Gulf Air has achieved its stated aim of narrowing losses for its 2003 financial year, but warns that increasing competition in the Gulf market is hurting its yields.
The airline's three-year plan, which chief executive James Hogan unveiled in 2002, called for the airline to narrow its losses in 2003, with a break-even in 2004 and profit in 2005. Reporting lower losses of 19.9 million Bahrain dinar ($52.8 million) for 2003, which compares with a 41 million Bahrain dinar loss in 2002, Hogan says that a break-even in 2004 "remains our target...but increasing fuel costs and new entrants are having an impact on our yield, but not capacity".
Several new Gulf airlines have started recently, including low-cost carrier Air Arabia and Abu Dhabi long-haul airline Etihad Airways.
Meanwhile, Gulf Air's rapidly expanding local rivals Qatar Airways and Emirates are showing no let-up. Qatar Airways will launch services to the USA next year as part of plans to add 20 new destinations to its network. The airline, which is not expected to move into the black for several years, will also start Australian services later this year. Etihad also plans US services in 2005.
Emirates begins US services next month, and has just announced that it had a record 73.5% increase in net profit to $429 million last year and bucked the trend by reporting improved yields. The airline's president Tim Clark says that yields grew by around 5-7% while unit costs per available seat kilometre fell by 4%. He says that the yield increase was achieved "by manipulating currency movements to our advantage".
MAX KINGSLEY-JONES / LONDON
Source: Flight International
