Travel bookings recovering after airspace closure during Israel-Iran conflict, says Gulf Air boss

Demand outlook is 'reasonable' after regional tensions in June

Jeffrey Goh, chief executive of Gulf Air Group Holding, said passenger numbers are picking up. Bloomberg

Gulf Air is recording an increase in travel demand following a dip in passenger volumes after Bahrain and other Gulf countries briefly closed their airspace during the height of the Israel-Iran war.

Bookings for the end of July and August are recovering after passengers cancelled or postponed their travel plans in June, Jeffrey Goh, chief executive of Gulf Air Group Holding, told The National.

“We were affected by the regional tensions in June and that affected demand clearly and affected passenger numbers but overall, in terms of where we fly to and from, demand is reasonable in terms of our outlook,” he said.

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Several Gulf countries temporarily closed their airspace on June 23 due to an Iranian attack on the US airbase Al Udeid in Qatar. Airlines scrambled to cancel flights and reroute planes, disrupting air travel across the region's busy skies.

The Bahrain airspace closure led to cancellations for the Manama-based airline, but passengers are now travelling into and through the Gulf region on a “deferral basis”, Mr Goh said.

“Those who had looked to travel in early July are pushing [their dates] to August. So we're seeing the numbers picking up again from the end of July and well into August,” he said.

The broader challenge is to address the concerns of transit passengers from the East and West over whether it is safe to fly through hubs in the Middle East, Mr Goh added.

“Inevitably and unfortunately, we will not be able to correct that perception 100 per cent,” but organisations including Gulf Air, Bahrain's tourism authorities and local hotels are working to spread awareness about security in the region.

This will “take a bit of time” but the aviation industry has proven its resilience in stimulating demand and attracting transit passengers and visitors to the region, he said.

Overall, demand in Asian markets is “healthy”, but some parts of the network are weaker and require stimulation including through competitive air fares.

“But overall in terms of volume, we see a reasonable, steady pace,” he said.

Dubai-bound flight diverted four times amid Middle East airspace closure

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Boeing 787 plane order

Gulf Air last week agreed to buy 12 Boeing 787 Dreamliners, with the option for an additional six.

Mr Goh praised the new leadership of Boeing under chief executive Kelly Ortberg for steering the company's turnaround after years of challenges.

“There is progress in terms of improving Boeing's performance and improving Boeing's aircraft production,” he said. “It cements the partnership we've had for many years.”

The airline needed to “join the queue for new aircraft today” because it takes manufacturers an average of up to seven years to deliver them.

Gulf Air is finalising the exact delivery dates and is looking at “early 2030s”, Mr Goh said.

At least 30 per cent of the order will be used to increase its fleet, while the rest will replace the older 787 widebodies to ensure a “relatively young” average age of 6.8 years, he added.

The airline operates 10 Boeing 787-9s, with two more to be delivered in 2026 and 2027.

“In the new order we have the option of including the [bigger] 787-10s in the fleet, but we don't need to decide now,” Mr Goh said.

"The market is fast-moving and fast-evolving...we want to make sure we tailor our aircraft configuration based on market intelligence to the best of our knowledge at that time," he said.

The new 787 order will also allow Gulf Air to boost capacity on popular long-haul destinations by replacing narrow-body aircraft with the wide-body planes, he said.

“Slots are a premium in some of these locations where you're not able to add more frequencies, so the alternative for us is to upgrade the capacity,” he said.

Gulf Air also operates a fleet of Airbus A320s and A321s, with eight more narrowbodies to be delivered between 2025 and 2027.

“I don't foresee significant expansion of the narrow-body fleet at this time,” Mr Goh said, when asked about a potential order.

Gulf Air last week agreed to buy 12 Boeing 787 Dreamliners. AFP

The airline last week announced it would start flights from Bahrain to New York's John F Kennedy Airport in October.

Gulf Air has a road map for the next five years as part of its “calibrated, disciplined growth” and the announcement of new destinations such as New York is a “manifestation” of that strategy to connect key business cities, leisure markets and religious centres, Mr Goh said.

GE vs Rolls-Royce engines

Gulf Air's new 787 aircraft will be powered by GE engines, a departure from previous purchases powered by Rolls-Royce engines.

“It was a very close call,” Mr Goh said. “It required a lot of extensive internal deliberations and understanding the advantages and disadvantages of both engine types. It took us quite some time.”

He said the evaluation was based on engine reliability, performance, fuel efficiency and time on wing (or the time the engine stays in workshops).

The two 787s to be delivered in 2026 and 2027 will be fitted with GE engines, he added.

The current 10 Boeing 787s operated by Gulf Air are equipped with Rolls-Royce's Trent 1000 engines. GE has a major market share on the 787 model while Rolls-Royce has long grappled with technical issues. However, the UK engine maker is upgrading the engine to make it more reliable.

"We also need to recognize that Rolls Royce has come some way in enhancing the Trent 1000 engine," Mr Goh said. "That made the evaluation much more interesting. In the end, based on the overall balance of considerations, we decided that for the future-proofing of the 787 fleet of Gulf Air, they should be powered by the GE engines."

US tariffs and plane costs

The Gulf Air chief said it is “too early” to determine the impact of US tariffs on the cost of planes but the industry is watching closely.

“We've negotiated an all-encompassing price for our aircraft orders. What Boeing does with the [additional tax percentage] in terms of any parts they need to import to manufacture the aircraft is a matter for Boeing,” Mr Goh said. “We are comfortable with the acquisition price.”

However, the wider aviation industry is concerned about the impact of tariffs on the cost of parts and airframes.

Also, the economic uncertainty stemming from the tariffs could hit consumer sentiment and corporate confidence, thereby dampening travel demand.

“We need to be very vigilant about the impact of these tariffs... We should be concerned about the general economic outlook for the industry," he said.

“If corporations are concerned about what the cost of business will look like, travel is often one of the first areas of discretionary spending that you address as a company.”