There is a ridiculous war of words over whether or not American customers deserve to have choice. I’ve been over the open skies debate before, many times. Both here and other places. You know where I stand; I support the middle eastern carriers. I am not here to talk about the whole debate today, but am here to talk about only one facet of it – Qatar Airways.
Qatar Airways has been the target of a certain American that neither myself nor H.E. Akbar Al Baker would like to name. I flew to Washington D.C. to watch Qatar’s head shoot down these allegations of questionable legality in person. Furthermore, it’s always a pleasure to see my favorite aviation personality.
In a very posh D.C. conference room we learned once and for all what Qatar Airways actually was.
Yes, they are a stated-owned airline. We already knew that. But they are not a state-owned airline designed to operate at a loss to promote another Qatari venture. Instead of getting straight subsidies from the government, Qatar Airways trades equity to the Qatari Sovereign Wealth fund. The Qatari fund would, of course, not offer a cash for equity investment in the airline unless they were going to see a return on this. They will.
In the interim, Akbar Al Baker is not permitted to “open the books” as his adversaries want, but allege to have done for him, because he is not the owner – merely the CEO. In other words, he will be able to answer questions soon. How? Qatar Airways will be heading towards an IPO in the near future. A public company has a lot more accountability, especially in the global marketplace.
So there’s that question answered.
The next question that was answered was, “why now?”
Why not complain while the open skies bilaterals were being signed with the UAE and Qatar? Back then, who cared? It was short-sighted on the big American three’s (United, American, and Delta – US3) part to ignore that the areas closer to the Middle East are also closer to the riskier, but rapidly-growing areas in the world market. Right now, fuel is cheap, the US3 are making eye-bulging and record profits with great margin. They want to keep it this way, no matter what. They have no reason to take risks, and as such, want to maintain the status quo. No desire to expand into growing markets. They’d rather rely on the trans-atlantic immunities that were granted in the past, which in some ways are a subsidy and government protection in themselves! Why take a risk when you have a seeming legal entitlement to profit?
It gets worse. The argument is hypocritical. A certain US legacy airline (prior to their merger to create one of the current big three) used to fly Detroit to Amsterdam five times a day on the summer timetable. Odd, considering how the market only had 85 daily passengers heading to Amsterdam. Instead, the majority of these passengers were connecting onwards to a destination beyond Amsterdam using a partner sixth-freedom carrier. How is that okay when one of the current arguments being blasted over the airwaves is that the markets the middle-eastern carriers fly to cannot sustain flights based on through-traffic alone?
How can traffic going to markets that are not even important to the US3 be “stolen?” The largest absurdity, of course, is that if this was simply a fight about traffic being “stolen” through sixth-freedom carriers, the US3 would be gunning for British Airways and them alone as they so rapidly outpace all others in the American market. British Airways, of course, welcomes open skies and has no horse in the strange game being played where only the consumer stands to lose.
Perhaps this is all just a proxy-fight on behalf of their European partners. After all, as H.E. Al Baker re-intimated, this is all about an appeal to emotion, and the exact same arguments are being made in Europe.
Remember, it is not all American airlines that are against open skies. Jetblue has expanded its codeshare with Qatar Airways; American has partnerships too (given its odd expansion with non-alliance member Etihad).
I feel that this fight is a joke. Open skies mean economic growth and contribution. Qatar Airways alone has a (list-price based) order book of 50 billion dollars with Boeing. They create jobs in the stations they serve by developing commercial ties. America wins with open skies and, more importantly, the US consumer wins. How can we have gone from a country that used to make fun of places that only had one or few airlines/other companies that were stubborn and never prone to innovation, to one that actively believes that a corporation is entitled to a profit just on the basis of its nationality — nothing more!
And like it or not, Qatar and the other Middle Easter carriers will likely continue to grow into new US markets.
Where should Qatar fly next? They’ve already announced Boston, a second-daily frequency to JFK, and Los Angeles, but those are all markets that face intense competition from both the legacy carriers of America and Europe, but also from the Arabian Gulf.
