Gulf Air: Flying In The Shadow Of The Middle Eastern Giants

Founded in 1950, Gulf Air is Bahrain’s flag carrier and one of the oldest airlines in the Middle East. Once the leading carrier to the Persian Gulf region, it is now dramatically outsized by the much-larger airlines of its neighbors: Emirates and Etihad in the United Arab Emirates and Qatar Airways in Qatar. Yet Gulf Air has the same geographical advantages and a decades-long head-start, so why does it fly in the shadow of these Middle Eastern giants?
First, a bit of historical background
Gulf Air was formed as an air taxi service from Bahrain to Doha and later attracted investment from British Overseas Airways Corporation (BOAC), which helped build up a fleet of Fokker F27s and BAC 1-11s to provide interconnecting services across the Persian Gulf. In 1973, the governments of Bahrain, Qatar, Abu Dhabi, and Oman bought out BOAC’s investment and created Gulf Air, each having a 25% shareholding.
Photo: Gulf Air | Air History
The new company gained five ex-BOAC Vickers VC10s, allowing it to expand wider, with daily flights to London (LHR) and regular service to Bombay, Karachi, Amman, Cairo, Beirut, and Athens. The airline grew rapidly, acquiring Lockheed Tristar L1011s, Boeing 737s and 767s, and subsequently, Airbus A320s, A330s, and A340s.
But everything changed in 1985, when Emirates began operating from Dubai, providing Gulf Air with its first serious regional competition. By the turn of the century, the partnership was fracturing, with Qatar leaving in 2002 to start Qatar Airways, Abu Dhabi in 2005 to found Etihad, and Oman in 2007 to focus on Oman Air. This left the government of Bahrain with full control of the carrier, a situation that persists to this day.
Related From Desert To Riches: The History Of Emirates Emirates has changed a lot in over 35 years of service.
Government ownership is a challenge
One of the most significant advantages afforded to successful airlines like Emirates and Qatar Airways has been the massive investments provided to them by their oil-rich governments. The injection of billions of dollars has allowed them to build out huge airports and massive fleets that serve them, operating to hundreds of cities globally.
By contrast, Gulf Air has had a tiny fraction of that level of support from its government. Part of this is due to Bahrain not having the same levels of oil wealth and moving towards a more diversified economy. But much of it is due to mismanagement, with multiple CEOs and failed restructuring plans over the past decade or more, resulting in Gulf Air having consistently run at a loss that entire time. This presents a catch-22: Should the government invest in an airline when it hasn’t come remotely close to delivering the massive profits that its neighbors have achieved?
Failing to deliver on the super-hub strategy
Gulf Air has all the geographical advantages of its neighbors, theoretically allowing it to be a super-hub connecting Europe, Asia, and Africa just like the other Middle Eastern giants. But a lack of investment has hamstrung it here as well.
Lacking airport infrastructure
Bahrain International Airport (BAH) is the oldest international airport in the Persian Gulf, but like the airline that calls it home, it has been rapidly overshadowed by its neighbors. The facility is currently undergoing a 30-year expansion plan, with the first phase being a new $1.1 billion passenger terminal that opened in 2021.
However, even with this update to facilities, the annual maximum capacity at BAH is only 14 million. Compare this to Hamed International Airport (DOH) in Doha, which had 46 million passengers last year and experienced over 30% growth. Or what about Dubai, where Emirates already flies nearly 90 million through DXB annually, and the new Al Maktoum International Airport (DWC) is set to have an annual capacity of 160 million, growing to 260 million. This is nearly 20 times larger than BAH, making it very evident how the lack of investment by the Bahreini government has severely curtailed any aspirations of building another Middle East super-hub.
