It’s been five days since Saudi Arabia and several other countries, including the United Arab Emirates, cut diplomatic ties with Qatar. We’re still getting to grips with what this all means but it seems apparent that this could turn into a protracted and damaging crisis with long-term implications.
Until this drama unfolded, the government-owned airline, Qatar Airways was riding a wave of success. The airline was snatching up awards and winning over customers at breakneck speed. But have the brakes now been slammed on this unstoppable advance?
We hoped the current situation would just be a short and temporary blip on Qatar Airway’s meteoric rise but that seems less certain now. A lot has happened since we first wrote about this developing situation on Monday and Tuesday. We’ve sifted through all the latest developments and assessed the effect it could have on Qatar Airways.
1. Qatar is ‘not ready to surrender’
Qatar’s Foreign Ministry has said it “is not ready to surrender” to the demands of Saudi Arabia, the UAE and other countries involved in the spat. A spokesperson claimed the country would not “compromise on the independence of its foreign policy”.
The statement continued: “The State of Qatar has never seen such hostility, not even from a hostile state.”
What this Means: Qatar’s neighbours are seriously unhappy with its foreign policies and have isolated the small country in an attempt to make it mend its ways. But it looks like Qatar has no intention of dancing to the beat of Saudi Arabia’s drum and is willing to tough it out.
However, in a positive development, Qatar’s Foreign Minister has said he favours diplomacy to resolve the impasse.
2. The country has plenty of money to keep going
Reuters has gone through Qatar’s balance sheets and has concluded it “could defend its currency for years”. The country has plenty of reserves and is the world’s top liquefied natural gas exporter.
What this Means: As long as Qatar can carry on exporting gas, it’s unlikely to go into deficit. That should mean that Qatar Airways can continue investing and planning for the future. Even with moves by the UAE, to put pressure on Qatari banks, the country shouldn’t suffer too much.
3. Emir of Kuwait continues frantic shuffle diplomacy
The Emir of Kuwait – an Arab state that is still on good diplomatic terms with Qatar – has been travelling between Qatar, Saudi Arabia and the UAE in an attempt to mediate a solution to the crisis. On Wednesday, Sheikh Jaber al-Ahmad al-Sabah arrived in Dubai with his Kuwaiti delegation.
The Emir met with HH Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and HH Sheikh Mohammed bin Zayed bin Sultan Al-Nahyan, the Crown Prince of Abu Dhabi.
What this Means: None of the parties involved in the talks has given any indication of what was discussed – or how those discussions went. However, since meeting, further sanctions have been announced by the UAE. That suggests the Emir’s efforts will not bring about a quick resolution to the crisis.
4. Airspace is closed to all aircraft flying to Qatar
Less than 24 hours after the diplomatic spat began and the UAE, Saudi Arabia, Bahrain and Egypt had closed their airspace to Qatari aircraft. That effectively meant that all Qatar Airways flights have to fly around these countries to reach their destinations. In some cases, flight times have been extended by a few minutes but other flights have had an hour or more added to the flight time. The Qatar Airways service to Sao Paulo now has to stop off in Athens to refuel due to the restrictions.
On Thursday, matters got even worse when the UAE ramped up the airspace closure by banning all aircraft from flying over its country en route to Qatar.
What this Means: The situation was already a massive burden on Qatar Airways and now there’s another reason to discourage people flying to Qatar. This will make doing business in Qatar harder.
5. Qatar Airways Licence Revoked in UAE and Saudi Arabia
Qatar Airways initially said it would keep its offices open in both Saudi Arabia and the UAE. That’s no longer possible, with the airline’s licence revoked in both countries. The two markets are really important for Qatar Airways but it has been forced to indefinitely cancel all flights between Abu Dhabi, Dubai and 10 cities in Saudi Arabia.
What this Means: There’s no denying that this will hit Qatar Airways hard. For now, the airline’s CEO Akbar Al Baker is saying it’s “business as usual” even though all the evidence suggests otherwise.
6. Aircraft flying almost empty
The crisis also appears to be hitting other Qatar Airways services. Reports suggest that aircraft are flying near empty on once popular (and profitable routes). Hamad International Airport – the home of Qatar Airways in Doha is also said to be eerily empty with passengers markedly absent.
What this Means: Admittedly, we’re in the middle of Ramadan and it’s the height of summer in the Middle East – a time when Gulf airports are generally quiet anyway. This could just be a short-term drop in passenger numbers.
7. Business is concerned
On Wednesday, S&P lowered Qatar’s credit rating as the country’s currency fell to an 11-year low and its stock market tumbled. Speaking of the sanctions imposed on Qatar, a spokesperson for S&P said: “We believe this will exacerbate Qatar’s external vulnerabilities and could put pressure on its economic growth and fiscal metrics.”
European aircraft manufacturer, Airbus, has also expressed concern at the latest developments. Speaking about Qatar, CEO Tom Enders has said: “Any disruption in any mature region or market that is relevant for us is a reason for concern.”
Referring to the sanctions, he commented: “That’s a development that is troubling for our industry, for many industries. We sincerely hope that these disruptions are not developing to a long-term conflict.”
What this Means: It’s hardly surprising that business has expressed alarm at the political friction in the Gulf region. Enders has said his company is not “overexposed” in Qatar, suggesting that he expects Qatar Airways to cut aircraft orders.
8. Other airlines could be set to win
The situation is looking really bad for Qatar Airways – and for Cabin Crew recruitment. However, other airline’s might be in a position to pick up the slack and take advantage of the circumstances. One such airline is Oman Air – the Muscat-based carrier that has been slowly building its fleet and route network. It’s now one of the few airlines in the region who can freely fly to Qatar.
What this Means: Oman Air is a lesser known airline with a much smaller route network and fleet than other regional players like Emirates and Etihad. However, the carrier is now recruiting Cabin Crew with applications being accepted up to 06th July.
We’ll be keeping a very close eye on developments and updating you as they happen.
