Saturday , 7 December 2019
Home >> Uncategorized >> Analysis: Qatar Airways continues its explosive growth in 2012

Analysis: Qatar Airways continues its explosive growth in 2012

Source

 Even as chief rival Emirates Airlines reported a sharp 72% decline in net profit to $408 million in fiscal 2012, fellow Middle Eastern juggernaut Qatar Airways is continuing with its exuberant pace of expansion. Earlier this year, the airline, which serves 116 destinations on a fleet of 108 aircraft, announced plans for 65-77 new weekly flights to 13 new destinations in 2012, as well as 45 additional new weekly flights to existing destinations within the network.

With the latest round of expansion, Qatar Airways is simply re-iterating its commitment to a diverse stream of growth; adding service to disparate points around the world, though emerging markets (as in general economics) are the fastest growing. Zagreb, Croatia became the carrier’s 30th destination in Europe in early May, but emerging markets such as Africa and the Middle East represent more than 70% of expansion in 2012.

The underlying details of their 2012 capacity growth illustrate additional differences between Qatar Airways and Emirates, who operates a fleet entirely composed of larger twin-aisle aircraft and is set to increase average seat capacity even further in its fleet mix by phasing out smallerA330-200s, 777-200s, A340-300s, and A340-500s in favor of larger Boeing 777-300ERs and Airbus A380s. Along with fellow Middle East super-carrier Turkish Airlines, Qatar Airways has re-balanced its growth in favor of smaller, niche destinations (like the Baghdads and Mombasas of the world), utilizing primarily the 144 seat Airbus A320 to closer in destinations.

In the longer term, growth using widebodies will resume, but will be restricted primarily to the smaller Boeing 787-8 which will be used in the same ilk as the A320, facilitating growth to more marginal destinations. While the first 787 destination will be London Heathrow, where the ultra-efficient airliner will operate one of five daily flights in a market where Qatar Airways offers more than 11,000 weekly seats in each direction, 2013 will be a big year for 787 deployment to the United States; the Qatari national carrier will be adding 6 daily flights between Doha and the United States.

New daily nonstop services on the 254 seat 787s will be offered between Doha and Atlanta, Detroit, Chicago O’hare, and Boston while the current daily nonstop flights between Doha and New York’s John F Kennedy International Airport will be supplemented by two daily direct 787 flights between Doha and New York City with stopovers at yet to be ascertained points in Eastern Europe. Qatar Airways currently serves Houston, Washington D.C., and New York in the United States.

Each of Qatar Airways new US destinations is currently on the radar of rival Emirates Airlines, though Qatar Airways appears to have a head start in firm announcements of these particular destinations. Fellow Middle Eastern rival Turkish Airlines actually announced their plans to begin service to Atlanta and Detroit, but these plans were never made firm. Of the cities planned in 2013, each has an attractive business case. Chicago with a huge population of immigrants and business is an obvious choice, and Atlanta is a huge business hub with a large ethnic African population of more than 150,000 people. Detroit as of yet has no service from any of the so-called MEB3(the major hub carriers of the Middle East; Qatar Airways, Etihad Airways, and Emirates) which is puzzling.

The Detroit metro area has the single largest population of Arab-Americans in the United States with over 450,000individuals, as well as a large Asian population of more than 200,000 individuals. While the large Delta Air Lines trans-Pacific hub operation in Detroit might detract from the overall business case, ethnic links between the Detroit area and the Middle East are so strong that a low cost aggregator such as Qatar Airways should be able to make the route work. Metropolitan Boston is also home to a large population of Asian Americans and is home to numerous businesses in the booming fields of technology and healthcare research. The 787 in particular, with its mix of low fuel burn, long range, and reasonable seating capacity will assist Qatar Airways as it moves into these uncharted waters.

Even as Qatar Airways expands its fleet of Boeing787s, their overall fleet plan remains nebulous. The carrier currently has 10 Airbus A380 “superjumbos” on order for delivery beginning in 2013, as well as 30 Boeing 787-8s, 60 Airbus A350s, 52 Airbus A320 family aircraft (50 neos),and 8 Boeing 777-300ERs. However, the future of the Airbus A380 at Qatar Airways is now in doubt, at least in the near term.

Earlier this month, the airline announced that it was deferring delivery of its first five A380s scheduled to arrive on property from October 2013 onwards unless European original equipment manufacturer (OEM) Airbus S.A.S is able to find a permanent solution to the numerous cracks that have been discovered in the wing ribs of Airbus A380s operated by Qantas and Emirates amongst other carriers. Europe has already ordered regular checks for cracks on all A380s in the continent, and while Airbus has assured the carrier that a permanent fix will be forthcoming, Qatar Airways remains unsure.

“I hope they will solve the problem…they are working very hard on it. There is a possibility for us to defer, yes. If there is no permanent solution found then we will have to defer,” said Akbar Al Baker, Chief Executive Officer of Qatar Airways.

He also expressed concern over Airbus’ claims that a permanent fix is forthcoming.

“We’ve accepted that,” he said. “But if there only a temporary fix and a permanent fix will come post-delivery, then Qatar Airways will not accept [that] and we will have to defer our order until such a time that they have a fully certified permanent fix to the wing meeting all the performance guarantees and weight guarantees that we have. We don’t want that an aircraft will be delivered with an interim solution so that after delivery we will have to ground airplanes to have the final fix,”

Simultaneously, Al Baker also expressed concern over the progress on Airbus’ A350 program, which industry observers say is likely to be further delayed into 2015. The problem also extends to the stretched Airbus A350-1000, which has met with harsh criticism. While Al Baker says that Qatar Airways has no plans at the moment to cancel its order for the A350-1000 as rival Etihad did (cancelling 7 more of theirA350-1000 orders earlier this year), he does not rule out the possibility of doing so if the aircraft fails to match the stringent performance promised by Airbus. “I have made it very clear that if it doesn’t meet the performance guarantees on the payload, the range then of course we will have to rethink what we are going to do with that airplane,”

Separately, the carrier has delayed negotiations with Canadian OEM Bombardier over that manufacturer’s 100-130 seat C-Series aircraft. Qatar Airways said that the decision was made because the carrier seeks to focus on other expansion projects.

As a whole, Al Baker has said that Qatar Airways plans to expand his airline’s presence to around 170 destinations by 2016.However, with the A350 program in flux and thus only 35-40 additional aircraft coming online during that time frame, it is clear that the carrier will have to further increase utilization of its already closely scheduled fleet. And, all of that growth is certain to be organic, as Al Baker ruled out further acquisition of troubled carriers in the wake of Etihad’s investment in Aer Lingus earlier this month.

“Qatar Airways is not interested in an acquisition at this time,” al-Baker said, “We do not just acquire loss-making entities because we are going to get them at a very good price and take advantage of their difficulties.”

With fuel prices remaining stubbornly high, 2012 is sure to be a challenging year for Qatar Airways. But the airline remains confident of achieving a net profit this year while continuing to grow service and connectivity at its central hub in anticipation of the grand opening of New Doha International Airport in December of this year.

About Vinay Bhaskara

Check Also

Jet Airways' Boeing 737-800 VT-JBD

Why Jet Airways is critical to Boeing’s India presence

Indian aviation continues to show tremendous aviation potential with growth forecast to be in the …

Spicejet Boeing 737-800 VT-SPL "Cardamom"

SpiceJet Q3FY19 results analysis: challenges remain

SpiceJet, reported its third quarter results of the fiscal year 2018-19 (FY19) this Monday. There …