If I were to fly to the Bay Area from the Middle East, I’d focus on the high-yield business traffic that needs to connect to the Indian subcontinent from Silicon Valley. Leave Emirates its market at San Francisco (SFO), and use a smaller plane (say an A350 with a weight restriction on the return) to pick up higher yields from a novel airport, like San Jose (SJC). That would shatter the mold. Price it right, offer the great Qatar service, the great minimum connection times in Doha, and watch other airlines scramble.
Except… SJC service is great and all, but there’s another market ripe for the picking – my hometown.
Emirates is not stupid; their second daily frequency into Seattle (SEA) is neither an offensive nor defensive play. Due to what I can only see as political issues, the A380 cannot set wheels on our tarmac (well, in an emergency they can, but not scheduled service). A tragedy.
But splitting the flights, using the Boeing 777, allows for a competitor to target the spill from the first flight with more convenient connections. It gets better. Seattle’s population is set to double by 2025. Seattle’s economy is booming due to its business-friendly policies and state governance promoting the same. The tech sector is also expanding, and wherever there is a tech sector, there are high-yield passengers to connect to the Indian subcontinent.
There are some wild cards that I would like to see added to Qatar’s US destination list.
Hear me out. Denver (DEN) has a solid and rapidly-growing economy, a huge catchment area, and an extremely dominant carrier that has the ability to set the prices. While British Airways, Lufthansa, and Icelandair can provide some transatlantic competition, only British Airways can provide a non-Star Alliance method to go beyond Europe. Thing is, while Denver’s economy is growing and might be able to sustain a thrice-weekly service with reasonable premium yields, they lack a large south Asian community to pad the more price-sensitive economy cabin.
No matter how much Pittsburgh (PIT) might want service, there’s no market. They have a great airport, but even the airport has had to resort to natural gas extraction to make ends meet. Pittsburgh may have one of America’s top computer science schools, but a university, no matter how prestigious, cannot drive international traffic. It does have a good-sized south Asian population, but VFR cannot sustain such a long route alone.
Salt Lake City (SLC) is too small. It’s not that it’s a Delta stronghold. It’s that Qatar’s business model has nothing to add to Salt Lake.
What about Detroit (DTW)? Detroit has a huge mid-eastern community nearby in Dearborn. It is also still home to the headquarters of the majority of the largest American automakers. Does Qatar care about automaker traffic? Probably not. Yes, Detroit is experiencing a tiny bit of an economic rebirth, but we are years away from Detroit being a high-yield, through-traffic destination.
One, last, crazy thing I’d do if I were Qatar: Newark.
I’d fly to Newark (EWR) as a strategic move for the long-term, but that does’t instantly equate to profit. Slightly easier to get to from Manhattan, sometimes, it is also closer to a large catchment area of reasonably well-to-do south Asians (at least if you trust the US Census). It’d certainly be a disruptive flight, but it might also steal traffic from the 2x frequencies into JFK.
No matter what you think of Qatar Airways, unless the consumer loses, they will continue to become a part of the American travel landscape.
What do you think of the battle between Qatar Airways, the other middle eastern airlines, and the US3?
I had no idea Akbar’s English was so good. And that he was able to write such a long post is incredible to me.
Usually I try not to poke bears, so to speak. Except, this time I can’t help but think that your comment is motivated by some sort of strange form of xenophobia. I don’t cotton to such actions, and don’t think anyone on this website’s staff does either. I’ve spoken with His Excellency many times- and just as you’d expect, a man of such education and importance is fluent in not only the English language but its conversational idiom.
No form of xenophobia or racism or anything of the sort. This post is just so incredibly pro-ME3 using irrelevant facts, addressing claims that US carriers don’t make, and basic lack of acknowledgement of facts that don’t support your opinion that I can’t help but think Akbar himself wrote it.
Ah yes, I had a feeling- I just had to clarify. You are moving the goal posts again. Whenever the pro-consumer side responds, the pro regulation side moves the goal posts to an entirely new, arbitrary, goal. This is going to be a fun argument. Shame I have to step out.
I didn’t have any “goalposts” to start with and I didn’t mention a goal, so I’m struggling to figure out what you are talking about.
Doug? Jeff? Richard? Which one are you?
Unfortunately, none of the above. What I find most comical is that Bernie didn’t dispute anything I said. Basically just said I’m not debating you. Over a thousand pages of financials back me up compared to a few sentences from a serial liar to back Bernie up.
