Qatar Airways faces its latest challenge as Middle Eastern states suspended its diplomatic ties with Qatar.
A political stand-off has seen Saudi Arabia, Bahrain, Egypt and the United Arab Emirates cut relations with Qatar and as a consequence, its state-owned air carrier is paying the cost. Yemen, Libya and the Maldives have also joined in prohibiting Qatar based airlines from entering into their territory. Fifty daily flights were grounded, and air travel between the countries has almost stopped completely. Hamad International Airport is in a state of chaos as this restriction significantly impacts on the Qatari nationals’ travel network.
This will do doubt place a significant shock on the airline’s business. Saudi Arabia and the UAE are Qatar Airways’ largest market. One firm estimates that the loss of traffic and the forced landings will cost the airline 30 per cent of its revenue. There are only two routes Qatar Airways maintains – two paths through Bahraini airspace (its only exit to the rest of the world). No doubt, this will become largely congested.
Qatar Airways is significantly reliant on transfer of international traffic. Its primary destinations include Europe and the United States. Qatar’s domestic market does not provide a large source of revenue, a characteristic of the airline’s so-called ‘hub-and spoke’ model. The airline flies to over 150 destinations worldwide, and its usual pathway overseas via Saudi Arabia is no longer an option. It is difficult flying over Iran due to Bahraini airspace – which is dominant in the region. This is because Bahrain was the first nation in the area to start its own airline. Most of the skies were theirs to fly through.
If Bahrain had not granted Qatar Airways this route, the entire airline would literally be grounded. Despite this ongoing crisis, Qatar Airways has been fairly calm. It announced on Twitter: “Our global operations remain unaffected and it’s business as usual”.
Qatari nationals are even banned on Qantas flights. They may not board flights to Dubai as the UAE has banned them from passing through its airports. However, Australian Foreign Minister Julie Bishop noted that Australia will not ban flights directly to Qatar. Qatar Airways operates flights on a daily basis to Doha from Sydney, Melbourne and Perth.
It will be interesting to see how the crisis develops. Theoretically, Qatar Airways’ rights are protected by the ‘Five Freedoms Agreement’, to which Bahrain, the UAE and Egypt are signatories. It guarantees first freedom rights; the right to fly over another country’s territory without landing. In practice, as we can see, violation of these rules are easy.