Qatar Airways: Becoming a global powerhouse

By Bjorn Fehrm

May 30, 2017, ©. Leeham Co: Qatar Airways is the flag carrier of Qatar, a country of 0.3m Qatari citizens and 2.3m expatriates. Its total population of 2.6m makes it one of the world’s smallest countries. Yet its influence is outsize, due to housing the world’s third largest Gas and Oil reserves.

Qatar Airways as a consequence has not lacked financing for its expansion.

Becoming fully state-owned

Qatar is a Kingdom situated in the Persian Gulf, with a total land area of 11,600km2 (4,500sq mi), about four times the size of Hong Kong (Figure 1). Its 2.6m inhabitants have the highest per capita income in the world. The economy is totally dominated by the natural gas and oil industry.

Figure 1. Gulf states including the United Arab Emirates states in color. Source: Google maps and Wikipedia.

Qatar Airways started operations with a pair of Airbus A310s in 1994. The airline initially had a mixed ownership, partly private and partly Qatar state. Gradually, the Qatar state increased its ownership. By 2014 the airline was 100% state owned.

By the end of 1996, the airline was re-launched under new management. Qatar Airways then operated two A310s and two ex-Japan Airlines Boeing 747s to 15 destinations.

In comes Al Baker

The Qatar Government asked the then-Director of finance & administration for the Qatar Department of Civil Aviation, Akbar al Baker, to run the airline. The state wanted an airline that properly reflected the dynamic growth Qatar represented, an airline that would act as a flagship for the country around the world.

Becoming Five Star Airlines

Al Baker was given the brief to make the airline one of the best in the world. Al Baker set out with changing the airline’s operation in all aspects. Excellence was sought, paired with growth. The “One of the best airlines in the world” ranking was achieved by 2004, when Qatar Airways (Qatar) got the 5 Star Skytrax rating. The year before Qatar, passed the IOSA (IATA Operational Safety Audit) as the first airline in the world with a 100% compliant rating.

Emphasis on Quality

The emphasis for the excellence in quality when an aircraft OEM shall deliver one of the airlines aircraft is well known. But the aim for highest quality and standards also covers all other aspects of the offered product. Over the years, Qatar collected numerous awards with “Best airline of the year” ratings in different categories. As there is no audited accounts (Qatar is non listed), the cost of the quest for excellence is not verifiable.

Annual Growth

Growth in passenger traffic has been between 20% and 35% per year, since the relaunch in 1997. Qatar is not a listed airline and certain traffic and financial information is hard to come by.

Qatar has been profitable since 2003, according to the airline. The annual report for 2015 (March 2015 to March 2016) gives turnover and profit levels from 2011 up to last fiscal year, Figure 2.

Figure 2. Financial information for the Fiscal years March 2011-March 2016. One QAR is $0.27. Source: Qatar Airways.

Profits have not been the main driver. Growth and service excellence have. It’s only in recent years that profits climbed above one percent of turnover.

Figure 3 gives statistics over transported passengers paired with fleet growth that we have compiled from different sources. Information over load factors is not released by the airline.

Figure 3. Qatar Airway’s passenger and fleet growth over the years. Source: Leeham Co.

By 2016, the global network contained 150 destinations, Figure 4. Qatar has been part of the Oneworld (IAG, American Airlines …) alliance since 2013.

Figure 4. Qatar 2016 network with 150 destinations. Source: Qatar Airways. Click to see better.

We use the ATDB databank for certain fleet data. The company introduced an informative timeline for an airline’s fleet. In previous articles, we have shown the timeline graphic with a static legend for all the aircraft types in the diagram. You see this diagram for Qatar’s fleet in Figure 5.

ATDB has now provided us with a live version of the fleet timeline as a service to our readers, where it’s much easier to explore the timeline. To see the interactive timeline which gives you aircraft type, year and fleet number by moving the mouse over the bars, click here. You can also change what is displayed in the control box under the diagram.

Figure 5. Qatar Airways fleet over the years, including new orders. Source: ATDB.

18 Comments on “Qatar Airways: Becoming a global powerhouse

  1. Seems more lack an advertisement than an analytical piece.

    These sentences are especially hard to read without smirking: “The “One of the best airlines in the world” ranking was achieved by 2004, when Qatar Airways (Qatar) got the coveted 5 Star Skytrax rating. “\
    ….and
    “Qatar has been profitable since 2003, according to the airline. ”

    I usually get better from this website but especially from Bjorn.

    tortugamon

    • Yep. 100% with you on this seeming like a paid-for advertisement…

    • Hi Tortugamon,

      I understand your comment. But how to make any real economical analysis when there are no independent audited reports made to e.g. IFRS? I can only state what the airline releases. Making claim to the contrary, i.e. that I don’t think it has been profitable this time is even more unsubstantiated.

      The article gives the context on the motivation for Qatar to run the airline and its economical power. It’s then for everyone to make their own mind about what is important and how money has flown.

      Re awards, this is real. They have got loads of them, and Qatar continues to get them. But if that is your stated goal and you spend the money for it, what to say? That they are bought or fake? No the awards are real.

      The article start by giving the context of the airline, its owners and its charter, why it exists. That the airline does not run to the same economical rules as others is clear. Why no info on load factors otherwise? Or balance sheet info?

