Tuesday, February 12, 2013

A sad day for Middle East aviation… Bahrain Air to file for voluntary liquidation

Bahrain Air to close operations
The end of the runway for Bahrain Air
Bahrain Air has been on a roller-coaster ride ever since it launched operations, with plenty of ups and downs along the way, but sadly that ride has reached its conclusion.

Earlier today, the airline confirmed that its operations had been suspended and it would file for voluntary liquidation. The decision, it seems, was made by stakeholders during a recent Extraordinary General Meeting.
 
Although the news might have been unexpected for some, Bahrain Air has been skating on thin ice as a result of continued market challenges, including political instability in parts of the Middle East and North Africa, such as its home country.

According to an official statement, the carrier was instructed to suspend flights to several destinations in 2011, during Bahrain’s State of National Emergency, but received no compensation, despite making official claims.

“The airline is now being required to make immediate payments on past government debts or face closure at the same time as having its scheduled operations, both destinations and frequencies, being reduced considerably by the Civil Aviation Affairs in the Ministry of Transportation,” continued the statement, which was placed on the homepage of Bahrain Air’s website.

“This effectively strangles the airline by simultaneously requesting payments and reducing its ability to generate the necessary revenues both to make these payments and to sustain long term profitability. The airline has also spared no effort to negotiate a solution with the Minister of Transportation (who is also an active board member of Gulf Air). However, he has shown no inclination to provide a meaningful solution. His decisions to restrict route approvals have cost the airline BD 4.5 million in lost revenues over the last 3 months.”

In what appears to be finger pointing, the statement added that Bahrain Air’s AOC was only extended for two months instead of one year by the Minister, even though operational audits had been passed. “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.”

Ending on a sombre note, the airline concluded that the decision marked a “sad day for all Bahrain Air shareholders and employees, and for our loyal and valued guests, and all those who valued the freedom of choice when making their travel plans”.

UPDATE: Bahrain Air CEO Richard Nuttall has told Gulf Daily News that its employees would be ‘taken care of’, according to a news report. "We have close to 300 airline staff who will be affected by this decision. We are working on guidelines to ensure they will get what they deserve," he said, adding that all of the carrier's aircraft were leased and the process of returning the planes would start shortly.

I’m saddened by the news – I have interviewed both the Managing Director and CEO of the airline on numerous occasions and admired their visions and hopes. What do you think of the decision? As always, please feel free to share your comments here, and you can also get in touch on FacebookTwitter and Google+ - I look forward to connecting with you!

ALSO READ: Top 10 Long-Haul Airlines of 2012, According To ‘Which?’ Magazine

23 comments :

  1. A demise is always a sordid affair. Bahrain Air's too is very much so.

    This is not pointing my fingers, yet I feel that the management & people behind the airlines are the ones mostly responsible for this kind of sad end. In spite of hardest times for the aviation industry, there is always plenty for those who want & work hard to get it; provided they play their cards right.

    Anyways, Good Bye Bahrain Air and Welcome to all who are, or inspiring to be, getting to the arena.

    Best Regards.
    Ijaz

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  2. It is indeed a sad day in Arab Aviation, I have a lot of friends and colleagues at Bahrain Air. Gulf Air prevailed at the end. For the last year there has been a lot of behind the scenes activities about a possible merger with GF. Can Bahrain only support one airline, probably not if it is a large carrier. Bahrain Air competed head to head with GF and all other international operators, unlike Flydubai that opened new destinations so that it will not compete head to head wit Air Arabia. Of course they competed on the popular routes but made revenues on a lot of others where they were the only carrier.

    I wish all my friends in Bahrain Air, all the luck. Take care guys.

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  3. Very sad news indeed. I interviewed CEO Richard Nuttall in December 2011 as the airline had adopted a 'value for money' model - which would place it between the big commercial carriers and low cost-carriers. This hybrid model has not always worked well for airlines in the past - Air Berlin was a classic European case in point.

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  4. "indeed a very sad day."

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  5. Too many prestigious airlines in a too small area... and Bahrain doesn't have the economical influence of its neighbor.

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  6. I was surprised to see the following statements in the article:

    The Minister of Transport is on the board of competitor Gulf Air? ! ?