Wow, it’s not that I wont debate you- it’s just there is a Breaking Bad quote I like to use to describe this situation. In your case. I reference DEA ASAC Hank Schrader. “You’re the smartest person I know, but can’t you see he made up his mind ten minutes ago?” Which, you have. If you wanted to have an actual debate, you would stop with the strange appeals to emotions and debate on facts. Like Delta’s love of fuel tax exemptions at their busiest hub. But you don’t, or you wouldn’t post the way you do.
You bring up these thousands of pages of financial data, but take them as gospel despite how they were located and revealed. This was not from the Middle-Eastern Airlines themselves, but from alleged forensic accounts. That’s not evidence in any legal sense, it’s cherry-picked. Never forget that a certain U.S. major CEO used to be a major trial litigator- he is bloody good at creating prejudicial arguments. That’s what he got paid to do beforehand. Like I said, you made up your mind. You want to debate so that I say something like “oh so and so did X”- then you get to pretend you won because you say “OH SO YOU ADMIT SO AND SO DID X!”. That’s not a debate- so I am not going to play that game.
You’re not changing my mind and I’m not changing your’s, but you aren’t acknowledging facts as simple as 1+1. Per Ernst & Young, which has no dog in the fight, Qatar is a going concern because, and only because, the Qatari government pours money in first as “interest free loans” (which WTO defines as a subsidy), which are then forgiven (which everyone defines as a subsidy). Debating whether or not that should matter and limit Qatar’s service to the US is a legitimate debate, but to say those subsidies don’t exist is to deny the existence of the airline itself.
interesting debate! I guess one of the weakest points raised by Richard Anderson, and now yourself, is to quote WTO rules as if applicable on aviation. Firstly the GATS agreement on Trade In Services specifically puts aviation outside its competency (except for 3 areas namely MRO, CRS and marketing and sales). Talking about the WTO in a matter-of-fact manner is surely erroneous and misdirecting. In fact if the WTO rules apply on aviation (which will not happen in the foreseeable future), the first causalities will be alliances and international hub and spoke systems.Then that US airline operating from Detroit to Amsterdam should not operate an airplane with greater capacity than the 85 passengers terminating in Amsterdam, otherwise that will be considered dumping.
Interesting read. Simply put, you cannot compare the ME3 to the US3 from a consumers’ point of view. An analogy of a soccer A squad vs B squad comes to mind.
Thank you Bernie, for your always informative commentary on open-skies.
As a follow-up, I did some research into US agreements with a certain Asian country whom at, one point, had the most powerful airline in the region. Congress, feeling threatened established their one-stop policy inhibiting more convenient service. That decision was made in the 1980s based on 1950s financial data.
To quote Star Trek: If there is to be a brave new world, our generation is going to have the hardest time living in it.
Happy to continue this discussion via email and I would subsequently like to hear more of your opinion and take of this battle between the US3 and the Gulf.
I am all too educated in that debate, I studied it in school- it’s why this one hurts my head. Also, I am a personal victim of this ridiculous protectionist rhetoric. I wrote a screed elsewhere if you are curious unto how. Shouldn’t be too hard to find. Do let me know if it is?
Just sent you an e-mail. Let me know if it went through. (Might have to check junk because my url gets flagged as spam)
Another advantage to servicing EWR (such as there may be) is that it’s much more accessible from the south by Amtrak – think customers who might otherwise fly non-stops or one-stops (to the west, not LGA or IAD) domestically from BWI or PHL, and maybe don’t want to dork around with flying to JFK for international travel, for example.
Owing to how delay-prone JFK can be, you pretty much have to depart so early that you’ll end up with a 3+ hour connection, or you’ll risk missing your flight over the pond, so people take these 30-45 minute flights to get to JFK only to sit in that generally awful airport for hours (save for the new DL terminal, which is pretty nice nice). Perhaps enough customers might find it a viable alternative to try their generally much newer planes and high-quality service, if they present a competitively priced option from EWR?
While Amtrak is certainly not immune to delays – or other tragic problems, as we’ve witnessed recently – travel times from BWI’s Amtrak stop to EWR are about 2:30 to 2:45, and it’s only an hour or so from Philadelphia’s 30th Street Station (near downtown; customers may opt for the stops immediately west and and east of 30th Street) that Philly’s SEPTA also services. All-in-all, an international passenger could well end up saving some time by taking Amtrak to EWR and Qatari overseas.
