Commentary
Colin Foreman
Editor

As the smallest economy in the GCC, Bahrain has long understood that its competitive edge lies in being agile and prepared to disrupt established economic models.

This proactive approach began decades ago with the deregulation of its telecoms sector, positioning it ahead of many GCC peers in opening that market. More recently, the same strategic foresight emerged in the fintech space with the early adoption of regulatory sandboxes and a supportive digital finance ecosystem.

Bahrain’s disruptive lens is now focused on the aviation sector. At the Gateway Gulf investor forum in Manama on 3 November, Bahrain signed a letter of intent with Malaysia-headquartered Capital A Berhad and Air Asia. The agreement covers the establishment of a hub in Bahrain as low-cost carrier Air Asia and its related businesses expand beyond Asia into new markets, including Europe and Africa.

A hub in Bahrain, which is located to the west of its existing hubs in Asia, will allow Air Asia to connect to the European and African markets, allowing it to develop a network that will be a low-cost alternative to the full-service airlines based in the Gulf that also bridge east and west, including Bahrain’s flag carrier Gulf Air.

Bahrain and Air Asia will not be competing on scale; instead, they will disrupt with lower prices. This agility will allow the kingdom to carve out a distinctive niche in an otherwise highly competitive market.

The strategic pivot is made viable by recent, essential capital investment in aviation infrastructure. A new terminal building was opened at Bahrain International airport in 2022. This has significantly increased passenger capacity and modernised operations, creating an attractive platform for a major international low-cost carrier like Air Asia to base its extensive operations.