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Basra beckons for Saudis

August 11 - 17, 2010
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Gulf Weekly Stan Szecowka
By Stan Szecowka

National carrier Gulf Air's expansion plans for destinations in and around the Middle East continue unabated with one of the most audacious to date ... Basra.

It's hardly likely folk will be packing up their buckets and spades for a sunshine break to the Iraqi hotspot but the airline's executives believe it will be a hit with businessmen as the trouble-torn country makes strides to stabilise.

Analysts predict that the airline could tap into a recent thaw in relations between neighbouring Saudi Arabia and Iraq, which should open the door for Saudi firms spending billions of dollars on regional expansion to explore an untapped country of 30 million where players from Turkey, the United Arab Emirates and Iran are making inroads.

Hameed Fadhel, from Baghdad University, said Riyadh wanted to pursue security co-operation with Iraq. "Saudi Arabia and Iraq have joint interests in several areas such as security ... and economic co-operation," he said, also citing oil policy.

Interest of Saudi firms is picking up. Products of Saudi food firms such as Almarai are sold in Iraq, though most exports go via Kuwait or Jordan as the only land border crossing is closed.

Last week, Iraqi media also reported government talks with a Saudi firm in the oil hub Basra on a $300 million power deal.

Although the country lacks political stability and security remains a major concern there is growing optimism that a bright future beckons. The US military recently handed over the military base of Bucca, which used to be the largest detention centre in the oil rich city of Basra, to the Iraqi government as it prepares to leave Iraq seven years after ousting Saddam Hussein.

"Iraq is a market that could offer 15-20 per cent increase in sales volume for particular products if potential is maximised," said John Sfakianakis, chief economist at Banque Saudi Fransi, citing demand for steel, food, machines and building materials.

After years of being in the doldrums Gulf Air is also seeking every opportunity to become an essential player in the region on its flight path to eventual privatisation. In the last 13 months Gulf Air has launched services to 11 new destinations. It hasn't opened so many routes in such a short timeframe since 1976.

As well as Basra the airline is also launching services to Addis Ababa, the capital of Ethiopia, and Isfahan in Iran.

Gulf Air chief executive Samer Majali unveiled the plans at a press conference last week and the details follow the recent announcement of the airline's commencement of services to Aden and Colombo.

Services to Isfahan start from October 30 with three weekly flights and to Aden via Sana'a and Colombo from October 31 with five weekly services. Basra also takes off on the same day with three weekly services. Addis Ababa will be on the schedule from December 6 with five weekly services.

"The launching of these new destinations further demonstrate our new strategy to identify and serve niche and under-served markets and, create potentially high yield city-pairs by providing direct service to Bahrain and beyond," said Mr Majali.

"While none of the Gulf carriers are serving Aden and Basra at present, cities like Addis Ababa and Isafahan are unexplored markets with Colombo being a popular tourist destination that has not been linked to Bahrain since 2002.

"We believe there is strong commercial potential in all these cities and we hope these routes also will be successful like the other six we recently launched. ... we are not only enabling the people and businesses of these countries to connect to one of the world's fastest growing economies but also reinforcing our position as the undisputed leader in connecting the Middle East."

A new winter schedule has also been unveiled as the company boasts improved punctuality, performance and fleet after years of doom, gloom and huge losses.

"The new winter schedule reflects one of the main objectives of our new strategy - to serve every regional capital with at least a double-daily service and generate a new market of travellers, who wish to conduct their business in the region and return home the same day," said mr Majali.

"Passengers can currently fly to Abu Dhabi, Dammam, Doha, Dubai, Kuwait and Muscat, conduct their business and return home in the same day with a number of flight options.

"We have taken this concept further in our new winter schedule by offering three times a week same day return flights to Riyadh, Jeddah, Beirut, Cairo and two times a week same day return flights to Amman and Damascus in addition to the daily flights to these cities.

"Another core element of our new strategy is to strengthening our international network and connect customers with seamless onward connections via Bahrain with the least possible waiting time."

The airline recently took delivery of 10 new aircraft - eight A320s and two E170s and phased out nine older planes - five leased A320s and four A340s, reducing the fleet's average age by four years to 7.8 years. By the end of next month two additional E190s aircraft will be joining the fleet and three more older aircraft will be phased out further reducing the average age of the fleet to 6.8 years.

In the next three years 13 more new aircraft will join reducing the average age to just 4.1 years making Gulf Air's fleet one of the youngest in the region.







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