Gulf Air has undertaken a review of its network that will result in cutting unprofitable routes and adding 25 per cent more destinations within five years. Bloomberg
Gulf Air has undertaken a review of its network that will result in cutting unprofitable routes and adding 25 per cent more destinations within five years. Bloomberg
Gulf Air has undertaken a review of its network that will result in cutting unprofitable routes and adding 25 per cent more destinations within five years. Bloomberg
Gulf Air has undertaken a review of its network that will result in cutting unprofitable routes and adding 25 per cent more destinations within five years. Bloomberg

Rolls-Royce must accelerate solutions to engine issues, Gulf Air says


Deena Kamel
  • English
  • Arabic

Gulf Air said engine maker Rolls-Royce must quickly fix the durability issues on the Trent 1000 engines powering its Boeing 787-9 wide-body aircraft, which are imposing constraints on the airline as it maps out network expansion.

The Manama-based airline has undertaken a network revision that will result in axing unprofitable routes and 25 per cent more destinations being added in the next five years, Jeffrey Goh, chief executive of Gulf Air Group Holding, told The National on the sidelines of the Routes World conference in Bahrain.

However, Gulf Air has had to reduce flight frequencies and cancel or delay some flights as a result of the persistent engine issues that are grounding some of its wide-body aircraft while the engines are in the repair shop, he said.

The airline called on the UK engine builder to address its issues as more predictability and efficiency is required to plan the growth of its network.

“Rolls-Royce doesn't have a solution for its Trent 1000 engines, which means there has been frequent grounding of aircraft. We are not the only airline,” Mr Goh said.

“Rolls-Royce has to expedite a solution.”

Rolls Royce UltraFan demonstrator engine being past to test on Testbed 80, Derby, UK. Photo: Rolls Royce
Rolls Royce UltraFan demonstrator engine being past to test on Testbed 80, Derby, UK. Photo: Rolls Royce

The industry continues to face “chronic challenges” in terms of aircraft availability and these supply chain issues are likely to persist for the next two years, he said.

“Our view is that things have not improved and certainly for our wide-body operations things have become worse,” he said.

“That means capacity is going to be constrained going forward and we are pushing Rolls-Royce very hard to have a solution with the engine problems, but we're not seeing much happiness in the horizon.”

Rolls-Royce's response to the airline's concerns has been a “statement that is filled with hopes but what we want is delivery.”

The so-called “time on wing” for the Rolls-Royce Trent 1000 engine is very short and there are challenges with defects on engine parts that require replacing, leading to more downtime for the engines. Time on wing is a measure of the operational reliability of a jet engine.

“We have run into double-digit percentages of the number of engine changes we've had to make on the 787s year-on-year,” Mr Goh said.

“That means downtime of the aircraft, more resources being dedicated to just changing the engines and many of these engines that go into the work shops stay there for a long time – and when they do come out, a certain percentage of those will have to go back in.”

Gulf Air currently has 10 Boeing 787s in its fleet and will take delivery of two more of these Dreamliners by the end of 2026.

Gulf Air operates a fleet of 32 Airbus A320-family aircraft and 10 Boeing 787-9s. It expects delivery of another nine A320-family aircraft and two 787-9s to join the fleet.

Jeffrey Goh, chief executive of Gulf Air Group Holding. Bloomberg
Jeffrey Goh, chief executive of Gulf Air Group Holding. Bloomberg

Route network 'recalibration'

Gulf Air flies to about 60 destinations today and expects to add 25 per cent more to its network within five years.

“We have completed our network review and we have begun to execute on the new network map that we have that will take us to the next four to five years, always subject to availability of aircraft of course,” Mr Goh said.

“Hopefully by the end of this year or the beginning of next year we will be announcing additional destinations.”

Gulf Air wants to boost its presence in key financial hubs, strong leisure markets and major pilgrimage centres.

The airline has launched new routes including to the Chinese cities of Shanghai and Guangzhou and Munich. At the same time, the airline has cut four points in Pakistan as part of its network recalibration.

Gulf Air had also launched routes to Najaf and Baghdad, though flights to the Iraqi cities has been suspended because of the conflicts in the Middle East.

Sharing information on flight risk assessment

Concerns over a wider conflict in the Middle East have prompted international airlines to suspend flights to the region or to avoid affected air space.

“It has impacted our operations and it has impacted customer travel plans because we have had to cancel flights, we've had to divert flights and we've had to do additional stops to carry extra fuel to continue operations just to avoid airspace that should be avoided,” Mr Goh said.

Airlines in the region are co-operating on sharing information about risk assessment for flights as safety and security of aircraft, crew, passengers and operations are a non-competitive issue.

“There is active, continuous conversations between the airlines in the region in understanding the intelligence related to safety of operations … so we all learn from each other because safety and security is always paramount for us and we want to make sure we cover every angle of the risk assessment. The more we know, the better we can plan and react to that.”

Safety is paramount even if it means inconvenience, disruption of operations, positioning of aircraft and the additional cost of rerouting flights, he said.

The higher costs is a “crease in the cloth and we are hoping it will not be a permanent situation … any airline operation should be able to absorb these temporary airline disruptions,” Mr Goh said.

Dealing with wars, pandemics and supply chain woes is a testament to the strength of the airline industry.

“There is no more greater testament to the resilience of the airline industry than from the Covid crisis we've had. And having emerged from Covid, we thought life would be better and now we're running into a different kind of crisis, which is the global supply chain crisis. We are all counting on the resilience of airlines to make sure we come out of this, as the industry has done for more than 100 years of commercial flying.”

Production issues and delivery delays at Boeing and Airbus have made it difficult for airlines to fully capitalise on strong demand for air travel.

Asked about the efforts of Boeing's new chief executive Kelly Ortberg in turning around the company during its safety and quality crisis, Mr Goh said it is “early days to make a fair assessment of whether or not the initiatives that the new CEO has in place will bear fruit. He is fairly new … it will take some time for changes to happen”.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company

Opening day UAE Premiership fixtures, Friday, September 22:

  • Dubai Sports City Eagles v Dubai Exiles
  • Dubai Hurricanes v Abu Dhabi Saracens
  • Jebel Ali Dragons v Abu Dhabi Harlequins
COMPANY PROFILE
Name: Akeed

Based: Muscat

Launch year: 2018

Number of employees: 40

Sector: Online food delivery

Funding: Raised $3.2m since inception 

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Fireball

Moscow claimed it hit the largest military fuel storage facility in Ukraine, triggering a huge fireball at the site.

A plume of black smoke rose from a fuel storage facility in the village of Kalynivka outside Kyiv on Friday after Russia said it had destroyed the military site with Kalibr cruise missiles.

"On the evening of March 24, Kalibr high-precision sea-based cruise missiles attacked a fuel base in the village of Kalynivka near Kyiv," the Russian defence ministry said in a statement.

Ukraine confirmed the strike, saying the village some 40 kilometres south-west of Kyiv was targeted.

if you go

The flights
Fly direct to Kutaisi with Flydubai from Dh925 return, including taxes. The flight takes 3.5 hours. From there, Svaneti is a four-hour drive. The driving time from Tbilisi is eight hours.
The trip
The cost of the Svaneti trip is US$2,000 (Dh7,345) for 10 days, including food, guiding, accommodation and transfers from and to ­Tbilisi or Kutaisi. This summer the TCT is also offering a 5-day hike in Armenia for $1,200 (Dh4,407) per person. For further information, visit www.transcaucasiantrail.org/en/hike/

Updated: October 09, 2024, 5:58 AM