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What If Etihad And Gulf Air Merge?  
User currently offlineBeijing21 From Switzerland, joined Nov 2004, 83 posts, RR: 0
Posted (7 years 1 week 5 days 13 hours ago) and read 3502 times:

I would say that would be great financially and boost operations in order to compete better in the region.

11 replies: All unread, jump to last
 
User currently offlineLurveBus From Philippines, joined Mar 2007, 286 posts, RR: 1
Reply 1, posted (7 years 1 week 5 days 13 hours ago) and read 3474 times:

Err, that would become the mess that is Gulf Air all over again. Etihad is basically a reaction to Gulf Air. One of the reasons Etihad was formed was because Abu Dhabi wanted a nice carrier that would focus on AUH for once, instead of GF's convoluted three/four hub system that had connecting passengers hop around the gulf to find their next flight.

User currently offlineBeijing21 From Switzerland, joined Nov 2004, 83 posts, RR: 0
Reply 2, posted (7 years 1 week 5 days 13 hours ago) and read 3471 times:

I meant Etihad may bidding for GF and then swallow carriers/cabin crews to expand more rapidly and narrow the gap with QR and EK

User currently offlinePanHAM From Germany, joined May 2005, 9376 posts, RR: 29
Reply 3, posted (7 years 1 week 5 days 12 hours ago) and read 3405 times:

Why should they? Etihad is a clean sheet airline. Why should they "swallow" the old structures of Gulf Air? Etihad is better off expanding with their own (plentiful) ressources.


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User currently offlineLurveBus From Philippines, joined Mar 2007, 286 posts, RR: 1
Reply 4, posted (7 years 1 week 5 days 11 hours ago) and read 3382 times:

Etihad is already doing that in a way. Gulf Air is downsizing, and most of the AUH-based crew have already migrated to Etihad. Why would Etihad want to go after the BAH and MCT hubs? And why would they want to try to restructure the mess that is Gulf Air? Gulf Air practically proved that large injections of cash do not translate into an efficient and profitable airline.

Besides, even if Etihad did want to acquire GF, I doubt that the Bahraini government would allow it. With Oman pulling out of Gulf Air, GF is practically Bahrain's to play with now.


User currently offlineBCAL From United Kingdom, joined Jun 2004, 3384 posts, RR: 16
Reply 5, posted (7 years 1 week 5 days 11 hours ago) and read 3340 times:

Gulf Air launched services in 1950 as Gulf Aviation Company, which was majority-owned by BOAC until 1973 when the Abu Dhabi, Bahrain, Oman, and Qatar governments purchased BOAC's shares. In 1974 the Gulf Aviation Company became Gulf Air, the national carrier of the four states with AUH, BAH, MCT and DOH being their hubs. Initially the system worked well but there were often issues between the four countries as regards the running of the airline and which of their four hubs the main hub was. Passengers also had the inconvenience of hopping around between the hubs to connect with international flights. As the individual countries developed as business/tourist centres in their own right, rather than being part of the Middle East, and wished to develop their own hubs with their own niche carriers, the Abu Dhabi and Qatar governments pulled out leaving Gulf Air in the hands of the Kingdom of Bahrain and Sultanate of Oman.

Qatar Airways was launched in January 1994 owned equally by the Government of the State of Qatar and private investors with its base at DOH. Etihad Airways was established in July 2003 as the federal airline of the UAE with its base at AUH. Both airlines have seen remarkable expansion, albeit not as spectacular as EK, and have been self-financing. They are backed by the wealth of the countries. Gulf Air on the other hand has seen its network shrink and has been posting losses in recent years.

Etihad would probably not gain much by absorbing Gulf Air into their network. In fact it might be detrimental to their expansion plans to go back to the disorganisation of Gulf Air pre 2003 with all its baggage, and having 2 or 3 hubs to develop rather than concentrating on AUH. Apart from these reasons, perhaps the Emirates of Abu Dhabi feel some pride in having their own airline focusing on their own international hub?



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User currently offlineB747-4U3 From United Kingdom, joined Jan 2002, 990 posts, RR: 0
Reply 6, posted (7 years 1 week 5 days 6 hours ago) and read 3205 times:

If Etihad did take over Gulf Air and keep Gulf's hub operation in Bahrain, it would be in exactly the same mess Gulf Air was in several years ago.

However, if EY kept Bahrain as a point to point hub offering services on profitable stand-alone routes, whilst moving most of the transfer traffic to Abu Dhabi it could work very well.


User currently offlineLightsaber From United States of America, joined Jan 2005, 13113 posts, RR: 100
Reply 7, posted (7 years 1 week 5 days 3 hours ago) and read 3122 times:
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Quoting PanHAM (Reply 3):
Why should they? Etihad is a clean sheet airline. Why should they "swallow" the old structures of Gulf Air? Etihad is better off expanding with their own (plentiful) ressources.

Exactly. EY would do better to take the best GF employees as GF shrinks. Airline mergers have a history of letting the problems of the weak airline cripple the stronger.

Quoting LurveBus (Reply 4):
Gulf Air practically proved that large injections of cash do not translate into an efficient and profitable airline.

Exactly. It delays reform.

