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Asian travelers hit by Qatar Airways threat to quit Oneworld

Gulf carrier accuses partners American Airlines and Qantas of hostility

Qatar Airways CEO Akbar Al Baker has threatened to pull the airline out of the Oneworld Alliance, citing mistreatment from fellow members American Airlines and Qantas.   © Reuters

Qatar Airways, the fast-growing Gulf airline, which serves dozens of Asian destinations, has threatened to quit the Oneworld alliance next February, accusing its partners American Airlines and Qantas of hostile business practices.

Although Qatar Airways has been subject to a blockade by its Gulf neighbors since 2017, the state-owned airline has continued to expand. It has opened routes in Asia to 13 cities in India, five in China and seven in Pakistan, five in Australia, four in Thailand and three in Vietnam, among other destinations. It also owns a 9.99% stake in Hong Kong airline Cathay Pacific Airways.

A Qatari exit from the Oneworld alliance, which it joined in 2013, would mean that Asian travelers using other members' loyalty programs, such as JAL's Mileage Bank or Qantas Frequent Flyer, would no longer be able credit miles flown with Qatar Airways to their accounts. Alliances such as Oneworld also enable member carriers to sell seats on the same flights, known as code-sharing, or coordinate schedules to facilitate passenger transfers.

Akbar Al Baker, the chief executive of Qatar Airways, said in a group interview on the sidelines of the Doha Forum that he was "not happy" that some Oneworld alliance members did not want to do business with his airline.

He accused American Airlines of "constantly trying to impede our investments and our strategic partnerships" and cited the carrier's cancellation earlier this year of a code-share arrangement with Qatar.

The two carriers have been clashing for years, with American accusing Qatar of receiving illegal state aid, a charge the Gulf airline denies. In 2017, Qatar attempted to buy a 10% stake in American but subsequently dropped the plan after the U.S. airline's CEO Doug Parker said in a memo to employees he was "not particularly excited about Qatar's outreach," mentioning "illegal subsidies."

Al Baker also attacked Australian airline Qantas in the Doha interview for doing business with Emirates, Qatar's far bigger Gulf rival, based in Dubai. Qantas has a code-sharing agreement with Emirates and has been lobbying the Canberra government against allowing Qatar to add a sixth Australian route to its network, complaining of unfair competition. The Australian carrier sent politicians a letter last month citing U.S. research that said Qatar Airways had received $17 billion in state aid and interest-free loans from the Qatari government and its sovereign wealth fund, the Sydney Morning Herald reported.

Al Baker insisted that his airline did not receive government support. In response to a request from Oneworld not to leave the alliance immediately, Qatar Airways had delayed a final decision on its departure until February next year, he added.

"If there is still a spirit in which we were invited to Oneworld, we will continue," he said. "And if I am shown the same intransigence by the members, then I don't think there is a point to me staying."

On a departure from Oneworld, he said Qatar would rely on the airlines in which it has stakes, but Al Baker was not specific about what they would offer passengers. "We are a big carrier ... and we have strategic investments in IAG, LATAM, Air Italy, in Cathay and are soon to announce another investment, so we really can sustain ourselves with our own group in which we have investments," he said.

He did not give details about the new investment. In October, Al Baker told reporters he was still interested in investing in a U.S. airline after American rebuffed him in 2017.

Al Baker, who is also chairman of IATA, the airline trade association, said the United Nations had set a very dangerous precedent by not challenging Saudi Arabia, the United Arab Emirates, Bahrain and Egypt over their 2017 decision to bar Qatari aircraft from their airspace as part of a wider blockade intended to put political pressure on the gas-rich Gulf state.

The UN's civil aviation body, the ICAO, had been "too political and too weak" to resist what he termed "using airspace for political means."

Citing the current dispute between Malaysia and Singapore over control of airspace in southern Johor and possible future arguments between Russia and Ukraine as well as between African nations, Al Baker said: "Once you allow a country to use airspace for political reasons, you are opening a can of worms for other countries also to settle their political differences by blocking international air traffic."

The International Court of Justice is currently considering a petition from the four nations imposing the blockade against Qatar. They are arguing that the ICAO lacks the jurisdiction to decide the issue.

Al Baker said the blockade had caused Qatar Airways "massive losses" because it lost flying rights to 18 lucrative and mature Gulf destinations, and the closure of its neighbors' airspace meant its planes had to fly on average an additional 20 minutes per flight to take diversionary routes.

Qatar Airways posted a loss of 252 million riyals ($69.2 million) in fiscal 2018 after a profit of 2.79 billion riyals the previous year. The number of passengers carried fell from 32 million to 29.2 million despite an increase of nearly 10% in capacity.

The airline has responded to the blockade by adding 24 new destinations in Pakistan, the Far East, Eastern Europe, Russia and Africa. It plans further expansion in Asia, including routes to Cebu and Davao in the Philippines, Medan in Indonesia and Langkawi in Malaysia.

Al Baker denied that the new destinations, which include Sarajevo in Bosnia-Herzegovina and Gothenberg in Sweden, would prove unprofitable. "We are confident that the new routes can be profitable," he said. We would not be adding them if we thought they were not viable long term."

Qatar Airways has a fleet of 234 aircraft with an average age of around five years, one of the youngest in the industry. Al Baker said the airline had over 300 aircraft with a total catalog price of $92 billion on order.

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