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Gulf Air cancels lease with Jet Airways for Boeing 777-300ERs

Speculation is rife that the middle east is finally slowing down. The Gulf Daily News is reporting that Bahrain based Gulf Air will cancel its deal to lease four long-range Boeing 777-300ER aircraft from Indian carrier Jet Airways after just six months.

Jet Airways Boeing 777-300ER leased to Gulf Air painted in Gulf Air livery.
Photo courtesy and copyright A.J. Best.

Jet Airways Boeing 777-300ER in Gulf Air liveryIn February Gulf Air agreed to lease four aircraft from Jet Airways on a wet-lease basis for six months, which includes the provision of pilots with an option for a three year dry lease during which Gulf Air would pilot the planes. The 777s were intended to help Gulf Air phase its ageing A340s out of service.

Citing “market and other business conditions” Gulf Air indicates now, only the wet lease period of the deal will now be honoured.

Gulf Air has taken delivery of three of the 777s and put them into service on routes to London, Bangkok and Kuala Lumpur. The fourth will arrive on May 1 and will be used on flights to Manila.

Speculation is rife as to why Gulf Air cancelled the deal so soon. The possible reasons include the ongoing aviation slow down finally affecting the middle east as well, to pressure from Jet Airways on Gulf Air to continue the wet-lease due to the massive over-staffing at Jet.

Recently Gulf Air has been cutting capacity on certain sectors. Jet has a lot of expatriate pilots initially hired for 777-300ER operations due to flight hour requirements etc. They had de-rostered quite a few of the 737 captains for 777-300ER training with the intent of having them take-over from the expat pilots as and when their contracts expired. Unfortunately due to the global slow down most of the Indian pilots are sitting idle not being able to accumulate the needed flight hours and costing Jet money.

Jet Airways Boeing 777-300ER take off from BrusselsWith a well known product, Jet Airways should not face too much of a problem finding another lessor for their uber luxurious 777s. In the worst case, Jet can also put the planes to good use. The Mumbai London Heathrow segment is finally getting profitable for them thanks to the pull out by Virgin Airlines, and capacity reductions by other foreign carriers. Jet can increase its capacity from double daily to triple daily. Jet can also consider pressuring Air India on the Mumbai to USA routes with additional capacity, and while I am not too hopeful, Jet can bring back the January suspended Bangalore Brussels service with onward connections to the US.

While Jet Airways is adamant that they prefer to sign bi-laterals, I feel they should strongly consider joining the Oneworld alliance. Oneworld has a major gap in South Asia. It’s rival SkyTeam has recently signed up Vietnam Airlines. While the delay Air India entering the Star Alliance with support of Lufthansa may open up possibilities for Jet, I doubt Jet would like to antagonise the civil aviation ministry who also happens to be the boss of Air India. Oneworld and Jet Airways have synergies and entry will bring the much needed passenger feed to Jet.

About Devesh Agarwal

A electronics and automotive product management, marketing and branding expert, he was awarded a silver medal at the Lockheed Martin innovation competition 2010. He is ranked 6th on Mashable's list of aviation pros on Twitter and in addition to Bangalore Aviation, he has contributed to leading publications like Aviation Week, Conde Nast Traveller India, The Economic Times, and The Mint (a Wall Street Journal content partner). He remains a frequent flier and shares the good, the bad, and the ugly about the Indian aviation industry without fear or favour.

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