If Crazy Al wants to pick-off some overseas traffic without relying only on NYC/NJ, then perhaps you’re right about EWR.
One has to wonder why Al Baker (and his associates) chose not to wear their standard Arab dress (complete with head napkin and holder)while in Washington. QATAR can swap spin images faster than the fat snakes that they are.
I know you have been long-time reader and we have often not seen eye-to-eye on things, but I have always (well almost always) respected what you have had to say. But to go to a level of just making racist comments is pretty bad.
You might bring up a good point, but by calling his cultural dress a “napkin,” is not just disrespectful to him and many others, but it also just kills what you were trying to say.
That being said, executives change what they wear all the time depending on audience. I have seen them in shorts when doing a laid-back event, in suits for press conferences and some in cultural dress for inaugurals.
David | Editor-in-Chief, AirlineReporter
How about Atlanta? Ninth largest metro (bigger than Seattle or Denver metro), many large corporate headquarters, many international businesses and large Asian/Indian population nowadays. And by the way Georgia legislature is ending the fuel tax exemption for Delta from what I have heard.
Robert – Qatar has already announced Atlanta http://www.qatarairways.com/us/en/press-release.page?pr_id=pressrelease_usa&locale_id=en_gl
I do agree with some of the points raised in this article. There are a few things that I take issue with, however.
For example, alpha alpha bravo, as he is known in Qatar among the personnel, is no “excellency.” He is not a high government official, he is not from the royal family, and this title has been given to him by the Indian journalists here.
He hails from Haydarabad, India, and his Qatari ties are dubious. To the locals, last names clearly identify the background and even genealogy of a person but I will not delve into that right now.
Akbar, as Kris points out, has indeed lied on many occasions. For example, when he stated just recently that the crew have no restrictions on when or who to marry.
He is vile and utterly disrespectful to all, flight crew, cabin crew as well as office and ground crew.
Lastly, they have been saying here for years that they “will be heading towards an IPO in the near future.” Back in 2010, too, they said that by the end of that year. But you are right that AAB cannot do that because he’s only the CEO. He is only a figurehead, really. Someone has to be the public face and that’s him. But he does have control over crew treatment, etc.
All I see in this post is an attempt to earn brownie points, particularly with alpha alpha bravo.
If these things are true (not saying that they are not), how many CEOs out there aren’t maybe the best people, nor have the best practices? And his official title is “excellency,” and just like if some airline executive has “sir,” (Branson) we are going to respect that title.
Bernie was giving his thoughts and feelings about the matter and they are what they are. If you look back, there is a story on AirlineReporter about the CEO of Delta, Richard Anderson, that is very positive and was not written to gain “brownie” points from the airline.
David | Editor-in-Chief, AirlineReporter
I am excited about foreign competition to challenge the domestic airlines. They need it in the worst way. But there are enough red flags about the way Qatar Airways treats its employees that I can’t in good conscience give it any of my money. Some of the stories out there are just odious.
I was very interested to see your airport picks for its service, though. As usual and for some good reasons (I’m sure), my local Phoenix Sky Harbor doesn’t come up. I think our best asset is the lack of weather delays … but our economic situation and the politics behind them sure are not the stuff to inspire intercontinental routes. Sad, considering how big a city it is.
Hi, just a couple of things. Firstly, I do not know what people are talking about when they say that Qatar Airways mistreats its employees. No one has any evidence, people just talk about it. Secondly if they are mistreating employees, why hasnt any employee walked of the plane in a foreign country and refused to go back.
I have talked to a few employees off record to get some background. None of them natives, but from other countries. Qatar does have some stricter rules than most other airlines, but most employees know that going into the job. Many find that the benefits of working for Qatar outweigh the negatives. And if they don’t, they leave.
Also, it was not that long ago that US airlines also had MUCH more strict rules on who could work for them. It is all a process.
David | AirlineReporter
“I”ve spoken with His Excellency many times- and just as you”d expect, a man of such education and importance is fluent in not only the English language but its conversational idiom.”
What cringing flattery and grovelling. You must be in his pocket. Also, why is an airline employee, addressed as “His Excellency”?. lol.