Gulf Air cost-cutting nets $30m


Gulf Air achieved "marked improvement" in its operational performance last year resulting in cost savings of BD11.3 million ($30 million) despite difficult circumstances in the last quarter, a top official has said.

President and chief executive Ibrahim Al Hamer said in a statement he was satisfied with the airline's performance.

"Although traffic levels were dramatically impacted by the events surrounding September 11, Gulf Air was able to react quickly to unfolding events," said Al Hamer.

"The rapid response in reducing capacity levels ensured that capacity remained balanced with traffic demands."

Complimentary letters received by Gulf Air increased by 280 per cent while complaints reduced significantly by 137 per cent in January this year, he said.

Also in January, over 73 per cent fewer passengers were denied boarding compared with January 2001.

Al Hamer said key highlights for the year include Gulf Air's ability to limit the fallout on traffic levels due to September 11 to around 3 per cent over year 2000.

He attributed the "remarkable achievement" to route rationalisation measures and early introduction of the low-season schedule.

"A major global advertising campaign served to increase awareness of Gulf Air and assisted in repositioning it as a premium carrier," he said.

Customer service and product offerings were improved through the revitalisation of the Gulf Air Holidays Department and the launch of a project to establish a full-service call centre in Bahrain, said Al Hamer.

"As part of the ongoing efforts to improve 'On Time' performance, a role was established for five duty executives at the newly established integrated operations Control Centre," he said.

"Improved schedule standardisation, and route rationalisation improved schedule efficiencies and reduced exposure to poor performing routes."

Gulf Air has cut frequencies on some routes such as London and dropped some destinations like Milan and Australia as part of the restructure.

Al Hamer said the airline began a successful codeshare relationship with Oman Air as part of its efforts to develop ties with its partners.

"A review of GSA relationships led to the successful renegotiation or termination of a number of agreements, with significant cost savings. The introduction of BSP within the Gulf also contributed to cost savings in addition to enabling a faster repatriation of funds to Gulf Air," said Al Hamer.

He said improved revenue management had also contributed to better response times between headquarters and outstations, boosting the the latter's ability to react to market opportunities.

He said Gulf Air cargo achieved a 2.3 per cent increase in freight tonne kilometres over 2000, "despite the challenging operating environment including the reduction in intra-Gulf wide-body operations".

Gulf Air continued its efforts to improve its management and operations systems by appointing Lufthansa Consulting for quality management, ground operations and flight operations training.

Al Hamer said "an organisational review and manpower audit" resulted in the introduction of a revised organisational structure which eliminated role duplication, non-essential positions, and reduced executive management numbers.

"Together with the reintroduction of an early retirement scheme, a total of 392 positions were removed by year-end," he said.

The airline's training department was also revamped and new and qualified instructors inducted in both commercial and technical fields.

"A significant achievement has been the creation of the management training programme - a course designed for all Gulf Air middle senior management," said Al Hamer.

"Other important achievements include the successful establishment of a Crisis Recovery Centre designed to improve Gulf Air's responsiveness to emergency situations," he said.

A business policy and development department was established revitalising the corporate planning function at Gulf Air while greater interaction was developed with local and international media to further improve the airline's image, he said.