ATW Editor's Blog

Qatar & IAG: Shifting sands in the global reach of the Gulf carriers

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Today’s announcement that Qatar Airways has acquired a 9.99% stake in British Airways/Iberia parent company International Airlines Group (IAG) is an interesting development in the ongoing change in the international airline landscape prompted by the growth of the Gulf carriers.

Qatar Airways CEO Akbar Al Baker describes the taking of a stake in IAG, worth about $1.7 billion, as an “excellent opportunity to further develop our Westward strategy”.  IAG CEO Willie Walsh said he was “delighted” about the investment and opportunities to work more closely with Qatar.

There’s a history to the IAG and Qatar connection. Al Baker and Walsh are long-time, firm friends who each hold the other in high respect.  In October 2013, Qatar joined the oneworld global alliance, becoming the first of the major Gulf carriers to join a global alliance. British Airways, a founding oneworld member, was Qatar’s sponsor and Walsh spoke very enthusiastically about the importance of having Qatar join. My understanding is that his enthusiasm was not matched by every oneworld CEO.

Dubai-based Emirates, meanwhile, remains alliance-independent, but in 2013 it entered a five-year alliance with Qantas, another oneworld founding member. And Abu Dhabi-based Etihad Airways owns a 29% stake in airberlin, another oneworld airline. Etihad has its own version of an alliance, taking stakes in relatively small carriers and creating a constellation of airline equity partners that includes airberlin, Air Serbia, India’s Jet Airways, Virgin Australia, Air Seychelles and Aer Lingus. Interestingly, IAG wants to buy Aer Lingus, a move, which if it happens, would further tangle the IAG-oneworld-Gulf carrier web.

Etihad, of course, is also now a 49% owner of Alitalia (to keep you on track with the alliance matings here, Alitalia is a SkyTeam member). But Qatar’s stake in IAG is the first time that one of the “Big Three” Gulf carriers has invested in one of the “Big Three” European airline groups of IAG, Lufthansa Group and Air France-KLM.

It will be fascinating to see if the Qatar-IAG deal marks the beginning of more such equity partnerships (within the caps of EU airline ownership rules) between Gulf carriers and their European counterparts.  The fact is that it’s becoming increasingly challenging for the “traditional” global hubs of Amsterdam, Frankfurt, Heathrow and Paris to compete with the “modern” world hubs of Abu Dhabi, Dubai and Qatar.

In the US, meanwhile, there is growing awareness that what happened in Europe regards Gulf competition could happen in America. A campaign is being run by North America’s “Big Three” – American Airlines, Delta Air Lines and United Airlines – to try and get lawmakers to review Open Skies policies and the international air transport competitive landscape to take account of the rise of the Gulf carriers.

Flying under the radar so far in the shifting sands of air transport power houses is Turkish Airlines, which is a Star Alliance carrier and which has developed an extensive network, very large and modern fleet and highly successful global hub in Istanbul. It will be interesting to see whether that continues to be the case if, as Al Baker described it, a “Westward strategy” by Gulf carriers begins, in some eyes at least, to look more like a Westward invasion.

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