Gulf Traveller and competition
Interesting article from today's Gulf News; I didn't know about MENAJET or Pluto Airlines!
Gulf aviation enters new era of competition
Gulf News Dubai |By Saifur Rahman, Staff Reporter | 30-06-2003
The Gulf's aviation sector is showing a degree of maturity and diversification after decades of traditional service that mainly catered to transporting contract labourers in the 1970s and 1980s and the business and leisure segment in the 1990s, before entering segmentation and specialisation in the new millennium.
The launch of Gulf Traveller - an all-economy class subsidiary by Gulf Air - followed by the announcement of the region's first no-frills carrier, MenaJet, coupled with the very recent launch of executive charter carrier Royal Jet, are very encouraging and mark the beginning of a new era in the Gulf's aviation scene.
These developments mark a fundamental shift in the region's aviation industry and widens the options for budget travellers as well as high-profile business travellers. Although it is too early to comment on the prospects and success of the all-economy class and no-frills airlines, the development reflects a shift from traditional thinking among aviation officials.
The traditionally demand-driven aviation sector has been lacking in imagination and innovation for a long time, with the exception of Dubai-based Emirates, due to an increase in the demand for transporting labourers mainly from South Asia, growth in business travellers from Europe, the Americas and the Far East, as well as an increase in leisure travellers from the West and Far East.
For a long time, all the major Gulf carriers have been catering to the same market, eating into each other's shares. While some increased their net profit, others like Gulf Air continued to sustain losses, a price paid mainly due to being complacent in a very competitive market which is also served by many European, African, Middle Eastern and Asian carriers.
Things, however, started to change as competition began to toughen with the launch of Qatar Airways in the mid-1990s and Oman Air in the late 1990s, which also began to take a toll on Gulf Air - the carrier owned by four Gulf states, Bahrain, Qatar (until last year), Oman and Abu Dhabi.
Sharjah, which was mulling the launch of its own carrier for some time, has finally announced the launch of Pluto Airline, which is going to put pressure on the existing players and possibly widen choices for passengers.
All these developments last year forced Gulf Air to adopt a do-or-die measure to bring it back to profitability at a time when Abu Dhabi had also declared its intention to launch a new airline.
The plan by Abu Dhabi appears to have been stalled with Gulf Air's initial success of a three-year recovery plan kicked off by James Hogan, its president and chief executive, who has managed to bring back some degree of confidence among the carrier's shareholders by reducing losses.
Though all-economy and no-frills airlines are not new in the aviation industry, these have never been tested in the Gulf's market so far.
For many people in the region, these are new and alien concepts and how the passengers receive these services is to be seen.
Better options
The recent shift in thinking among the region's aviation officials is obviously a result of the increased competition in a limited market, in which one has little choice but to come up with better options in order to give one's competitors a run for their money. With Gulf Traveller, that's exactly what Gulf Air is planning to do.
The first and business class seats in the flights to most south Asian destinations in any case remain almost empty. So the all-economy class livery makes good economic sense, aviation experts believe.
Not only will a full-service all-economy class livery help Gulf Air manage its inventory, capacity and load in a better way, it will also be in a position to 'play around' with the economy-class fare and bring it down, if necessary, because of extra seats and presumably additional loads it is going to command.
Additionally, it now has the option to pass on extra commission to travel agents who will lure passengers to Gulf Air.
How the market reacts to the possible scenario is not yet known.
However, one thing is very clear. Gulf Air is going to enjoy more flexibility in the market in terms of pricing of economy class tickets and filling up all the seats.
The aviation community will understandably monitor the development of this all-economy class brand and its success while taking a close look at how it contributes to Gulf Air's bottomline in the coming months.
Many aviation officials believe this is going to take the competition in the economy-class segment to a different level. At least James Hogan does.
During its launch, Hogan said: "Gulf Traveller, we believe, will change the face of the aviation business in this part of the world. It is a unique product in this part of the world.
"Gulf Traveller is the next stage of the new business model that we are introducing to destinations in the subcontinent. We will maintain the same economy class fare across both the brands and won't offer cheaper rates. It is not going to be a cheaper carrier, but a competitive one," he stressed.
With this, Hogan claimed that the carrier is 'back in business'. Gulf Air is, indeed, back in business.