Saudi Arabia is most important market for Gulf Air

Samer Majali was first given the task of running Gulf Air and taking it out of turbulence in 2009. He steadied the airline and was on the way to achieving what then seemed well nigh impossible. Through a series of strategic decisions, he was able to cut losses, and brought the airline back into business. But then the events of 2011 changed the airline's trajectory.
He is a qualified aeronautical engineer and holds a master's degree in air transport management from Cranfield University in the United Kingdom. He joined Gulf Air from Royal Jordanian where he worked for more than 30 years. He held several positions in various divisions of the Jordanian airline before becoming its president and chief executive officer in 2001. During his eight-year tenure as Royal Jordanian chief executive, he turned it around into a highly successful and profitable business.
He has held a number of significant positions within key aviation industry organizations. He served as president of the Arab Air Carriers Organization in 2004 and remains an elected member of its executive committee. He was also chairman of the International Air Transport Association's board of governors from 2008-2009.
Majali admits that it is very tough to survive in the airline industry. "It is always very challenging," he says. But he is very optimistic that Gulf Air will reach newer heights in the coming years and explains his vision and the new strategies that have been put in place.

Following are excerpts from the interview:

Q: Thank you for talking to Arab News. Can you please take us through what is often described as Gulf Air's historic association with Saudi Arabia?
A: Sure. We recently celebrated more than 60 years of service to Saudi Arabia. It is our largest market outside Bahrain. You know that Bahrain's relationship with Saudi Arabia is historical dating back to centuries and, as the national carrier of Bahrain, Saudi Arabia has been part of the airline's history since its beginning. It is one of the first three countries that we began our services to, landing in Dhahran in 1950, expanding further into Jeddah in 1976. We also have the distinction of being the first international airline to land in Riyadh in 1982. We have continuously expanded and strengthened our presence connecting customers from the far corners of the Kingdom to the world through our network. We started operating to Madinah in June 2010. Very soon we will launch services to three more destinations — Taif, Qassim and Yanbu. This will make us the largest international carrier operating into Saudi Arabia. In these past six decades, we have flown more than 15 million passengers to and from Saudi Arabia. The numbers speak for themselves. Saudi Arabia has always been, and will be, a very important market for us and I would like to thank our Saudi customers for their continuous support to Gulf Air and we look forward to developing this relationship further.

Q: Within the Kingdom, Gulf Air has had a special focus on the Eastern Province, right?
A: Right. We are actually the airline of the Eastern Province. Getting into Bahrain is like taking a car journey to an airport via the 25 km King Fahd Causeway that connects Alkhobar with Manama. It is almost as if Gulf Air is sitting in the middle of Dammam. And as I said before, the Eastern Province has a special place for Gulf Air as it was here in Dhahran we first landed in 1950 beginning our long and historic relationship. The largest share of our customers comes from the Eastern Province. Our Eastern Province customers can reach out to more than 45 destinations via our network. We provide easy connectivity to over 300 flights a week in the GCC, Europe, Middle East and North Africa, and over 3,000 flights throughout our network from Bahrain. We recognize the importance of our customers from the Eastern Province for whom Bahrain is the nerve center of their business for all practical purposes. Therefore, we continue to invest in this market. We consider it as our home market. Also, for the trade and industry from the Eastern Province wanting to move their goods swiftly and safely, Gulf Air's Falcon Cargo offers trucking service between Dammam and Bahrain. With 12 truck services a week and multiple daily frequencies to GCC countries, reaching goods to any of Gulf Air's destinations is much faster. With a combination of regional jets, narrow body and wide body aircraft Gulf Air is capable of moving goods on time, every time.

Q: Saudi Arabia is your largest market outside Bahrain. What about the other markets in the region?
A: Yes, Saudi Arabia is the largest market for us. Iraq and Iran were the other two big markets for us, but because of political issues, we had to recently freeze our services to those two countries. That added to our troubles. Now Saudi Arabia remains the only large market for us. Our strategy really is to extend to Saudi Arabia. We are one of the largest carriers in Saudi Arabia after Saudi Arabian Airlines in terms of the number of flights in and out of Saudi Arabia. We have multiple daily flights to Jeddah, Riyadh and Dammam. We operate five times a week to Madinah. We will be going to go to Madinah daily. After opening up to Taif, Qassim and Yanbu, we will follow up with some more new destinations. The departures and arrivals of the additional flights have been timed in such a way that it benefits international and regional business travelers.

