Wednesday, March 13, 2013

EXCLUSIVE INTERVIEW: Bahrain Air CEO Richard Nuttall discusses the airline's closure


Bahrain Air CEO Richard Nuttall speaks to AviationWriter.com
Bahrain Air's Richard Nuttall speaks to AviationWriter.com
As a result of continued growth in the Middle East aviation industry, we’re used to hearing about the rapid growth of airlines such as Etihad Airways, Emirates Airline and Qatar Airways, among others.

However, as the recent closure of Bahrain Air shows, the region is not immune to the same aviation challenges and struggles as other parts of the world.

As you’ve probably heard, Bahrain Air stakeholders made the tough decision to suspend operations last month and confirmed it would be filing for voluntary liquidation.

As I explained in my original post about the situation, Bahrain Air has been on a roller-coaster ever since it launched operations, with plenty of ups and downs along the way.

Most recently, it has been skating on thin ice as a result of political instability in parts of the Middle East and North Africa, including its home country.


The airline, which placed itself between a full service carrier and a low-cost one, seemed to take a critical stance in terms of government support (or the lack of). For example, it was instructed to suspend flights to several destinations in 2011, during Bahrain’s State of National Emergency, but official claims for compensation were apparently denied. It also declared a stalemate in negotiations with Bahrain’s Minister of Transportation (who is also an active board member of Gulf Air).

“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,” revealed an official statement on Bahrain Air’s website.

According to Gulf Daily News, the airline’s staff will receive a combined BHD2.2m (US$5.8m) pay-out for losing their jobs, while Bahrain national carrier Gulf Air had agreed to open recruitment to Bahraini pilots affected by the closure.

During my time as senior group editor of Aviation Business magazine, I met and interviewed Bahrain Air CEO Richard Nuttall on numerous occasions. We also shot the cover featured on the right together during the last Bahrain International Airshow (one of my favourite covers from the magazine!).

As a kind gesture, Richard agreed to be interviewed on TheAviationWriter.com about the Bahrain Air situation – and I invited readers to submit their own questions, with an overwhelming response.


Below are the five questions that Richard has answered, providing a fascinating insight into the situation from one of the key figures involved. It's the first interview I have featured on this blog, so I hope you enjoy it – and a massive thanks to Richard for participating.

Of course, feedback is always welcome, so please leave your comments on this page or get in touch via Facebook, Twitter and Google+.


INTERVIEW WITH RICHARD NUTTAL, BAHRAIN AIR CEO


I have received a lot of comments on my blog about Bahrain Air’s closure. The opinions were mixed – some argued that Bahrain Air had a lot of potential but was a victim of politics, while others said it was destined to fail. In hindsight, how do you feel about the situation?
In a part of the world where almost every other airline is subsidized, and flying from a small Kingdom which is currently going through its own issues, it was always going to be difficult to be truly profitable. There is not enough point to point traffic, and regional connecting traffic yields are too low to sustain an airline. So it was always going to struggle by traditional measures. However, as a new airline, with a low cost seat configuration, Bahrain Air was always going to be much more efficient than Gulf Air on many Indian subcontinent routes and to seasonal leisure markets. As such, Bahrain Air could certainly have played a role connecting the Kingdom to select destinations at a much lower cost than Gulf Air.

What response have you received from the industry since the announcement? Have fellow airlines, travel agents, airports and other partners been supportive?
Most of the feedback has been supportive. We had a good operation and were locally very much airline of choice for a number of destinations. It is widely recognised that a combination of the Arab spring and the political decision to protect Gulf Air put us in an impossible situation.

Where have you reached in the process of winding down operations and what remains in the future? What is the time frame before the process is completed?
It is not for me to comment. You would have to discuss with the liquidator.

Gulf Air is cutting routes and making further redundancies. Do you think it will benefit from the closure of Bahrain Air? And what are your thoughts on its future?
The closure of Bahrain Air will bring minimal benefits to Gulf Air. They will benefit marginally on a few routes, but they either do not fly to most of our strongest routes, or they are planning to pull out or reduce frequencies. And for any connecting traffic they are still competing with a host of other carriers. As for the future of Gulf Air, I wish them well. Historical evidence suggests it can take decades to restructure inefficient state carriers. It will take patience and deep pockets. But at least there now seems to be a resolve to take difficult decisions that were taboo in the past.

