Can An Airline CEO Get It Right By Getting It Wrong?

Gulf Air, one of the oldest airlines operating in the Middle East, has been facing an identity crisis over the past few years.  Gulf Air has gone from a major player among Middle Eastern airlines to an airline that did not grow at the pace of its younger upstart competitors, and as a result faces many challenges for its sustained survival.

Two days ago Gulf Air’s CEO, Samer Majali, took a step that very few executives take in public, especially when addressing global executives from thier own airline … Samer Majali admitted that Gulf Air got it wrong.

Rather than blame others, or spend time arguing what could have been done, Mr. Majali outlined the airline’s mistakes and has vowed to move forward and correct the errors.

In a bold move Mr. Majali stated “It is not logical to continue to request funding from the government to support the airline’s operating losses to the tune of hundreds of millions of dollars per year; funds that could be much more usefully employed to improve the quality of life for the citizens of Bahrain in terms of infrastructure, roads, schools and medical care.”

Not stopping at the obvious impact points, Mr. Majali  also stated “We failed to explore niche markets, where we could exploit a leadership position and instead we entered into a price war for the same passengers, resulting in lower yield.”  … and …  “We were incurring huge costs in maintaining them [airplanes], while our competitors were flying new planes with high specification in terms of passenger comfort and entertainment. Unfortunately, we haven’t implemented a proactive interior upgrade or re-fleeting strategy in the past. Outdated products, poor service and complacency have alienated passengers and robbed the airline of its edge.”

As many airline executives place blame on others, it is clear that Mr. Majali is looking forward, rather than backwards, to move the airline in the right direction. Geographically  Gulf Air is excellently situated to capture inter-Gulf regional traffic largely ignored by many of its competitors in the region.

As Saudi Arabian Airlines moves towards privatization, and adjusts its focus on regional traffic as well as increased long haul traffic, Gulf Air will find a larger competitor along its border.  There is a defined niche’ for Gulf Air in the Middle East, one it needs to open its eyes to and embrace in terms of its passenger products, routes and sustained alliances. Gulf Air has a definite lead on Saudi Arabian Airlines in having established strong code-share agreements, as well as having created some very unique in-flight products that entice ‘premium cabin’ flyers, as well as families flying long haul routes …  and having a more flexible structure to embrace newer concepts and adapt in a more rapid manner.

While many airline simply get it wrong and do not move quickly to correct their errors, Gulf Air’s CEO appears to have his eyes set in the right direction ready to move his airline towards sustainability and profitability. Hopefully the airline takes Mr. Majali’s lead and Gulf Air’s Golden Falcon can continue to soar.

Happy Flying!

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Comments

  1. Excellent reporting on a story the rest of us might have missed if not for you Steve. And for the record, I think Majali’s admission of a mistake shows me a true leader under development. Hopefully it’s not too late. Perhaps a follow-up piece by year end?

  2. Rob,

    Personally I have flown with Gulf Air and while their on-board product may be behind the time a bit, their service is excellent. I plan on following how Gulf Air proceeds from here.

    I am also following Saudi Arabian Airlines and how they are progressing with their privatization, they have some interesting moves coming up…and I am keen to see how these two airlines square up against Emirates, Qatar and Etihad.

    Happy Flying (I guess in your case Happy Whining!)

    -Fish

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