Lacking the fleet and destinations
The lack of investment has also left Gulf Air’s fleet lagging behind its neighbors. Emirates and Qatar Airways have fleets of over 250 aircraft, emphasizing widebodies to connect their hubs to far-flung destinations. Even Etihad, which has had its own struggles in recent years, has a fleet of 100 aircraft. By contrast, Gulf Air has a fleet of just 42 aircraft. While it has made recent investments in A320neos, A321neos and B787-9s (see table below), it is still short of being able to match its competitors.
Aircraft Type Number in Fleet Average Age Airbus A320-200 8 14.8 Airbus A320neo 6 5.2 Airbus A321-200 4 12.0 Airbus A321neo 14 1.8 Boeing 787-9 10 5.4
As a result, Gulf Air is limited in the number of destinations it can fly to. It currently offers scheduled flights to 60 destinations, although many are seasonal and/or operate only once or twice a week. By contrast, Emirates and Qatar Airways operate to more than 150 destinations and often operate multiple daily flights to the most prominent cities. For example, Gulf Air’s most significant long-haul route (by seat count) is BAH-LHR, a twice-daily B787-9 service. By contrast, Emirates operates seven daily A380-800 flights on the DXB-LHR route.
Photo: Markus Mainka | Shutterstock
Operating in a hyper-competitive market
To be fair to Gulf Air, it is operating in a very competitive space, and it is competing on multiple fronts:
Long-haul giants: Gulf Air’s traditional rivals are the big three: Emirates, Qatar Airways, and Etihad. Given the relative strengths discussed above, it is difficult to see Gulf Air becoming truly competitive anytime soon.
Gulf Air’s traditional rivals are the big three: Emirates, Qatar Airways, and Etihad. Given the relative strengths discussed above, it is difficult to see Gulf Air becoming truly competitive anytime soon. Regional Low-Cost Carriers (LCCs): The region has some prominent, high-growth LCCs, and even the big three have lost ground at their home bases to Fly Dubai, AirArabia, and Wizz Air Abu Dhabi. Gulf Air’s share of seats at BAH has declined from 65% to 61% in the past four years, entirely due to erosion by LCCs.
The region has some prominent, high-growth LCCs, and even the big three have lost ground at their home bases to Fly Dubai, AirArabia, and Wizz Air Abu Dhabi. Gulf Air’s share of seats at BAH has declined from 65% to 61% in the past four years, entirely due to erosion by LCCs. Emerging competitors: Politically, Saudi Arabia is one of Bahrain’s closest allies, but in the aviation world, the increased investment in Saudia and the imminent launch of Riyadh Air pose further concerns for Gulf Air.
Politically, Saudi Arabia is one of Bahrain’s closest allies, but in the aviation world, the increased investment in Saudia and the imminent launch of Riyadh Air pose further concerns for Gulf Air. New flight patterns: Threats from outside the region, notably carriers like IndiGo or Wizz Air, also exist. As these carriers acquire longer-range, more efficient aircraft, such as the Airbus A321XLR with its 4,700NM range, they can offer long-and-thin routes that potentially negate the need for a stopover at a Middle East super-hub.
Photo: Sharjah International Airport
Is Gulf Air finally turning it around?
Despite these headwinds, Gulf Air and the Bahraini government are genuinely trying to turn things around. The most notable recent change was moving Gulf Air and the BAH management company into the same group so they are better aligned on a joint growth strategy. The government is now making more concerted efforts to invest in the combined entity.
Photo: Bahrain International Airport
The appointment of a new CEO has also led to a fleet review. More modest orders for A320/A321neos and other variants of the B787 are expected to allow the carrier to better align with demand across its network. There has also been extensive route rationalization, with a renewed focus on premium passengers in major financial markets, which has led to new routes to Zurich, Shanghai, and Guangzhou. There are also reports that it is looking to make a return to New York (JFK).
At the same time, Gulf Air is supporting a national strategy to transform Bahrain into a tourist destination, similar to what Dubai has achieved and Saudi Arabia is chasing. While that will undoubtedly assist in differentiating Gulf Air, it remains to be seen whether it can truly capitalize on the opportunity.