Qatar: Taking flight

Home to the region’s second-largest airline and with a new airport due to open shortly, Qatar is setting its sights on becoming an international leader in air transport.

Qatar Airways now serves more than 100 destinations worldwide and is becoming a key player in linking the Middle East to Europe, Africa, Asia and beyond. It has shown interest in acquisitions abroad, and with a brimming order book, shows no sign of slowing down.

On February 1, the airline launched this year’s route expansion programme with its first scheduled daily flights to Baku, Azerbaijan and Tbilisi, Georgia. The flight connects Doha International Airport to Tbilisi via Baku.

The airline’s CEO, Akbar Al Baker, said that Azerbaijan was a “destination with great potential” and that the new route would create an “air corridor” to the Caucasus for inbound and outbound business and leisure travellers. Azerbaijan has been one of the world’s fastest-growing economies in recent years – as has Qatar – and its energy sector in particular is a magnet for foreign investment.

Launching flights to Georgia and Azerbaijan continues the carrier’s policy of expansion. The airline aims to increase connectivity between Doha and the rest of the Gulf to Europe, and to provide a growing number of European passengers with flights to Asia via Qatar. Al Baker has said that he expects frequency to increase on the new Doha-Baku-Tbilisi route, and more destinations in Europe to be added to the firm’s portfolio.

This year, following Baku and Tbilisi, Qatar Airways will add a further seven destinations from Doha: Kigali, Rwanda; Zagreb, Croatia; Perth, Australia; Mombasa, Kenya; Zanzibar, Tanzania; Helsinki, Finland; Qassim, in central Saudi Arabia. The geographical spread of these routes is indicative of Qatar’s current focus on establishing medium-haul links to Europe, the Middle East and Africa.

Al Baker has also said that he would like to see Qatar Airways’ rapid expansion continue in India, where it currently operates 110 flights a week. Having added Goa, Amritsar, Kolkata (Calcutta) and Bengaluru (Bangalore) in recent years, the carrier has upped frequencies to meet rising demand. While this year and last have seen the addition of new medium-haul destinations in particular, the firm also serves a number of long-haul destinations in the Americas and East Asia.

In addition to its increasing destinations, the airline is now eyeing up possible acquisitions to strengthen its global position. In 2011, the carrier bought a 35% stake in Luxembourg-based Cargolux, Europe’s largest freight airline, to help build up its cargo business with the aim of making Qatar a major player in the global freight market.

Qatar Airways’ ongoing expansion should dovetail with the development of the New Doha International Airport (NDIA), a $14.5bn project that will replace the existing airport, which is currently operating at above capacity. The new airport, scheduled to open this year, is due to have an initial capacity of 28m passengers per year, scalable to 50m after 2015. The need for a new airport is clear: in 2011, the existing airport handled 18.1m passengers, up 15.2% from 2010, while aircraft movements also rose 15.2% to 138,768 and cargo volume 13.7% to 795,559 tonnes, growth which can be attributed in part to Qatar Airway’s success.

Executives at the nation’s flag carrier will be hoping that the NDIA provides a platform from which the airline can compete internationally. For all its stellar performance of recent years, Qatar Airway’s future success is not guaranteed. It is subject to most of the same downside risks and pressures as the rest of the industry – consumer confidence and spending power, unpredictable costs and geopolitical factors.

It also faces tough competition from a range of rivals, such as European carriers who fly directly to the same destinations in Asia and Africa, and regional challengers. Dubai-based Emirates, the largest airline in the Middle East, is an obvious example, but there are other muscular competitors, such as Turkish Airlines, which has risen to prominence and success over the past decade, and the UAE’s national airline, Etihad. These airlines also have strategically located centres in the region.

Qatar Airways’ order book of more than 250 aircraft, worth a total of $50bn, suggests that the country’s leadership has a great deal of confidence in the continuation of this national success story. Indeed, the country has placed great stock in its airline and airport as drivers of economic growth and diversification.