One class act

Gulf Traveller is a new type of airline for the Middle East. It is not the classic three-class long-haul airline and it is not an upstart no-frills airline either. It sits somewhere between the two.

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By  Neil Denslow Published  July 2, 2003

I|~||~||~|Last month a new type of airline took to the skies in the Middle East. Gulf Traveller made its maiden flight out of Abu Dhabi International Airport on the 1st June carrying passengers. It carried with it too several new interesting ideas on how to run an airline and the hopes and fears of its parent airline, Gulf Air.

Later last month, the airline got its official launch. A Boeing 767, registration number A40-GZ, was parked up in front of the VIP terminal at Abu Dhabi International Airport, and played its part in the press conference to mark the occasion. It was decked out in a splendid new livery of white, deep blue and gold, as befits an airline within an airline and the new business model that it represents.

It also represents a considerable step forward for Gulf Air and is an integral part of the plan GF executives put together last year to return the airline to profitability, a plan that coincided with the arrival of the current chief executive, James Hogan. “I told you last year that Gulf Air had embarked on a period of change. And what you see here today is another example; in fact it is a Middle Eastern first. Gulf Traveller is built on a different aviation business model; but it is a different aviation model for a changing era in aviation worldwide,” Hogan told the assembled press.

The idea for Gulf Traveller has its birth in some basic research. Gulf Air operates on the classic model: a three-class aircraft operating on long-haul routes to Europe and Asia. But on certain routes, this classic model did not get the best out the airline’s resources:

“When we started looking at the utilisation of the aircraft from a revenue point of view, and what the penetration of the cabin was, we saw that, on certain routes, we were full in economy but business was almost empty; just 0.5% full,” explains Hogan.

“This told us that, on these particular routes, there was not a market for business seats. So by taking out that business class cabin and putting more economy seats in, I know that I am going to generate more revenue per unit,” he adds. Combine an ability to generate more revenue with cost savings, and the route can start to produce good returns.
This then was the basis for the airline model. What it definitely is not is a low-fare no-frills airline, despite various attributions in the press.

“It is an all-economy, full-service airline built on one class, one service and one aircraft type. One has to be very clear. It is not a budget or no frills airline. It is not the equivalent of Ryanair or easyJet. It is about creating a product that meets the needs of the traveller. We define Gulf Traveller by the customer,” says Hogan.

He points out that you can expect all the services on board the aircraft that you would otherwise get: “It’s a modern aircraft. Seat pitch is at 32 inches. You get a video, multilanguage audio services; all the standard comfort items.”

The travelling market that Gulf Traveller is setting out to serve is the labour market in the UAE. “The UAE has a huge labour base, and most of these clients are price conscience. GT will meet their needs,” Mahfood Ali Al Harthy, general manager, Gulf Air, UAE, told Aviation Business. Gulf Traveller is to have an initial 17 routes, most of which are to the Indian Sub Continent.

||**||II|~||~||~|Tickets will not be artificially cheap, however. Hogan was specific: “It is going to be competitive to normal economy pricing. I have no intention of undercutting marketplace pricing.” And there will be plenty of frills, in fact because Gulf Traveller routes are very specific, it allows the airline to save money and actually provide more frills at the same time by making a virtue out of the decision to be one class. For instance, cabin staff has been cut by one, but the actual staff-to-passenger ration is improved giving a higher level of service an economy passenger would otherwise experience. Gulf Traveller has a cabin staff-to-passengers ration of 1:39. “In other airlines in economy, it is normally 1 cabin crew to 44-46,” says Hogan.

He has been able to work the same trick with catering. Being all economy means less meal types to prepare and therefore lower costs. But it also means that food choices offered are sensitive to local destination tastes.The flight can be more passenger friendly too by ensuring that more of the crew speak languages local to flight destinations. Inflight video is context sensitive too: “We have ensured that there is a choice for the regions we fly to,” says Hogan.

However, saving one member of staff on board the plane does not provide the savings needed. But making efficient use of the crew by basing them in Abu Dhabi does. That the airline needs to be based in Abu Dhabi is driven by demographics. “The UAE is a very important market for us. It represents huge volume. There are more expatriates in the UAE than in any other GCC market, and we have Dubai next door, just 50 or so minutes away,” says Al Harthy.

Gulf Traveller’s cost savings is to embrace this fact and use Abu Dhabi as a hub. For the first time the airline will base aircraft and crew in the city. “Basically in the past we used to incur around BHD2 million [US $5.3 million] of costs just moving cabin crew and pilots between Bahrain and Abu Dhabi and vice versa. Today the situation is different. 300 cabin crew are now stationed in Abu Dhabi,”says Al Harthy. All in all, the combination of staff efficiency, single aircraft type and catering savings represent a saving of 30% of the airline’s historical operating costs for the routes, according to Al Harthy.

Gulf Air is not going to abandon three-class travel, however. “In reverse, we have actually added more capacity on certain routes within the Middle East and within the GCC and we are adding frequency to every part of the globe, where GT does not operate,” explains Al Harthy. “Also, although we are operating all economy on a route does not mean that we are ignoring premium traffic. There are certain routes on which we will be operating both brands,” he adds. For both Mumbai and Delhi, both brands are to be used. “We are giving the consumer the option,” says Al Harthy.

An option that may be more widely available in the future. Hogan believes that Gulf Traveller will operate outside the Indian Sub Continent. “We all know how much business comes out of the ISC. But I also see, post the Gulf War over the next three or four years, Europe opening up as well.||**||

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