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Qatar Airways – no stopping the growth

Qatar Airways started 2007 as it ended 2006: continuing its aggressive pace of capacity growth. Announcements of new aircraft orders, destinations and frequencies are a regular occurrence in Doha.

Like some other state-owned carriers of the resource-rich Gulf region, the carrier’s Government backers have put national promotion objectives above profitable short-term financial results. Although upper management periodically speaks of eventual privatisation, the likely date for such a transaction is now “after the company becomes profitable”, which it expects in 2011 or 2012. Qatar Airways’ expansion appears less aimed at achieving positive net income than at heightening the country’s image on the world stage.

CEO Akbar Al-Baker notes that, "you should put the airline business in the context of a bigger picture. Even if your company may not be able to make profits, the country can immensely benefit from it." This viewpoint helps explain the carrier’s recent and projected growth.

In addition to its building a USD90 million premium class passenger terminal (which will be demolished when the carrier moves to Doha’s new airport in 2008), Qatar Airways has embarked on an expansion plan that positions it as one of the world’s fastest-growing carriers.

Qatar Airways Total Weekly Seats By Region: Jul-07

Source: Centre for Asia Pacific Aviation & OAG

Even with a small local population base, it continues to post annual growth of its already sizable operation of about 40%. It added 13 new destinations in 2005 and would have made similar additions in 2006 except for aircraft delivery delays. To enable this type of network growth, the carrier is constantly adding to its fleet.

In Jul-06, it added to its outstanding order for 80 A350s (and 5 A380s) by signing on for 20 B777s, with a further 20 options, as well as a mystery-cloaked order for an undisclosed number of B787s. Qatar intends to operate 120 aircraft – more than double today’s 54 units – by 2017.

The carrier has made Asia Pacific a big part of its growth strategy, with new destinations (e.g., Hong Kong on a non-stop basis, Yangon, Shanghai) and frequency additions (e.g., Manila nine-times weekly, Bangkok double-daily) all featuring heavily.

Qatar Airways’ expansion also features some longer-range prestige routes, such as its application to fly to Sydney, Stockholm and Melbourne, its stated intention to connect Doha with Sao Paulo, Brazil and its recent launch of direct services to Washington and to New York via Geneva.

The carrier enjoys support from its Government owner (50%, with the balance ostensibly held by unnamed private investors). In addition to the blank cheque it has been given to pursue its expansion programme, the regulatory body has worked to ensure that Qatar Airways does not face undue pressure from the region’s growing LCC sector.

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