Qatar Airways faces tough headwinds due to new restrictions

A man stands outside the Qatar Airways branch in Riyadh on June 5, after the carrier suspended all flights to Saudi Arabia following a severing of relations between major Gulf states and Doha. (AFP)
Updated 06 June 2017
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Qatar Airways faces tough headwinds due to new restrictions

DUBAI: Qatar Airways, the second-biggest carrier in the Arabian Gulf, will face tough operational and financial headwinds as a result of restrictions placed on it by several other Arab nations, and the pressure will grow the longer the diplomatic fracture goes on, aviation analysts said.
All flights between four countries — Saudi Arabia, the UAE, Bahrain and Egypt — and Qatar are cancelled for an indefinite period from June 6, and Qatar Airways flights will not be allowed to fly over the airspace of those four nations.
Saj Ahmad, chief analyst at StrategicAero Research consultancy in London, said: “Qatar Airways will be hit hardest since it will have to reroute flights (that previously flew) over Saudi Arabia and the UAE on its long-haul missions — adding fuel, time and costs. Equally, its narrow-body fleet will end up parked at Doha, and ramp space there is not exactly plentiful — so again, they will have to redeploy them somewhere, if at all possible.”
Citibank, the American financial giant, said: “Loss of routes and the requirement to detour neighbors’ airspace could have a significant long-term impact on Qatar Airways business.”
That was echoed by John Strickland, independent aviation expert at JLS Consulting. “Much depends on how long (the dispute) goes on. We have not heard the final story yet. But the longer it goes the worse it is for Qatar,” Strickland told Arab News.
“The ban on ‘in’ and ‘out’ flights will obviously have an immediate impact, but the restrictions also inhibit operational flexibility on overflights through the other countries. Qatar files to Europe, Africa and the Americas, and all are affected by the ban on airspace in the region.”
Qatar seemed on Monday to have already begun avoiding the airspace of the countries that imposed the ban. Social media websites showed air maps of Qatar Airways planes en route to the west flying over the Arabian Gulf, heading towards Iran and Iraq, before turning westward toward Europe and America.
Strickland such operational adjustments would become more problematic. “Some alternative routings will be much more difficult. For example, routes to South America have to go over Saudi Arabia or Egypt. Rerouting will bring its own clear challenges. It may not be possible to fly nonstop, and then Qatar will have to think about new refueling facilities on the ground.”
He said that the restrictions could also put a brake on Qatar’s ambitious aviation expansion plans. “Qatar Airways has been a carrier in expansive mode, operating from a new state-of-the-art airport. The restrictions will have a significant effect on all that.”
Other Gulf airlines will also feel the effect, though to a more limited degree, Strickland said.
“Of course, not flying to Doha means passengers will have to find alternative connections to get to and from there. That won’t be cheap or easy,” he said.
“The longer this spat lasts, the more damaging it will be for everyone — and it will be passengers who suffer most,” he added.
The latest turbulence comes after a year of challenges for the Gulf aviation business, with testing competitive conditions compounded by security fears in the region and in Europe, as well as the laptop ban first imposed on some regional airports by the American authorities.
But Ahmad does not believe the recent problems marked the end of the “super connector” model adopted by Emirates, Etihad and Qatar Airways.
“There is simply too much demand going through hubs like Dubai for traffic to suddenly halt. And let us face it, there has been no cataclysmic move that would hurt demand; even the laptop ban has not put off other travelers connecting through places like Dubai,” Ahmad said.
“While some may view the region as risky, notably carriers from the US that do not serve the GCC (Gulf Cooperation Council), overall, passengers will still fly on as normal. There is no security reason nor any other factor that negatively acts as a deterrent. The Qatar spat is bilateral, so the impact is limited to those who serve Doha and to Qatar Airways,” he added.


Philippine central bank holds overnight borrowing rate steady

Updated 13 December 2018
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Philippine central bank holds overnight borrowing rate steady

  • The Bangko Sentral ng Pilipinas left the rate on its overnight reverse repurchase facility unchanged at 4.75 percent

MANILA: The Philippine central bank held its benchmark interest rate steady on Thursday, as expected, in line with the outlook for the inflation rate to cool.
The Bangko Sentral ng Pilipinas left the rate on its overnight reverse repurchase facility unchanged at 4.75 percent, as predicted by 11 out of 13 analysts in a Reuters poll.
The central bank raised rates by a total 175 basis points at the past five consecutive meetings to tame inflation, which eased for the first time in nearly a year in November to 6.0 percent.