Bahrain Air operates in an increasingly competitive field: regional low-cost airlines have proliferated, from Air Arabia and Flydubai in the UAE, to Kuwait’s Jazeera Airways. From a standing start in 2003, Middle East budget airlines now account for about 7 per cent of total intra-regional seats, according to the Sydney-headquartered Centre for Asia-Pacific Aviation.

Bahrain Air is finding strong but uneven demand for its services. For example, it has suspended operations to Jordan’s capital, Amman, following weak demand, although it says it will resume flights to the city should demand pick up again. The carrier has grown quickly in the space of just two years, but it has missed some of its more ambitious targets. The airline carried 750,000 passengers during 2009, some 200,000 fewer than its initial forecast.

However, it is not alone in suffering slower demand than anticipated. Other budget carriers have also been affected by a recession-inspired aviation downturn. Last year, Malaysia’s AirAsia X announced it would suspend its service to Abu Dhabi after just three months, citing insufficient demand.

Bahrain Air’s unique selling point is the pioneering of a mid-point between the budget carriers such as Flydubai and Jazeera Airways, offering a “premium affordable” service, with 12 seats on each plane dedicated to business-class passengers. A key marketing slogan is that it is the “first premium service carrier with affordable fares”, an attempt to distinguish itself as a cut above the no-frills carriers. 

The airline was ranked second-best budget carrier in the region in research group’s Skytrax award rankings in 2009. Revenues are on a steadily upward trajectory as the airline targets new markets and withdraws from the less popular destinations. Bahrain Air reported revenues of $105m for 2009, up from $80m the previous year, and hopes to achieve 2010 revenues of $140m, before breaking even in 2011 – the year in which its IPO is expected.