Can Gulf Air Explore Leasing or Chartering to Sustain Calicut Operations?

Gulf Air’s decision to discontinue flights to Calicut has shocked frequent travellers like myself. As someone from North Kerala, my final destination is usually Calicut, and I have long relied on Gulf Air for its direct connectivity from Bahrain. The convenience of a nonstop flight is invaluable for many Indian expatriates.

On my last trip from Calicut to Bahrain, I observed nearly 90% occupancy on the flight. Indians make up the largest expatriate community in Bahrain, with unofficial estimates suggesting that over 50% are Keralites—many hail from the Malabar region, making direct flights to Calicut crucial. Discontinuing the Calicut route and reducing Cochin flights will create major inconveniences, especially for those travelling for business and family visits.

While Gulf Air may focus on increasing transit passengers from destinations like Goa and Bangalore, this decision risks alienating a core segment of loyal passengers. Airlines worldwide struggle with financial losses due to rising fuel costs, labour expenses, and high debts. Countries like Argentina, Pakistan, Sri Lanka, India, and South Africa have privatised their national carriers to improve efficiency. Despite various strategic measures, Gulf Air faces financial challenges and must take drastic steps to attain profit.

Instead of completely withdrawing from the Bahrain-Calicut sector, Gulf Air could consider a leasing or chartering model to maintain operations while ensuring financial sustainability.

A Potential Solution: Leasing or Chartering

• Gulf Air could lease a dedicated aircraft for a weekly service.

• The flight could be chartered by an individual, business entity, or consortium willing to cover a fixed cost, ensuring the airline’s profitability regardless of passenger numbers.

• This model secures Gulf Air’s revenue without bearing full operational risks.

• Given the high demand among Indian expatriates, investors could step in and make this work.

Financial Viability

An Airbus A320, commonly used by Gulf Air, seats around 180 passengers. With an average ticket price of BD 120 (~$320), a fully booked flight could generate around $43,200 one way or $86,400 per round trip.

Considering a wet lease (including crew, maintenance, and insurance), the cost is approximately $3,500 per flight hour. A Bahrain-Calicut-Bahrain round trip (~10 hours) would cost ~$35,000 in lease expenses. Factoring in fuel, airport fees, and operational costs, the total expenditure per round trip could be around $60,000–$70,000.

The model could be financially viable if Gulf Air sets a sustainable margin on top of these costs. Moreover, Malabar-based business groups could coordinate bookings to ensure 100% occupancy, making this a win-win situation for the airline and passengers.

While my calculations may not be perfect, the concept of a structured chartering or leasing arrangement is worth exploring. Gulf Air can continue serving a vital route while mitigating financial risks - offering both economic sense and passenger convenience.

(The author is Chairman and Managing Editor of The Daily Tribune)