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Gulf Air's brand master

Posted 17 May 2018 · Add Comment

New branding, a new fleet, the world’s best business-class seat and an expanded long-haul route network. Gulf Air’s new CEO explains to Alan Dron why he is aiming high with his plans for the future.

Bahrain’s national airline outlined an ambitious five-year plan in February. It foresees a return to the larger long-haul network that was drastically pruned a few years ago to cut costs.
No fewer than 39 new aircraft will result in a complete renewal of its fleet. And it aims to deliver a business-class product that will out-do even the much-lauded premium cabins of the Gulf’s ‘big three’ – Emirates, Etihad and Qatar Airways.
The man with the task of guiding the airline towards achieving those goals is Krešimir Kučko, who was appointed last November from his former role as CEO of Croatia Airlines. Kučko was with the central European carrier for 25 years and held the top position there from 2012.
Croatia Airlines and Gulf Air share some similarities. Comparatively smaller in size than their regional rivals, they both have a small domestic population from which to draw passengers. Croatia Airlines also used to be loss-making but, under Kučko’s leadership, it recorded profits in the five years up to and including 2017. The board of Gulf Air will be hoping that he can achieve a similar result at the Bahraini national carrier.
There are parallels between the challenges facing both, he said. “Especially when operating under the full-service network carrier business model there are a lot of challenges that are similar. In general, we’re talking the same language.”
Kučko noted that the bulk of last year’s profit figure for the global airline industry was made in the US: “In other regions, it’s getting better but it’s not that shiny at the moment.”
One major problem is wafer-thin profit margins. In 2013, he said, airlines were typically making a profit equivalent to the price of a hamburger on each passenger carried. “It was something like $4 a passenger. Today, we can maybe invite someone for a light dinner.”
As a state-run company, Gulf Air is not obliged to release financial figures and has not done so since its annual results for 2015, which showed a net loss of BD24.1 million ($62.7 million), although Transportation and Telecommunications Minister, Kamal bin Ahmed Mohammed, said in summer 2017 that 2016 had not produced such good results as the previous year.
The CEO said that Gulf Air had not been alone in encountering difficult conditions in the past two years. There had been a huge increase in capacity in the region, encouraged by low fuel prices. Gulf Air was aiming for an improved performance this year, he said.
“As you know, it’s a big challenge, a huge challenge,” said Kučko when asked why he had taken up his new position. “Considering what I did in the first 25 years of my career, I think I can contribute to Gulf Air, which has huge potential that needs to be released.”
In March, the airline announced a new strategy, based on seven ‘pillars’: safety, network growth, innovation, human resources, customer focus, revenue vs. cost and, most significantly, the airline’s role as a contributor and key driver of the local economy.
Kučko has several priorities: “In the short term, it is putting the newly announced strategy into operation and we need to get everything and everybody ready to begin accepting the new fleet.” Five Boeing 787-9s and two Airbus A320neos will arrive this year.
One of Gulf Air’s strategic goals, he added, is to become the airline of choice – no small task, given the high customer service standards of the ‘big three’.
In the medium term, the challenge will be to manage the new fleet and the expansion of the airline’s route network, while achieving sustainability and maintaining it in the long term: “We need to look at positioning ourselves both regionally and globally.”
In recent years, Gulf Air has focused strongly on building up its role as a regional carrier, aiming to win lucrative point-to-point traffic rather than the lower-yielding transit passengers through its Manama hub that previously formed much of its traffic. Long-haul routes were cut back severely, to just London Heathrow, Paris Charles De Gaulle, Frankfurt, Bangkok and Manila.
Under the new five-year plan, more long-haul routes will be opened up, although there will continue to be a concentration on Middle East flights (with more going to multiple-daily frequency, predominantly to suit business passengers) and also to the Indian sub-continent, which already forms a major part of the airline’s route network.
One medium-haul route, to Baku, Azerbaijan and one long-haul route to Casablanca, Morocco, will start this year. However, the CEO said that Gulf Air would not fall into the trap of over-extending itself: “We’re not aggressively attacking long-haul routes; first, we need to consolidate our home market, the GCC region.”
Servicing this expanding network will be a growing, renewed fleet. No fewer than 39 aircraft are due to join the fleet by 2023 – 10 Boeing 787-9s, 17 Airbus A321neo and 12 A320neo, with a price tag, at book prices, of around $3.4 billion. Gulf Air also has six more 787-9s on option.
Five of the 787s and two A320neos will arrive this year. The influx will gradually replace the current fleet of six Airbus A330s, six A321s and 16 A320s, then considerably expand it.
The first of the 787s is scheduled to arrive imminently and will handle the double-daily Manama-London route, as will the second aircraft when it arrives immediately afterwards.
The US-built aircraft will provide a considerable improvement in fuel-burn over the A330s, but the most important change they will bring will be in terms of passenger experience, said Kučko.
“Our new business class will be ‘best in class’,” he said, adding that the new business-class seat had been benchmarked not against other carriers’ business-class, but first-class, seats. He declined to give further details before service entry, but said that the cabin would be considerably better than ‘standard’ business-class offerings from other airlines.
“The same goes with the neo. It will have flatbed seats in business-class in the A321s flying the longer routes, such as Paris and Frankfurt.” The airline’s current A321s also have this feature – highly unusual in a single-aisle aircraft. Gulf Air says that the arrangement has proved popular on the Paris run.
As for economy class, the new aircraft will feature what the CEO believed would be “the biggest seat-pitch in the region” with enhanced in-flight entertainment systems and larger seatback screens. “It will be a new level of experience in economy class.”
Amid the fanfare for the incoming aircraft, however, one noticeable absence has been any news of Gulf Air’s plans to acquire Bombardier CSeries regional jets. The aircraft have been on the Canadian manufacturer’s order book since 2012, but just prior to the 2016 Bahrain Air Show, the airline’s former CEO, Maher Salman Al Musallam, cast doubt on whether an airline of Gulf Air’s size could handle a third distinct type in its fleet.
Kučko was reticent on the subject of the Canadian aircraft, limiting his comments to: “We are in negotiations with Bombardier.”
On the marketing front, Gulf Air is rolling out a new brand identity. This was scheduled to get its first public airing with the flypast of the first Boeing 787 at the Bahrain Formula 1 Grand Prix in April. Understandably, Kučko declined to give details before the unveiling, other than saying that it would involve a new logo and crew uniforms, but that the airline would retain its falcon insignia.
“It will be a mix of tradition, inheritance, and a touch of modernisation. I believe the new livery of our aircraft will be very elegant and reflect all the most important values of the company.”
 

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