Gulf Air chief predicts Middle East airline rationalisation in near future

Rationalisation of Middle East airlines is a reality, according to James Hogan, president and CEO of Gulf Air, who predicted that many carriers would move to share back-room costs within the next five to 10 years.

Hogan, who was speaking at the Arabian Hotel Investment Conference in Dubai, predicted that airlines would come together to “take some of the costs out of the industry” and improve the bottom line, as seen in Europe and America.

He said, “There are too many public utility airlines in the Middle East, and at some time the airlines need to get back into shape, especially as there is more pressure as the airline industry becomes global. 

“The best way for the sector to move forward is through consolidating some of the back-room costs like engineering, training and IT development. This will help take some of the costs out of the industry, but will not affect the brands, much as in the hotel industry.”

Hogan stated that global carriers were unlikely to be part of the rationalisation – “they have a distinct global strategy” – but would help struggling regional carriers to share costs.

“Low-cost airlines do not exist in the region, as seen in Europe, and will not do so until they open up new markets. At present, they are just sitting on top of the current schedules and keep the yields down.”

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