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aviation


Samer Majali, ceo, Gulf Air


fast facts


- the airline, the oldest in the region, turned 61 this year, and is fully owned by the Kingdom of Bahrain.


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Gulf air recently added three new destinations in saudi arabia and is also negotiating with the indian government to launch new routes into the country.


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Gulf air's falcon logo appeared on the shirts of the premier league club Queens park rangers for three years, after the airline signed a £7 million ($11 million) deal with the team in 2008.


58 / DECEMBER 2011


business. It is even more peculiar to see the global interest in this industry despite all the challenges it presents. It is an industry that is anything but volatile, anything but predictable. Yes, unpredictability seems to be the name of the game in this business. From fluctuations in the price of oil over the last decade and the periodic increase in aviation fuel prices pushing up the operating costs, price wars among competitors eating into each other’s revenue, flash strikes by industry workers leading to grounding of entire fleets and creating chaos among thousands of travellers, the industry is in a predicament. And who would have thought that a sleeping volcano in far off Iceland would erupt and cripple the aviation industry for almost four weeks resulting in millions of dollars loss in revenue? Added to this woe was the recent unrest in the Middle East and North Africa that resulted in hundreds of airlines reducing and cancelling flights, creating a huge dent in their revenue and profitability? The list seems endless. We have experienced a rollercoaster ride in our business in the last ten years with a mix of economic crises and geo-political events, as well as brief spells of recovery. For the first


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t is strange, if not unusual, that despite a meagre 1.2 per cent profit margin there is so much competition in the aviation


time since 1998, the industry achieved an EBIT margin in excess of five per cent in 2010. Last year proved to be fairly a good year for airlines with their profit margin touching 2.9 per cent but, once again, we will see a dip in 2011 with industry pundit forecasts even tougher for 2012. However, there are booming economies that present huge opportunities for the aviation business to grow, particularly China, India and in Brazil. China, alone, is expecting to increase its number of aircraft to 4,500 in the next five years from its current 2,600, while India's domestic aviation market has tripled in the past five years.


But standing out from this, and standing tall, is the Middle East aviation industry. Though not immune to the above said uncertainties, the Middle East has emerged as the strongest growing region in the global aviation market. Its geographically strategic location, connecting the East and the West enabling easy access to some of world’s largest growing economies, its ‘hub and spoke’ business model of the GCC airlines that connect practically every part of the world through modern airports and, of course, the ability to invest in the latest aircraft have all made the global aviation business take notice of this region. Yes, the industry may witness turbulence and storms but the future belongs here.


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