Amid the spectacular success stories of Etihad Airways, Emirates Airline and Qatar Airways in the Middle East aviation industry, the Bahrain Air debacle stands out. Last month, stakeholders in Bahrain Air made a final call to suspend airline operations and file for voluntary liquidation.
Since its launch, Bahrain Air had struggled to cope with severe competitive pressure from regional airlines and a drop in business as a result of political instability in parts of the Middle East and North Africa. The carrier also faced trouble at home as Bahrain itself had to cope up with political and economic turmoil. During Bahrain’s State of National Emergency in 2011, the airline was denied compensation for suspension of flights to several destinations.
In an exclusive interview with ‘The Aviation Writer‘ website, former CEO of Bahrain Air Richard Nuttall states that the airline faced difficulty in competing due to heavy subsidies allowed to other competitors, insufficient point to point traffic and low regional connecting traffic yields. However, Bahrain Air had the potential to serve selected Indian subcontinent routes more efficiently than Gulf Air as it benefited from low cost seat configuration. Unfortunately, political intervention and subsequent unfavorable decisions adversely affected the airline.
In a recently issued statement on its website, the airline also pointed out towards a deadlock in negotiations with Bahrain’s Minister of Transportation. The statement reveals that “in the circumstances, given the position of the Minister, the shareholders decided that had no option but to discontinue financial support and put the company into voluntary liquidation”. Under the liquidation process, the airline’s staff will receive a combined payout of USD 5.8 million for losing their jobs. Bahrain’s national carrier, Gulf Air, has also agreed to open recruitment to Bahraini pilots affected by the closure.
The closure of Bahrain Air is not expected to significantly benefit Gulf Air as the carrier will continue to face immense competition from other Middle East airlines and there has been no decision to serve routes frequented by Bahrain Air.