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?