Q: How supportive have Saudi government and officials in General Authority for Civil Aviation (GACA) been?
A: They have been very supportive. With the new change in structure of GACA and the new emphasis on developing the civil aviation industry in terms of opening up for airlines, including the domestic market, that is a huge change and opportunity. Their decision to make airports more efficient and to invest in airports is significant. They are really trying to reformulate their strategy regarding civil aviation in general and putting a lot more emphasis on opening up Saudi Arabia to the world. From that angle, they have been very supportive to us in particular. Sometime back we paid a courtesy visit to Dr. Faisal bin Hamad Al-Sugair of GACA at his office in Riyadh. We discussed a number of topics of common interest, including the historic and pioneering relationship between Gulf Air and Saudi Arabia. We also discussed ways and means of strengthening our relationship. So we are very thankful to them.

Q: Because of the recent troubles in Bahrain, people seemed reluctant to take the trip to Bahrain across the Causeway. That must have affected Gulf Air business?
A: Yes, of course, that got affected last year. People were reluctant to cross over. And that obviously had a major factor. Rather than taking the road across the bridge our customers had to fly into Bahrain from Saudi Arabia. But now things are getting back to normal and we are recovering. The problem is that the media blew things out of proportion. You are here in Bahrain and Formula One is taking place. The country is largely peaceful. Peaceful protests do take place but what happens is that some young enthusiasts and troublemakers, out of sheer boredom, burn tires and throw Molotovs and that then gets reported in the international media creating a scare. (The huge number of people who attended the colorful and high-decibel Formula One event corroborated Majali's statement).

Q: What is whole focus on double daily flights?
A: The fact that we fly double daily and more means that you can, if you want to, not spend the night in any city that is in the three-hour flying time radius. The business traffic is primarily to bigger cities such as Riyadh and Jeddah. By having double-daily flights to these cities you offer the businessman the service to travel in the morning and come back to your destination in the evening. That is why we have gone in for smaller jets. The new jets underline our business objective of providing double daily and same day return for business travelers, who now have more options to travel to these cities and return the same day after completing their business without the need to stay overnight involving expensive hotel accommodation. Smaller airplanes allow you to increase the frequency. For instance, on the Bahrain-Dubai sector, the competition (read Emirates) flies two or three times every day. We fly eight times daily. We, therefore, offer a better product with a smaller plane. With high frequency operations, our customers can travel when they want to travel not when we tell them to travel.

Q: How is Gulf Air doing on the long-haul routes?
A: They are obviously very strong. We don't fly everywhere. We fly to certain points in the Far East, Manila and Bangkok, and most points in India, Bangladesh, and so on. And also we fly to key points in Europe, such as London, Paris, Frankfurt, Copenhagen and Rome.

Q: How tough is it to be part of the airline industry, especially in the region?
A: It is tough for everybody in the airline business. It is one of the toughest industries in the world. No doubt. The revenue side is open competition. And the competition is very fierce, sometimes unfair. One does not have control of the cost side and your control of the revenue side is very limited. That is why it makes it very difficult to survive in the business. In addition to all of that we have had the additional headache of what happened in the Middle East in general in 2011 and in Bahrain in particular. It is a very, very challenging situation.

Q: What kind of competition are you facing from budget airlines? They seem to be mushrooming.
A: There is no competition from budget or low-cost carriers. The budget airline model is still in its infancy in the Middle East. Internet penetration is still very low, credit card usage is low. These are all very necessary to develop the low-cost carrier business. They still use travel agents for their sales. People demand business class and better quality products, so the low-cost model is very difficult to apply in Saudi Arabia. Therefore, there is not much of a competition.

Q: Lastly, what is the mandate for 2012 and beyond?
A: We are trying to recover the damage. 2011 was very traumatic. We are focused on re-establishing our traffic. That is our focus and our efforts are paying off. Latest figures indicate that we are succeeding.