      • FWIW, here’s an early cutting (Flight, May 11, 1994) :
        “Qatar Airways is planning to start twice-weekly services from Doha to London Gatwick in early June, possibly followed by routes to Vienna in Austria and Munich, Germany. The new Middle East operator, which began flying in January, is planning to feed US flights departing from Europe, although it has no plans to set up a marketing alliance with a US airline. Sheikh Hamad Ali al-Thani, chief executive of the Doha-based carrier sees Qatar linked to as many as 12 destinations by the end of 1994.
        “The initial performance of Qatar Airways, which began with regional flights to Dubai and Sharjah in the United Arab Emirates, has been much better than expected, according to Al-Thani. He says the airline, set up with $6 million of private capital, is about to receive a second Airbus A310-200 and will decide this month on a third, for which an additional injection of capital is likely to be required.
        “The airline’s first aircraft, a former Kuwait Airways A310-200 flown under an operating lease from Airbus Industrie, is flown “almost daily” from Doha to Dubai and is used on weekly services to Khartoum in Sudan. Early Sharjah services were dropped to release the A310 for other routes, says al-Thani. His strategy is to develop a network of routes before expanding frequency.
        “Plans for a weekly Doha-Colombo (Sri Lanka) service were held up in April, when the Indian authorities refused to grant overflight rights in time, but weekly services finally began on 19 April. The operator expects to open services this month to other Middle East destinations. New weekly services are planned this month to Damascus in Syria and to the Jordanian capital Amman.
        “Qatar Airways “…is the national carrier, but is not a prestige airline”, says al-Thani, possibly out of deference to Gulf Air in which the state of Qatar has a 25% share. It is a low-cost operation which “…aims to compete with any fares on its routes.”
        And another (January 1, 1997) headed QATAR CONFLICT
        “Sheikh Hamad Ali Al-Thani, the former chief executive of Qatar Airways, claims that his departure from the airline followed moves by the board to co-operate rather than compete with Gulf Air, for which the chairman is Qatari general sales agent.
        “Contrary to our report (Flight International, 10-17 December, 1996, P10), Hamad was in favour of competition and describes the chairman’s Gulf Air relationship as a ‘conflict of interest’. He claims that the Gulf Air business brings in $10 million annually in commissions.”

        • Thanks, apparently this all changed at end 1996, when Akbar Al Baker was asked to move from the Civil Aviation Authority to run the airline (he did not seek the job). His charter was to invest and increase the airline’s standards. If one look at the investments over the years they are huge. There are no accounts on where the money came from nor the cost of capital or return on investment.

    • I think your comments are unjustified. Bjorn article repeated states the numbers are those provided by Qatar and are unaudited and the only ones available.
      At 26m pax Qatar is up there with the big three carriers American, United and Delta – a remarkable achievement given where its come from.
      Also, compare the service on US airlines vs Qatar. The 3 ME airlines offer standards of service most US flyers can only dream of and to the best of my knowledge Qatar have never assaulted a pax.

  2. It appears Qatar Airlines’ profile is the result of principally the personal profile of its P&CEO Al Baker. So as to understand the full picture, it may be appropriate to dwell somewhat on this colourful man : personal history, education, motivations, career strategy a.s.o. ie what makes Al Baker run ?

  3. All well and good, but Ackbar Al Baker should do the honourable thing…

    Ditch that awful comb-over and invest in a shaver!

  4. Something that I fail to understand and that the article does not even allude to is this:

    There is a supposed “Emphasis on Quality”. I believe that most of us can agree that quality is reflected (and emphasised) in both soft and hard product.

    QR is also extremely, and to the minutest detail, critical of the OEMs aircraft and vendor OEMs furnishings.

    However, this is also an airline that has very little hard product consistency across its aircraft fleet that will only be even more pronounced after they start rolling-out the new QSuite…

    • @Moe

      Is the attention to detail argument the reason why there are something like 15 QR A350s sitting around TLS in various states of final assembly and testing. QR is accepting aircraft at a snails pace but at the same time it is picking up differently configures LATAM aircraft to fill the gap, go figure….

      Alternatively are they waiting on the new business class to be fitted out (QSuite?) to accept the outstanding aircraft? If I were Airbus I would be losing patience with AAB as QR seem to be singlehandedly slowing the ramp of the programme

      • To an outside observer, sounds like they dont have the money all lined up to pay on delivery. The raising of minor issues is a well known method in the building industry to avoid paying until absolutely necessary.
        Qatar , while having big resources, may have cash flow issues and or difficulty arranging the finance for all sorts of projects. There may be just a bottleneck with the type of governance these sheikdoms use.

      • Seems like a stretch to blame Qatar for slowing the ramp up of a program with well known problems. Remember they were tough on the 787 as well. If you spend billions and billions of dollars it’s not unreasonable to demand the aircraft delivered live up to the contractual obligations.

        • I don’t think the relatively cosmetic issues affecting the A350 can realistically be compared to the problems suffered by the early B787 aircraft. Those early aircraft suffered substantially from weight and engine performance issues, something that was much less of an issue even on tranche 2 A350s.

          Why the delay?

  5. QR has a reputation (a la AAB) as ridiculous to deal with through delivery from both manufacturers respecting fit/trim and finish. They also have a pervasive reputation as being very poor employers compared just with their ME competitors (difficult on crews from all respects as far as lodging/hours/appearances etc.)

    I don’t doubt that they have a good/comparable passenger rating, but I’d just note those factors in passing when considering this highly non-transparent organization operating within a basic monarchy without accountability/records equivalent to those in the west (or east).

  6. QR’s progress might come to a juddering halt or even go into reverse with this morning’s news of Qatar’s isolation by several of its neighbours. The isolation will apparently include withdrawal of overflight rights which will provide significant challenges to many of QR’s routes.

  7. I believe Qatar’s first 747s were ex-All Nippon Airways aircraft, not Japan Airlines.

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