As Qatar Airways was celebrating its inaugural service to Australia’s capital, Canberra, Akbar Al Baker, the airline’s outspoken chief executive held a press conference in the city’s Hyatt Hotel. And while the event was meant to celebrate the airline’s latest route launch – it’s fifth gateway city in Australia – Baker certainly had some other interesting comments to share with the world’s media.
Specifically, Baker was keen to talk about the effect that a blockade by a Saudi Arabian led bloc including the UAE, Bahrain and Egypt was having on Qatar Airways. The blockade started early last summer after a political spat quickly escalated. It resulted in the blockading countries closing their airspace to Qatari jets and banning Qatar Airways from operating in those countries.
Saudi Arabia accuses Qatar of funding terrorism and claims the infamous Qatari news channel, Al Jazeera promotes extremism. With Qatar vehemently denying the accusations and refusing to comply with a list of demands drawn up by Saudia Arabia the situation doesn’t look like it will be resolved anytime soon.
Qatar Airways probably couldn’t have found itself in a worse place if it tried – Both Saudi Arabia and the UAE were important markets for the airline. At one point, Qatar had even been trying to start its own subsidiary airline in Saudi Arabia – although abandoned those plans after significant pushback from Saudi authorities.
What Al Baker has to say on the Saudi-led blockade…
If that wasn’t bad enough, Qatar Airways is now flying longer routes to avoid the airspace of its neighbours. As Baker explained:
“We have increased maintenance costs because we are flying longer routes, we have more fuel consumption, so the cost to the airline is rising…”
“I have already stated that the airline will post a loss this year due to the blockade, but this doesn’t mean that we are going to shrink. We will keep on expanding and growing the company,” Baker told the Associated Press.
It will mark a huge change of fortune from last years financial results. For 2016/2017, Qatar Airways posted a $573 million USD profit – a huge increase of 21.7% on the previous year’s performance. Not that Baker can say how bad this year’s loss will be yet – telling reporters that we might not know until April.
And how is Qatar Airways responding?
With dozens of jets suddenly grounded, Qatar Airways has been quick to open up a slew of new routes – Canberra being just one – to redeploy those aircraft. It doesn’t seem like the blockade has had any negative impact on Baker’s thirst to expand his airline. Whether these new routes will make up for the loss, however, is a totally different matter.
“It all depends on how quick we will be able to mature the new destinations that we are operating instead of the destinations that were taken away from us during the blockade,” al-Baker explained.
“The world is not only these four blockading countries. The world is very large and we are always looking at new opportunities which we have been doing very successfully. We will grow everywhere, not only by … new destinations but also grow frequencies.”
Does Al Baker’s comment suit his airline’s political motives?
No one, however, really believes Qatar Airways is truly subject to the same economic forces that other commercial airlines face. Whether you call it a capital investment or illegal state subsidies, it’s pretty safe to say that the government-owned airline is financially backed by what is the world’s wealthiest country per capita.
Powerful U.S. airlines, including Delta, United and American Airlines have been crying foul for several years, accusing Qatar Airways of receiving illegal subsidies and putting American livelihoods in jeopardy. It could now play into Qatar’s political strategy to show their national airline as suffering at the hands of the Saudi-led bloc.
After all, the United States has one of its largest foreign military installations based in Qatar and is an ally the Persian Gulf country can ill afford to lose. Perhaps realising that President Trump’s thinking is heavily influenced by the news media, Baker commented:
“Mr Trump realizes that he was misinformed, misled by the blockading countries to believe that Qatar was a pariah in the region, which is not the case. We are a big supporter and an ally of the United States”
He even referred to accusations about Qatari military jets intercepting Emirati commercial flights as “false news” – echoeing Trump’s use of the term “fake news”.
Last month, we learned Qatar Airways had agreed to make changes to how it reports its finances with the US State Department. Qatar negotiated the agreement in a bid to fend off the prospect of tough restrictions being placed on its U.S. operations. So far, it is the only Gulf airline to have reached a settlement with the United States over allegations of unfair business practices.