Qatar Airways CEO: We Are Not Taking Over the World (To Paraphrase)

We are in the midst of a bit of a back-and-forth between the head of the
Association of European Airlines (Ulrich Schulte-Strathaus, for those keeping score, and to whom I’ll refer as S-S) and outspoken CEO of Qatar Airways (Akbar Al Baker, in the other corner).  S-S started things off last month when, while speaking at an aviation conference, he accused Gulf-based carriers Qatar Airways, Etihad and Emirates of conspiring to capacity dump (offering more seats than necessary at a price below their true cost) to drive out Asian and European competitors and, (this is an odd one), accusing the governments of the Gulf nations of operating the airlines “as an instrument of national strategy.”

The latter part was meant to suggest that the airlines are subsidized by the government as a way of building the strength of the countries.  This is, of course, an absurd accusation coming from someone representing Europe, where countries have propped up both airlines and airplane manufacturers for years.

He went on, essentially suggesting that these 3 airlines are spending upwards of $100 billion to take over the aviation world (not necessarily untrue).  These carriers have more than 400 widebody aircraft on order, more than the US airlines combined.

S-S’ complaint smells of sour grapes if you ask me (which you haven’t), as he’s really just disappointed that no European carrier has been able to accomplish in 80 years what these 3 airlines have done in 20.

Al-Baker struck back in a statement earlier this week saying that S-S’ remarks were “factually incorrect” and called him out for the “billions of Euros” that European countries have pumped into their aviation industry.  He then answered S-S’ call for a World Trade Organization for airlines, which would adjudicate disputes between carriers and ensure free trade.  Al-Baker said that he’d be happy to have this body as long as it allowed “free competition across the board.”  In other words:  I’ll sign up for an airline WTO when you let me fly from Frankfurt to New York.  Don’t hold your breath.

The Gulf carriers have been much maligned by representatives of airlines in other regions, primarily because they are growing so quickly from the seemingly unlimited funding of their governments.  Funny though – isn’t that how just about every other major airline in the world started?  Boo hoo, Lufthansa.

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  1. Tweets that mention Qatar Airways CEO: We Are Not Taking Over the World (To Paraphrase) | Online Travel Review -- - pingback on February 11, 2011 at 8:25 pm
  2. some thoughts:
    1) it is clear that they want to feed as much people and cargo through their proposed gigantic airports. SO: Doha and Dubai airports and airlines working REALLY close together. Quite the opposite of Canada where airports are cash cows and are being taxes through the roof (so short sighted thinking)

    2) Qatar, Dubai are putting a lot of money into the new airports hoping to attract cargo and aviation companies. I think that could make sense. I could see UPS, Fedex or others landing in the desert 24/7 creating whatever noise they want. But, sand and heat are a problem for airplanes so maybe that would be a problem. As far as attracting industries, I’m not so sure; it’s not always “build it and they will come”. You can’t import highly skilled people like you can import people from south-east asia and pay them dirt cheap to build a real estate bubble. The Airbus/Boeing/bombardier of this world will probably have a problem with the precarious political stability there (hey, we want landing slots otherwise we put 1000$ visa requirements on your country) and other such blackmail.

    3) countries around the world see issue with 97% of passengers just switching planes in some hub country. Most people in the North-east and Canada transit through Paris/London/Frankfurt/Amsterdam. How many will actually stop and visit Doha? Maybe people (like Jared and I) will connect there once just for kicks and then go back to wherever else they flew before? For sure, it’s not we’re going there to have a drink with our girlfriend in a bikini (Id’ have to google it but I bet that’s not allowed).

    3) seems like a good idea to slowly transition their economy from oil supplier to something else. But put much of your money in airlines? huh? Haven’t they heard “the easiest way to become a millionaire is to start as a billionaire and start an airline”? I think they need to think closely at how they are perceived (including me) and their tourism offerings before trying to get everyone to connect through their airports. I have a couple probably misconceptions about Dubai and Doha but I bet other people are having much deeper inacurate ideas.

    4) I think they need to convince us that they are open for business and that there will be very strong guarantees for investments made there. But I don’t see people biting any time soon. Much more companies will invest in Mexico (Qeraterro), China and India before Doha or Dubai becomes a magnet for aerospace industries (Even if they have all the airports and desert you can dream of). You can “brute force” innovation.

    5) people kinda know that they are “resources” for their employers (Southwest would call them people) but we still know that we are employed because of what we are worth, not because they really love us. And in most people’s mind, when we think Dubai, we think Pakistanis being treated as slaves. And the next thought is “no thank you for me”.

    Bottom line, they can try to divest their economy in big shiny airports. But in the end, people will blog, twitter, facebook it. And people will vote with their dollars. They better start working on their image because,as of right now, it’s a lot of talk but it sure sounds like the same type of bubble that saw all those cranes over Dubai building empty appartments and offices.

    P.S. hmm, Icelandair is kinda the same. But in that case, they didn’t have to twist my arm for me to stop for 2 days on my wayt to Europe. In fact, I’ll fly them again and stop for 2+ days again.

  3. I am just glad that US companies are above using lobbying organizations when it’s in their best interest. And that the US airline and aircraft industry isn’t subsidized by me, the US taxpayer. Oh… Wait…

  4. I think it is really India/Pakistan. Indian market is much larger than it looks and western carriers do a piss poor job — both on destinations and food.

    good point about airline and airports working together.

    My parents are a great example: they probably spend well over 12K a year on flying, all of it going to Gulf-based airlines.

    DOD traffic is another big component.

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