Quoting Beijing21 (Reply 2):
I meant Etihad may bidding for GF and then swallow carriers/cabin crews to expand more rapidly and narrow the gap with QR and EK

Cure would be worse than the disease. It would be better for EY to grow organically with aircraft selected for profitable growth rather than taking on whatever aircraft GF might have.

Its going to be tough for the middle east hub carriers. None of them have sufficient O&D markets to dominate on their own. They have two choices:
1. Have the lowest CASM (EK)
2. Have the best premium service.

The second strategy is being pursued by both EY and QR. Since neither has a strong O&D market, only one will prevail. As to GF, they are not as focussed as their three major competitors and thus are in deep trouble. Love or hate EK, they have a strategy and our sticking to it. By having the lowest CASM and greatest number of connections has an advantage. If it remains a four way competition, you will have three (or even four) weak airlines.

Last I looked, QR required cash infusions every year and EY was a few years from a profit. Only EK generates cash and thus should be able to borrow cash a little easier from the markets. But they are far from unstoppable and could be overexpanding. (Or crazy like a fox... only the future will tell.)

Since much of this expansion is being driven by India to Europe connections, all are long term vulnerable to Indian/European expansion (point to point). However, as long as LHR and other airports are slot controlled, the advantage goes to those who can effectively hub and fill large airframes. Not to mention the Indian government has messed with their airlines so much that they missed growth opportunities.

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineRemcor From United States of America, joined Feb 2006, 358 posts, RR: 0
Reply 8, posted (7 years 1 week 5 days 3 hours ago) and read 3121 times:

So would it become Gulfihad? Or perhaps Etihair?

User currently offlineEXTspotter From United Kingdom, joined May 2007, 992 posts, RR: 1
Reply 9, posted (7 years 1 week 5 days 3 hours ago) and read 3105 times:

Etihad would have no use for buying Gulfair.

Gulfair is in poor shape financially and there is little commonality between the two airlines, also operating an airline accross two countries is difficult as shown by Gulfair in the past.

In summary, there wouldn't be much for Etihad to gain from it.



AF BE BY FR MV PD SZ U2 VZ DHC6, 8-3/4Q, 732/8, 763ER, A319, A380
User currently offlineFlyDreamliner From United States of America, joined Jan 2006, 2759 posts, RR: 15
Reply 10, posted (7 years 1 week 5 days 2 hours ago) and read 3094 times:

Quoting Remcor (Reply 8):
So would it become Gulfihad? Or perhaps Etihair?

Being that Etihad means "united" in Arabic, I doubt they'd merge that with Gulf Air to make a nonsense word.

If Bahrain ever lets Gulf Air go, Etihad might absorb their assets ala American absorbing TWA's assets.

I ultimately see trouble for the Gulf carriers. Emirates is gambling big with its super expansion. So far as I know, Qatar has never made money and isn't necessarily on track to either, and Etihad, while seeming to have a good business model and what not, is poorly located in the center of a tempest. Gulf Air is struggling pretty badly and needs a miracle. Then again, with oil rich emirates backing up their airlines, I suppose you can keep an unprofitable airline going for a long time.



"Let the world change you, and you can change the world"
User currently offlineB747-4U3 From United Kingdom, joined Jan 2002, 990 posts, RR: 0
Reply 11, posted (7 years 1 week 5 days 1 hour ago) and read 3054 times:

Quoting FlyDreamliner (Reply 10):
I ultimately see trouble for the Gulf carriers. Emirates is gambling big with its super expansion. So far as I know, Qatar has never made money and isn't necessarily on track to either, and Etihad, while seeming to have a good business model and what not, is poorly located in the center of a tempest. Gulf Air is struggling pretty badly and needs a miracle. Then again, with oil rich emirates backing up their airlines, I suppose you can keep an unprofitable airline going for a long time

Absolutely! Just look at Europe. Just like the Middle East, Europe is a relatively small geographic region which had a large number of airlines wanting to become major hub and spoke carriers. Several have already failed, one is on the brink of failure but they have all been operating for decades. Look how long Olympic and Alitalia have been hanging on.

The same will happen in the Middle East. It will get to the stage where it is no longer politically viable to support a carrier which has never made a profit.

If I had to gamble I would put my money on EK and EY surviving. Dubai is a rapidly growing city and possibly the most important in the Middle East. Emirates already makes money and has a good brand. Equally, due to Abu Dhabi's close proximity to Dubai- indeed Abu Dhabi International is closer to many parts of Dubai than is Dubai International it can leach off the success of Dubai as well as Abu Dhabi. In addition to that, by providing a superior service, it has differenciated itself enough from Emirates to be able to take a portion out of Emirates' market.


I feel that GF is in a mess and will only be able to survive by focussing on profitable regional point to point routes from Bahrain plus a limited number of long-haul routes.

I feel that QR is trying to do too much too quickly. They are trying to do in 5 years what Emirates did in 20 and I don't think it will work. Mr Baker said that they are not profitable because they are expanding rapidly, and should be profitable in the next 5 years (I believe he said that a couple of years ago, and has again recently repeated that). However, with the number of aircraft they have on order, when will this rapid expansion stop? And if they are constantly expanding how will they make a profit? In addition to this, several other members have pointed out that whilst Etihad has been focussing on provided clear and consitant schedules, Qatar has taken a more "join all of the dots" approach which means that connecting times can range from 1hr one day to 6hrs another day and can have 4 different departure times in a week.


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