Despite the closure of Bahrain Air, you have been hailed for your management of the airline. What are your plans going forward?
Let’s see. I am looking around for the next opportunity. But I think airlines are in my blood. They are all about people, and they play a key role for the communities they serve. This can be terrifically energising. But time will tell.


7 comments :

  1. Dr. Ahmed ElsayedMarch 13, 2013 at 3:37 PM

    This is Dr. Ahmed Elsayed, professor of aerospace engineering. I would like to have a global look and be back to this sad event. All airlines in the area surrounding spring revolutions countries (Egypt, Tunisia, Libya, Yemen) have been greatly influenced by instability of these countries.

    I was flying from Munich to Cairo few days ago via EgyptAir and found the occupied seats are less than 40% and asking staff about normal rates who confirmed to be less than 50% and mostly are transient passengers as well as Egyptians. This not only has bad impacts on aviation but tourism as well. I'm expecting similar situations for Libyan, Tunisian and Yemen airlines!

    Now back to Bahrain Airlines; I would like to direct my speech to leaders of the gulf area (H.E King, Shiekh, Prince)

    1- Why CEOs of your airlines are non-native citizen? You've a successful experience in higher education when you sent scholars to different foreign countries to get their Ph.D degrees and when they were back, many of them are now University Presidents. You may (and not saying must) examine this idea and start sending high rank native workers in airlines to be the top management in your airlines. I know some airlines are headed by H.E. Shiekh, or prince, but they are not the acting heads.

    2- What about an alliance for Gulf airlines similar to present alliances (Star Alliance, etc)? You've strong economy, fleets having most recent airplanes and multi-national and international flights as well as very strong hubs either in Saudia Arabia, Dubai, Mumbai...

    I hope this idea will be liked and I can give more discussions and help. I've worked in 8 countries in design, operation, performance and analysis of aircraft engines in airlines, Universities, research centers. I'm also author of the international book: Aircraft Propulsion and Gas Turbine Engines (Taylor & Francis/ CRC Press, Feb 2008), which is available in most international airlines, 60 countries.

    Best regards,
    Ahmed El-sayed

    ReplyDelete
  2. Juditha-Jade PARKINSONMarch 13, 2013 at 9:50 PM

    Quote and unquote from your blog:

    ".... It also declared a stalemate in negotiations with Bahrain’s Minister of Transportation (who is also an active board member of Gulf Air).
    “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,” revealed an official statement on Bahrain Air’s website."

    But there is a conflict of interest on the part of the Minister of Transportation. This is the first thing that he has to face if he was in the same situation here in Belgium.

    By the way, excellent interview. And thanks for informing us of the follow-up of your previous blog.

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    Replies
    1. Thanks for your positive feedback - its interesting how this situation could have panned out different in another part of the world!

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  3. Gopinath RamakrishnanMarch 14, 2013 at 10:31 AM

    Thanks to the author for publishing this interview with the CEO of Bahrain Air. It is very miserable when we see the time, effort and of course money been devoted goes down the drain. There could be dozens of reason for this plight. However it is proved beyond doubt that an airline future depend upon the country’s political and economic growth. Bahrain as a country has more shortages rather than advantages. The economic growth has always been very stagnant. The National carrier themselves is going through heavy turbulence. Cost have sky rocketed and the inflow of government fund has been reduced drastically. They are being forced to take certain difficult decisions in order just to keep floating. Bahrain Air as a private carrier would definitely feel the pinch when they are always been the second carrier.
    Now that the hands has been burned this should be the time to act wisely by having only the National carrier in a country like Bahrain and utilise the expertise from both the airlines to expand the wings of the now shrinking National carrier.

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  4. Ramakrishnan GopinathMarch 15, 2013 at 8:38 PM

    Now that Gulf Air needs a CEO, Richard with his local experience could be a decent choice. With the current political environment and with the minimum Government support, Richard has being doing a commendable job as the CEO of Bahrain Air. We hope to see him around.

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  5. Most of their success was due to their innovative marketing

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  6. It was a decent airline, with nice service, and very reasonable rates. Sad to see it closed down!

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