    The Minister extended the AOC of Bahrain Air for only two months, despite audits passed? ! ?

    The MOT is simultaneously demanding payment of back debts while restricting route approvals? ! ?

    If these statements are true, there exists a serious conflict of interest within the MOT.

    In the past I've seen similar political maneuvering here in the US involving FAA and 'good ol' boy' relationships with carriers...

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  7. There you've got the answer "The airline has also spared no effort to negotiate a solution with the Minister of Transportation (who is also an active board member of Gulf Air)"...

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  8. Kamel Lamri BoudjemaFebruary 14, 2013 at 2:31 PM

    As you said: Sad day...! But a question is to be raised about possibilities to continue operations and/or causes of sad liquidation event?

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  9. It was quite obvious ...the writings on the wall!! Bahrain is small country could not sustain two airlines. Many major airlines and some were flag carriers in the world went down...what would stop small airline like Bahrain with limited resources not to go down??!!

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  10. Middle and long term business perspective. This is to me the driving force to maintain the airline afloat. Obviously the share holders did not see much perspective.

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  11. Unfortunately never been a question of if but always of when. Yet indeed a sad day, not only for aviation but more importantly for lots of people relying on a pay cheque.

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  12. Its indeed a sad day for the industry --- guys do u see progress in restoring order in Bahrain?

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  13. Evgenia (Zhenya) KyanovaFebruary 15, 2013 at 9:16 AM

    Indeed, this is bad news, esp. taking into account the great start of the airline just a few years ago. Alternatively, the region seems to be experiencing changes in its development pattern - so far, aviation growth has prevailed, with limited rates of non-success, but it looks like that ruthless competition is gradually taking its toll.. Hopefully, this will lead to even greater service quality rather than the opposite (i.e. oligopolistic type of offering).

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  14. Even I had the same incident with paramount airways completely south religion & we effected lot with out job even I'm facing the same situation I hope Bahrain airline should back soon & save the staff lives.

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  15. While it sad to see people losing their jobs, and especially if those include friends and colleagues, I fail to see what promise Bahrain Air ever had.

    A small country like Bahrain, simply and utterly could not have sustained another airline. I don't know how the investors were lead to believe that this airline will be a good venture and will have a good ROI, but the majority of the people who are aware of the aviation and political environment, did not think that Bahrain Air was a good idea to start with.

    It needed a maverick, shrewd and enterprising person with a heavy pocket to run a direct competitor to GF in Bahrain. Bahrain Air simply did not have such a person. Look at the Management structure of Bahrain Air and how it was run, to find out answers to a lot of questions and perhaps some insight in why Bahrain Air flopped.

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    Replies
    1. Hi Sir,

      would you mind to provide further details about the management structure of Bahrain Air, because I am really interested to know more about the issue that related to leadership.

      Many thanks

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  16. I agree with Mr. Majeed Panahi.

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  17. Yes its true and sad I feel for the customers who paid for services & will not be able to get even a penny.

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  18. What's bad for your people is good for us! I hope Bahrain Air goes into liquidation and United Airlines gobbles up all its assets!

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  19. I sincerely hope that Bahrain Air gets back into the air ASAP!!

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  20. Agreed Sam, bearing in mind they're operating in a small world region with very large dominant carriers with probably no or low influence and don't think has protection from a major alliance.

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  21. It was not at all surprising for the local market. It was expected to happen but the question that always loomed was when? From the beginning it looked like Bahrain Air wanted to replicate Air Arabia's model. What the shareholders did not see was the success Air Arabia achieved was only because it started out of a virgin market with virtually no competition and a market of its own. Bahrain Air went on to compete with the govt supported Gulf Air and from the beginning there was a clash of egos at the very top. The Misistry of Transportation seemed to have its on agenda as being on the board of GF is a conflict of interest. Now what is the fate of GF. Another Olympic/Swiss or same as Bahrain Air. I sincerely wish Richard and his erstwhile team all the very best in with the next job.

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  22. Sigfrido Munguia PulidoMarch 3, 2013 at 1:14 PM

    I thought Middle East Airlines were far from financial troubles!

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