Bahraini sovereign wealth fund Mumtalakat has given the thumbs up for the construction of an aircraft maintenance, repair and overhaul (MRO) facility this year as it remains committed to getting its ailing carrier Gulf Air off the ground, an official spokesperson said on Wednesday.
Jamal Hashim, Director-Engineering and Airworthiness at Gulf Air’s Technical Services Operations Division, said construction of the MRO facility’s first of two phases will likely start in the next six months.
The entire project is expected to be completed within 18-24 months and will be overseen by the kingdom’s start-up MRO company
Gulf Technics, which has been providing maintenance support to
Gulf Airfleet since April 2011.
While refusing to comment on the actual cost of the MRO project, Hashim confirmed that financing will be shouldered by the airline’s “mother company”
Mumtalakat and is entirely separate from
ongoing restructuring efforts at Gulf Air.
The initial phase will see the construction of a hangar bay that can service one wide-body and two narrow-body aircraft at the same time. Another Mumtalakat-affiliated company,
Gulf Aviation Academy, is expected to provide the technical manpower once the project becomes operational.
“There are future plans for additional hangars. It all depends on how strong the business will be and how much revenue it will make,” Hashim said.
He added that Bahrain’s MRO facility will be built with Gulf Air fleet in mind, but it will also be open to providing maintenance support to aeroplanes by other airlines. In the long term the maintenance facility will prove more cost-effective for Bahrain’s national carrier, Hashim said.
“Gulf Air is actually suffering from having to fly its aircraft long distances [just to get serviced] and that adds to the cost [of maintaining its fleet]. Establishing the MRO in Bahrain will primarily take care of the national airline’s needs to start [off] with and then expand to [generating] revenue,” he told Alrroya.com.
Speaking at the MRO Middle East Conference in Dubai, Hashim dismissed reports that Gulf Air will be dissolved amid tough regional competition and heavy financial losses aggravated by last year’s Arab Spring.
“I think the [Bahrain] government is fully committed to [keeping] the airline. Yes, the competition is very fierce in the region. There are much bigger fishes in the market and in order to operate and work smarter, you will have to look at different strategies,” Hashim said.
Without giving details about the carrier’s current restructuring programme, Hashim said the plan is aligned with CEO Samer Majali’s vision of redirecting Gulf Air’s focus from long-haul to a more regional approach.
Political turmoil dents 2011 passenger figures
Bahrain had been one of two Gulf countries that caught the wave of last year’s Arab Spring, which grinded the economy of several countries in the Middle East and North Africa to a halt.
With several sporting and international events cancelled, Bahrain’s tourism traffic dwindled, further hurting Gulf Air’s plan to finally return to profit in 2011, according to an analysis by the
Centre for Asia Pacific Aviation (Capa).
“Bookings at the airline slumped nearly 30 per cent over the first five months of 2011, and traffic has still not fully recovered, although it is gradually returning to normal. Passenger numbers through Bahrain International Airport were down almost 1.1 million for the first 11 months of 2011. While traffic was most heavily affected between February and May, passenger numbers since June 2011 are still down 9.4 per cent compared to the same period in 2010,” Capa said in a report published on January 24.
Even prior to the Arab Spring and the global financial crisis, Gulf Air was already experiencing a turbulent journey. Established in 1950, the Bahrain-based carrier is the oldest in the GCC region, but has been quickly outpaced in recent years by more aggressive and younger neighbouring airlines such as Emirates, Etihad and Qatar.
Its top management scene had also been shaky with rapid turnaround of CEOs from 2006 until the current chief Majali took office in 2009. And because of unforeseen circumstances such as the political upheaval in 2011 and the skyrocketing fuel prices, Gulf Air’s financial recovery plans have been heavily dampened, Capa said.
“After combined losses of more than $1 billion [Dh3.67bn] over the past three years, the carrier hoped 2011 would see decisive progress in reducing losses. It was expected that losses would be almost eliminated by the end of 2012, with profit returning from early 2013. Now breakeven is not anticipated until late 2013,” the Sydney-based agency reported.
Capa, however, is optimistic about Gulf Air’s recovery prospects due to the strong support it has been receiving from the Bahrain government, which gave it a $1.1bn lifeline in May 2011.
“With the support of the Bahrain Government, 2012 will be another year of recovery for the carrier, putting 2011 behind it and getting back on track with its financial turn-around,” the agency said.
Middle East potential MRO hub
Gulf Air’s Hashim said the Middle East has a huge potential to become an MRO hub given the robust growth that the region’s travel industry has been enjoying despite challenging market conditions.
“I see a large opportunity for the MRO industry in the region. The [global] aviation industry has been in a roller-coaster ride the past years, [but] the Middle East aviation has been surging ahead with phenomenal growth. Obviously this has encouraged airlines in the region to place massive aircraft orders. As much as 1,000 aircraft have been ordered [and are] expected to be delivered in 10-15 years,” Hashim said.
He added that with the expected arrival of more aircraft and considering the number of fleet currently in operation, there is clearly a need for locally-based maintenance support facilities.
According to the
International Air Transport Association’s (Iata) latest report published on Wednesday, Middle East passenger demand jumped by 11.7 per cent in December with load factor at above 77 per cent. Year on year, Middle East airlines’ traffic figures were up 8.9 per cent in 2011 compared with a year before.
While Middle East carriers have experienced downward pressure on load factors last year, Iata said their price-competitive products and geographically well-positioned hubs enable them to continue improving their share of long-haul markets.
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