Beijing21
Topic Author
Posts: 79
Joined: Thu Nov 25, 2004 8:06 pm

What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 3:16 pm

I would say that would be great financially and boost operations in order to compete better in the region.
 
LurveBus
Posts: 218
Joined: Wed Mar 21, 2007 8:21 pm

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 3:37 pm

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.
 
Beijing21
Topic Author
Posts: 79
Joined: Thu Nov 25, 2004 8:06 pm

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 3:40 pm

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
 
PanHAM
Posts: 8538
Joined: Fri May 06, 2005 6:44 pm

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 4:55 pm

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.
powered by Eierlikör
 
LurveBus
Posts: 218
Joined: Wed Mar 21, 2007 8:21 pm

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 5:06 pm

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.
 
BCAL
Posts: 2925
Joined: Mon Jun 28, 2004 10:16 pm

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 5:44 pm

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?
MOL on SRB's latest attack at BA: "It's like a little Chihuahua barking at a dying Labrador. Nobody cares."
 
B747-4U3
Posts: 617
Joined: Fri Jan 04, 2002 8:08 am

RE: What If Etihad And Gulf Air Merge?

Fri Sep 07, 2007 10:13 pm

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 avatar
lightsaber
Crew
Posts: 11855
Joined: Wed Jan 19, 2005 10:55 pm

RE: What If Etihad And Gulf Air Merge?

Sat Sep 08, 2007 1:43 am

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
"They did not know it was impossible, so they did it!" - Mark Twain
 
remcor
Posts: 301
Joined: Thu Feb 16, 2006 9:25 am

RE: What If Etihad And Gulf Air Merge?

Sat Sep 08, 2007 1:45 am

So would it become Gulfihad? Or perhaps Etihair?
 
extspotter
Posts: 617
Joined: Wed May 30, 2007 12:45 am

RE: What If Etihad And Gulf Air Merge?

Sat Sep 08, 2007 1:55 am

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
 
flydreamliner
Posts: 1928
Joined: Sat Jan 07, 2006 7:05 am

RE: What If Etihad And Gulf Air Merge?

Sat Sep 08, 2007 2:01 am

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"
 
B747-4U3
Posts: 617
Joined: Fri Jan 04, 2002 8:08 am

RE: What If Etihad And Gulf Air Merge?

Sat Sep 08, 2007 3:13 am

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.