destination in the UAE. Other benefits will feature special stopover rates at Gulf Air’s partner hotels and resorts.

The airline is also undergoing a design revamp that will be rolled across its entire livery over the next few months.

Says Mr Hogan, “Globalisation, economic turbulence and uncertainty, and changing market dynamics are just some of the factors that have impacted the world’s airline industry driving the need for significant change in order to remain relevant and to survive. Gulf Air, like its counterparts worldwide, has had to realign itself to address the new business order.”

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