Bahrain Air grounds flights, faces liquidation

Bahrain Air has halted all flights and will liquidate its assets.

The struggling Middle East carrier blamed "political unrest in the island kingdom and the government's refusal to pay it compensation," Reuters reports.

The privately owned airline launched in 2008 and offered about 110 regional flights to 18 destinations in the Middle East and Asia. Bahrain Air had four Airbus aircraft and about 300 employees.

"Bahrain Air's breakdown contrasts with the fortunes of Emirates, Etihad Airways and Qatar Airways, the state-owned Middle East companies that have expanded into global airlines to challenge established network carriers," Bloomberg News writes.

Indeed, the Middle East publication Gulf Business asks: "(In) a region where global airlines are growing faster than many international competitors, why has Bahrain's local carrier failed to make ends meet?"

Bloomberg notes "private airlines in the Gulf region face financial difficulties as they compete with state-owned carriers."

And, in shutting down Bahrain Air, the company's stakeholders did in fact accuse Bahraini officials both of reneging on financial promises and of festricting the carrier's growth.

Bahrain Air also faced competition from the bigger — and state-owned — Gulf Air.

"The Bahraini government is looking to re-energize Gulf Air at the expense of facilitating growth for Bahrain Air, so the smaller carrier was always going to struggle, irrespective of the other bigger (Gulf) carriers," Saj Ahmed, chief analyst at StrategicAero Research, says to Gulf Business.