MIAMI — Mr. Akbar Al Baker, Group Chief Executive Officer for Qatar Airways, held a press conference in Washington D.C. today, officially adding the airline’s voice to the ongoing U.S. Open Skies debate. He also met with government officials and prepared for upcoming U.S. launches to Los Angeles, Boston, and Atlanta.
He explained that “the Big Three U.S. carriers would like to rollback Open Skies. It allows us to provide service to underserved routes. U.S. carriers have attacked this before, and their claims should be rejected as it is a claim to eliminate competition and choice. The Big Three U.S. carriers cannot back their claim of harm they say they are threatened by falling capacity and growing yields from Gulf Competition.” He continued by saying that “U.S. carriers are enjoying record profits, cutting capacity in international markets, controlling capacity in their home markets to keep their prices high.”
The U.S. claim that Qatar is receiving massive government subsidies which is in violation with the Open Skies agreement. Al Baker sees it a bit differently: The big three U.S. airlines use a broad definition for us, but a narrow one for themselves.” He then went on to explain that Chapter 11 bankruptcy reorganization which many U.S. airlines have gone through is viewed around the world as a form of a subsidy while “state ownership is not synonymous with subsidies. There is a fine line between what many view as subsidies or not, but Al Baker claimed “We don’t receive handouts or subsidies from the state. The state is the owner of the airline but it’s within the right of any owner to inject equity. We are independent. We are operating a very successful model of an airline that is owned by the state as a commercial company.”
Many industry watchers and indeed the U.S. Big Three have complained about the lack of transparency into government held Qatar’s finances. Al Baker disclosed that “we will open our books when we are IPO’d which will happen in not too distant future, but it’s up to the owner of the airline, the state of the Qatar to open the books.”
When asked by ATW editor Karen Walker in a later Q&A session about reopening the agreements and discussions between both countries governments, Al Baker snapped back “This is a Pandora’s box which will then open other air service agreements. Why don’t they (U.S. 3) talk about their partners in other countries? This is about avoiding competition. If the U.S. government wants to talk to government of Qatar, this is unnecessary. There is no cause for them to be reopened. We are operating within those permissible parameters of the agreement.”
This imbroglio is not new but when asked what made it reach such a boiling point in a question by Ben Mutzabaugh from USA Today, the characteristically blunt Al Baker responded “They have become greedy to make even more profits. They have consolidated and reduced capacity to keep prices high against the interests of the customers and provide crap service. They are doing a proxy fight on behalf of the U.S. alliance partners in Europe. We have a delegation from the EU coming to discuss who realize these issues are irrelevant because the U.S. Big Three are afraid of competition and unable to meet our levels of high passenger service. Qatar is the only five star related airline in Middle East and only five star airline servicing so many destinations in the U.S.”
Competition Is Beyond The Gulf
During the Open Skies debate at the Phoenix Aviation Symposium, a consultant pointed out that there are only three flights to the Gulf area on U.S. carriers; Delta operates one flight to Dubai, and United serves both Dubai and Kuwait which only leaves the Gulf Carriers as the only options to fly direct to the Gulf. Meanwhile, United is the only U.S. airline to offer direct service to two cities in India. However, Al Baker explains that his airline offers U.S. passengers easy connections to 12 points in IndIa, Sri Lanka, and Nepal which have no service by U.S. airlines as they rely on their alliance partners to help connect traffic.
Al Baker recognized this as well, and explained that the “key facts on competition is that no U.S. carrier competes with Qatar on any nonstop market. Qatar demonstrates little interest on GCC market and India. US doesn’t focus on Middle East, Africa, and Southeast Asia. They prefer to operate mature routes but not take risks on emerging markets. Our carriage of traffic coming from points behind Doha is lawful and pro competitive, and we offer one-stop service to underserved and non-served destinations by U.S. carriers.”
Qatar and U.S. Business Relationship
Qatar the country and the airline both have a long standing relationship with the United States. The U.S. and Qatar signed an Open Skies agreement in October 2001, and six years later, Qatar Airways started flying to New York City and Washington D.C. in 2007. Since, the airline has been expanding its presence in the States, and next year, it will add new service to Boston, Los Angeles, and Atlanta. Meanwhile, no U.S. airline flies to Qatar.
Al Baker explained that the airline does support U.S. businesses, especially when it comes to aviation. The airline operates more 60 Boeing aircraft in its fleet, and Al Baker points out that “we have purchased engines such as the GE 90, GEnx, and CFM’s with GE9X on order, IAE V2500 by Pratt & Whitney, and 80 orders for PW1000G engine for Airbus neos.”
Al Baker sees Open Skies as a win/win for U.S. airports and businesses, and the airline knows that airports like Pittsburgh want new services, and Al Baker says “customers want us.”
Lastly, Al Baker explained that “there is a lot of trade at stake with about $19 billion for current Boeing orders and about $50 billion in future bookings. Plus, Qatar visitors brought in $900 million to the U.S. in 2014 expenditures.”
One of the key elephants in the room is the relationship with fellow OneWorld member, American Airlines and how this disagreement affects that relationship. “We will still respect our partnerships. There is no issue with American. If we (Gulf 3) are such a problem, why has American expanded their code share with us and airlines like Etihad who is our competitor? We can do the same like we have with JetBlue.”
A reporter from the Atlanta Constitution, the major newspaper in Delta’s hometown, asked if Qatar’s recently announced service between Atlanta and Doha was retaliation against Delta and its CEO Richard Anderson who has been a leading voice in opposing Gulf 3 expansion. Al Baker shot that down saying “Our announcement of new service to Atlanta is not retaliation. It’s just per our plan; nothing new.”
Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies, issued the following statement today in response to Qatar Airways CEO Akbar Al Baker’s press conference:
“Akbar Al Baker said he was coming to the U.S. to ‘open the books,’ but all we heard today was more name calling and denials. It’s unfortunate that he won’t answer serious questions about the $17.5 billion in subsidies and unfair benefits that Qatar Airways has taken from its government in order to undermine fair competition, which is a serious violation of Open Skies. Altogether, Qatar Airways, Etihad Airways and Emirates have received more than $42 billion in subsidies from Qatar and the United Arab Emirates in their quest to dominate international aviation to the detriment of the U.S. aviation system, American jobs and consumers. The harm from their actions is real, which is why we are asking the Obama Administration to request formal consultations and a freeze on additional routes.”