Travellers could be seeing higher airfares soon, due to rising fuel prices and labour costs hitting airline profits. Last week, the International Air Transport Association (IATA) cut its profit outlook for 2018.
The aviation trade body also warned that growing trade tensions could also pose a risk to the airline industry.
A year ago, four Arab countries imposed a land, air and sea blockade on Qatar – banning its national carrier’s jets from their skies. And although Qatar Airways “had a robust plan B” when the blockade started in June 2017, the ongoing Qatar-GCC crisis has meant losses for the airline.
Counting the Cost talked to Qatar Airways CEO Akbar al-Baker about the impact of the year-long blockade and the financial future of the national carrier.
CTC: How much has the blockade on Qatar affected Qatar Airways?
Akbar al-Baker: Qatar Airways is still flying, and we are still expanding. It [the blockade] did impact us. It increased our flying time, and it put pressure on my operational cost, but it did not stop the will and our determination to keep on our part of growth.
This year actually, since the blockade, we’ve received the Best Airline of the Year. We’ve received over 30 aircraft and added over 19 destinations, and we have continued our investments in both Cathay Pacific and Air Italy. The impact has only been on my bottom line, but not on my determination to keep on continuing.
CTC: How big a financial loss has Qatar Airways experienced and how sustainable are those losses?
Al-Baker: I cannot tell you the amount of the loss because we still have not finished our accounting process, but we should be announcing our losses in the not too distant future.
However, we can sustain these losses for the foreseeable future, but we cannot sustain these losses if the blockade continues beyond the horizon that we have in mind.
CTC: If the blockade does carry on long-term, are you going to need investment from the Qatari government?
Al-Baker: My answer is yes, I should not fool anybody. We are a state-owned company. The shareholder of Qatar Airways is the State of Qatar and when there’s a requirement for capital injection, of course the business will go to its owner to ask for capital injection.
At the moment, I don’t think it’s likely. But … I don’t know. I cannot answer for certain.
CTC: What about your expansion plans in the US? Have you settled the dispute with the US government?
Al-Baker: We never had any disputes with the United States. We had disputes with the three [airline] carriers that were crying foul. We’ve proven to them that we have always been publishing our accounts. They had access to our accounts, and we’ve always told them in the past that we have no intention of fifth freedom carriage over Europe.
So all this fuss about us getting subsidies and not publishing our accounts was a mere public relations exercise by them to gain support from their unions.
CTC: Is it over now?
Al-Baker: I think it’s over now because we’ve signed a document with the US government and the matter has been put to rest, and we will continue to deliver on what we have agreed with the government of the United States.
CTC: What does defeating the blockade mean in practice?
Al-Baker: Defeat means that they did not meet any of their targets that they blockaded us to achieve. We have not capitulated, we have not given in to any demands. We have continued our growth and Qatar has continued investments. Qatar has continued its normal life, and Qatar has been very well supplied by Qatar Airways.
CTC: Does the appointment of a new US secretary of state, Mike Pompeo, make a difference?
Al-Baker: Well, he already told them ‘enough is enough’. Now it’s for the international community to put pressure that this should not last any longer.
If they don’t want us to operate into their countries, if they don’t want trade with our country, it’s fine. But to blockade a country is against international norms and international civilised behaviour, which I’ve said already in the past.
I am sure that there will be a time when the United States will put continuous pressure that this blockade must be lifted immediately.
This interview has been edited for clarity and brevity.
Source: Al Jazeera