Qatar Airways grows profits 332%, braces for gulf crisis

Qatar Airways, One of the Middle East’s biggest carriers, on Monday announced net profits of $445 million in 2016, 332 per cent increase from $103 million the previous year.

The airline’s revenue climbed 3.23 per cent from $9.3 billion in 2015 to $9.6 billion for the 2016 financial year.

Akbar Al-Baker, Qatar Airways group chief executive officer said in a statement that 2016 was the best year for the airline, which has operated for 19 years now.

The airline added 13 new destinations this year, bringing total flight routes to more than 150 cities worldwide. It also launched direct flights from its base in Doha to Atlanta, home to the world’s busiest international airport.

Qatar Airways operates a fleet of 186 aircraft, including the new Airbus A350 XWB, out of its hub in the vast new Hamad International Airport in Doha that is preparing to host soccer’s World Cup in 2022.

Qatar Airways is one of the region’s three biggest carriers, alongside the Middle East’s biggest carrier, the Dubai-based Emirates Airline, and the Abu-Dhabi based Etihad Airways. The three have increasingly challenged Western airlines in long-haul flights.

U.S. carriers such as American Airlines, Delta Air Lines, and United Airlines have criticized the three major Gulf carriers, saying they are aggressively expanding services to the United States while receiving unfair subsidies from their governments. They have pressed Washington to renegotiate treaties that allow Gulf airlines to fly to the U.S.

However, analysts estimate that a political standoff between Qatar and other Arab states will affect the financial status of airline adversely. Last week, Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut ties with Qatar and blocked direct flights with Qatar. All except Bahrain barred Qatari flights from their airspace, compelling Qatar Airways to use longer routes over Iran.

Qatar Airways has made Doha a global hub in just a few years, but barring it from airspace of the Gulf states threatens its position as a major transcontinental carrier, experts say.

Along with its Gulf peers — Dubai’s Emirates Airlines and Abu Dhabi’s Etihad — Qatar’s national carrier has captured a sizable portion of transit travel, capitalising on the Gulf’s central geographic location. But political differences between Qatar and neighbouring Saudi Arabia, the United Arab Emirates and Bahrain, as well as Egypt, exploded last week into a full-blown regional crisis, including severing air links.

The measures meant cancelling dozens of daily flights by Qatar Airways and carriers from those countries, and also mean Qatari aircraft have to make long diversions, mainly around Bahrain and the vast airspace of Saudi Arabia. “The impact is already bad because it has driven up flight times and therefore costs. As the airspace tightens, the problem grows much worse,” said aviation analyst

Addison Schonland from the US-based AirInsight. “Operationally, this is a constraint for the airline that is almost certainly now seeing its profits cut deeply,” he added.

The Islamic republic has opened its airspace to around 100 more Qatari flights daily, increasing Iranian air traffic by 17 per cent.

“For the future, Qatar flights’ routes and fuel burn will be increased as a result of this,” said aviation analyst Kyle Bailey.

 

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