Interesting letter to the GDN today:
Expand ... don't shrink
**Posted on » Saturday, October 13, 2012
The article in the newspaper regarding Gulf Air down-sizing was very painful to read. Unfortunately, members of the government and parliament do not understand the nature of the airline business.
Reducing the fleet and destinations to half it's current size could never hit 2.2 million passengers in your wildest dreams. This shows how flawed the thinking of the consultants who worked on this proposal are.
If you do your research, you will find no airline in the world has taken a decision to down-size and stay with that strategy because it does not work.
Currently, Gulf Air is losing market share despite growing in the region due to airlines increasing their capacity and flights into Bahrain. If you do not continue to grow, even at a modest pace, you will be left behind.
The reason airlines like Etihad and Emirates are able to make money is because they are expanding, not shrinking. Operating larger aircraft is always more economical per seat than the small aircraft Gulf Air is using. Adding more and more destinations that connect to each other makes it easy to fill the flights.
Unfortunately, the reverse is also true and down-sizing means the exact opposite will happen. The 20 aircraft scenario simply will not work and will eventually lose as much as the company is losing now. It is sad that Mumtalakat continues to listen to the same consulting company which already proposed the current Gulf Air strategy three years ago that has proved unsuccessful. A J