GMG goes to 'make or break' Dubai from Feb 1

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FE Report
The country's largest private carrier GMG will start flying to Dubai from February 1, an official said Thursday, in a move seen as 'make or break' for the struggling airlines.
The company has leased a Boeing 542-seater 747-200 aircraft to fly passengers to the gulf gateway seven days a week, making it the first Bangladesh private airlines to achieve the feat, General manager of GMG Erfan Haque said.
The airlines has made extensive marketing of the flight both at home and in the Gulf and the officials are confident that the latest GMG destination will cement its place in the region.
"It is the most crucial flight for us. It is a huge challenge," Haque said.
"The flight to Dubai will open up the whole Middle East for us. It is also the best destination as far as profit is concerned. We have struck inter-line agreement for Riyadh Dammam, Jeddah, Kuwait and Bahrain," he added.
One in two people who fly abroad from Bangladesh goes to the middle east, which employs more than 70 per cent of the country's over five million expatriate workers.
The weekly flight to Dubai will almost double the number of monthly passengers for the struggling airlines, which according to insiders, has yet to break-even despite operating for a decade.
Haque said the airlines was making profit since 2005, but insiders said it was losing Tk 10 million a month even six months back.
The airlines carry 34,000-35,000 passengers a month operating 42 weekly international flights to Kolkata, Delhi, Kathmundu, Bangkok and Kuala Lumpur. The Dubai flight will add another 30,000 passengers to the airlines' monthly tally.
"Our plan is to carry as much as 100,000 passengers a month by the end of the year. We will add flights to lucrative destinations and a few in India before the year end," he said.
Haque said, the airlines will lease another Boeing 747-300 aircraft by April and fly to Karachi very soon. It also has plans to fly to Abu Dhabi, Saudi Arabia, Singapore and London by this year.
"It will be defining year for us. We hope by the end of 2008 we will be a respected airlines in the region," he said.
An analyst says that the flight to Dubai can pave the way for better days at GMG but the road to glory looks bumpy and tougher than ever.
"There is no doubt that the flight to Dubai can make the struggling GMG a big player in the region. It is a huge opportunity for any airlines to fly to the middle east, specially in Dubai," analyst Imran Asif said.
But the airlines is ill-equipped to make gains from the new found opportunity as it faces huge competition from Gulf carriers, lack of flexibility due to dependence on a single wide-bodied aircraft and high fuel cost, he said.
"The flight to Dubai is the most competitive and a slight disruption or a drop in passengers may impact GMG's balance sheet. Besides, the Boeing 747 aircraft that the airlines has leased is not fuel effi cient. It's a guzzler," he said.
World's sixth largest airlines Emirates at present carries the bulk of the traffic between Dhaka and Dubai, followed by ailing Bangladesh national carrier Biman.
Emirates operates 14 jumbo flights a week and will soon add two more. There are also several other top gulf carriers operating in the route.
"The operating cost of GMG will be far higher than other airlines since the airlines use four different types of aircraft. It hired aircraft on wet lease basis, which is very costly," he said.
By wet-leasing an aircraft, an airlines hires everything from the leasing company including its crew, its maintenance and insurance. In dry lease, an operator hires only the aircraft, but provides for all other costs.
In addition to the recently hired Boeing 747, GMG has three Dash-8 which mostly flies in domestic routes, two leased MD-82 and a Boeing 737-800.
"The Dubai flight is a huge gamble for GMG. A combination of good fortune and better demand can discount the negatives," he said, adding if GMG clicks it will also be a big boost for other private airlines.
Haque, however, says that GMG can weather the 'negatives' as it did many times since 1998 when it started operation in domestic route with a 37-seater Dash-8 aircraft.
"We have never been as confident as we are today," he said.