Gulf Air back on the radar

The parallels are obvious. Last week’s announcement that Gulf Air is to sponsor Championship football club Queens Park Rangers mirrors the deal arch-rival Emirates has with Arsenal, albeit on a smaller scale. But in an exclusive interview with Marketing Week, recently installed Gulf Air chief executive Björn Näf reveals there is more to it than first meets the eye.

Näf explains that the QPR deal marks a major shift for the company and heralds the creation of a “new” Gulf Air, one capable of competing against its newer, richer Middle East rivals. Näf says: “We are putting the basics in place – a new fleet, working on reliability, punctuality, customer focus and a fresh marketing strategy.”

Industry experts feel that Näf has a difficult task ahead in leading Gulf Air’s recovery after a deeply troubled period, and the amiable Swiss concurs. “The airline has been through some very tough times,” he admits.

Times have been tough indeed. The airline has been haemorrhaging money – it made a $340m (£180m) loss in 2006; has seen ownership changes; and, in the space of a year, has been under the stewardship of three different chief executives. And, while Gulf Air has been struggling with a succession of crises, competitors including Emirates and newcomer Etihad have been growing aggressively.

Gulf Air, founded in 1950, is the oldest airline in the Middle East. In 1951, the now defunct British Overseas Airways Corporation (BOAC) became major shareholders in Gulf Aviation, as it was then known.

Then in 1973 BOAC sold its holding to the governments of Bahrain, Oman, Abu Dhabi and Qatar. Each government took a 25% share of the company, which was rebranded Gulf Air.

The Seventies and Eighties were times of growth, with the number of routes and destinations increasing. But during the late Nineties the company’s profits fell dramatically and it struggled with spiralling debts.

Former BMI chief operating officer James Hogan was appointed chief executive in 2002 and set about a dramatic restructure. At the same time, Qatar pulled out of the airline and put its lot in with its own carrier, Qatar Airways.

The dynamic Hogan made bold changes and, despite war in the region, met with some success in dragging the company into the future. But in 2006 Abu Dhabi withdrew from Gulf Air and, according to one industry source, “poached” Hogan to head its own infant airline Etihad.

Hogan was replaced by former Swiss International Airlines chief executive André Dosé, who arrived in April 2007, and, apparently unable to cope with the constraints of multi-government ownership, resigned within four months. Soon after, Oman withdrew from the company leaving Bahrain as sole owner.
Chief operating officer Näf was drafted in as acting chief executive then later confirmed in the post. He lays out his plan for the airline with Swiss precision and feels the difficulties that dogged Dosé’s tenure will not apply to his. “In Arab culture you have to build trust, without that you are lost,” he says, alluding to Dosé’s frustration with Middle Eastern legislature.

He points to Bahrain’s new status as sole owner of the airline as a major plus. “The airline is crucial to Bahrain’s economy. It is committed to backing us up and that has brought speed. Things that were not possible under multiple owners now are.”

In the past six months Näf has ordered 60 aircraft, the first fleet order for ten years. A fresh corporate identity is planned and the search for a global marketing agency is on to reposition the airline in a market where it has been somewhat left behind by its competitors. “There is heavy competition. Like QPR, we are in a tough league,” Näf admits.

Aside from raising the company’s profile, the association with QPR’s owners, Formula One duo Flavio Briatore and Bernie Ecclestone, along with the UK’s richest man Lakshmi Mittal is “crucial”, says Näf. The airline already has an established relationship with Ecclestone through its sponsorship of the Bahrain F1 Grand Prix, but he is particularly keen to tap Mittal’s Indian connections.

“They know the whole world,” says Näf. “They can open doors. Mittal is very influential in India and that is key for us. We want to double destinations, seats and frequency to India.”

Näf looks on QPR’s mission to assert itself as a “global brand” among teams like Chelsea and Arsenal as having resonance with Gulf Air’s own quest to re-establish itself in a market dominated by Emirates and the upstart Etihad, which recently signed up to sponsor the first Abu Dhabi F1 Grand Prix.
Yet travel industry consultant Keith Betton queries the wisdom of airlines getting involved in sports sponsorship at all. “I am a total cynic about it,“ he says, “People choose flights based on price and suitability.” However, he concedes: “I suppose it gets the name out there.”

Gulf Air’s name will get a lot further “out there” should QPR rise to the Premier League, as planned. When asked if promotion would mean QPR’s price tag goes up, Briatore jokes: “Well, it won’t go down.”

Whatever doubts industry analysts have about the true impact it may have on sales, the desire to be linked with the style and excitement of QPR’s owners is strong in Näf, as is the hope that he has bought into Briatore’s vision at an early stage and will thus be connected with a great success story from the start.

“It is not a question of investing more,” Näf says, “It is a question of investing smarter.”

The Middle Eastern Set
Qatar Airways
Based: Doha, Qatar
Founded: 1993
Destinations: 81
Sponsorship: Major sponsor of English cricket in a deal encompassing the seven Test Match grounds for all domestic and international matches. Also sponsors the Qatar Festival in Paris, a horse­racing event held at Longchamps.

Emirates
Based: Dubai, UAE
Founded: 1985
Destinations: 91
Sponsorship: Arsenal FC, including the 60,000-seater Emirates Stadium, and top-flight German football club Hamburg SV.

Etihad
Based: Abu Dhabi, UAE
Founded: 2003
Destinations: 44
Sponsorship: Official airline of Chelsea FC, main sponsor of Harlequins Rugby Union Club, sponsors PGA tour fixture Abu Dhabi Golf Championship, and set to be title sponsor of the Abu Dhabi Formula One Grand Prix for its inaugural race in 2009.

Gulf Air
Based: Bahrain
Founded: 1950
Destinations: 41
Sponsorship: Bahrain Formula One Grand Prix and Queens Park Rangers FC.