Gulf carriers set to benefit from ‘reordering’ of aviation industry

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• Qatar Airways and British Airways add 42 countries to shared network 
• Deal follows Emirates and United Airlines codeshare agreement
• Diversion of routes to bypass Russian airspace results in increased costs

Gulf carriers are likely to strike up new partnerships with foreign airlines as the war in Ukraine and the lingering impact of the coronavirus pandemic threatens to reorder the global aviation scene.

The reshaping of the airline industry as a result of pandemic-induced change is opening up new, and more competitive avenues for global airlines and carriers from the Gulf and Turkey will “largely benefit from that outcome”, said Linus Benjamin Bauer, founder and managing director of Bauer Aviation Advisory.

His comments followed the announcement that Qatar Airways and British Airways have deepened their ties to create what they describe as the world’s largest airline joint business.

• Emirates, United Airlines set to announce codeshare pact

• Qatar’s airspace deal to boost global aviation ambitions
• Saudi Arabia to open airspace to all airlines, including from Israel

“In light of the Emirates-United, Qatar-British Airways and Qatar-Finnair partnerships, we’ll witness more partnerships between the Gulf carriers and foreign carriers to come,” Bauer told AGBI.

“For airlines, the pandemic has provided the opportunity to reevaluate their existing business models and network strategies including alliances and partnerships.”

Qatar Airways and British Airways completed the latest phase in the expansion of their partnership earlier this week, adding 42 new countries including Italy, the Maldives, Norway, Singapore and Sweden to their shared network.

The expansion will enable connecting journeys on single tickets through Doha and London, bringing the total number of destinations served by the two airlines to 185 across more than 60 countries.

The deal comes just days after Dubai’s Emirates and US carrier United Airlines signed a codeshare agreement.

Starting in November, Emirates customers flying into Chicago, San Francisco and Houston – three of the biggest business hubs in the US – will be able to connect to United flights to and from nearly 200 cities across the US on a single ticket.

Qatar Airways Group chief executive Akbar Al Baker said the joint business “cements both airlines as industry leaders”.

Sean Doyle, chairman and CEO for British Airways added: “This is a huge milestone in our long-standing relationship with Qatar Airways, an airline that shares our passion for customer service, choice and flexibility.”

Bauer said the pandemic and the war in Ukraine have “pushed the importance of alliances and partnerships to another level”. 

“Many routes between Europe and Asia overfly Russia, hence airlines will now need to rethink their network strategies by taking these uncontrollable variables into account.

“The diversion of long-haul routes from Europe to Asia bypassing Russian airspace and areas of tension in the Middle East will result in longer journey times and increased costs, making some long-haul routes unsustainable – even with fuel-efficient aircraft like the A350,” he said.

“Such a negative impact results in airlines’ search of a new business or network strategy by shifting flights away from Russia and towards the Gulf.”

Bauer added that the recent partnership deal between Finnair and Qatar Airways is an example of this.

Finnair’s high reliance on the use of the Russian airspace for the successful gateway to Asia from Helsinki has compromised the entire business model and strategy of Finnair. 

“The recently announced partnership with Qatar Airways will help Finnair to restore its successful network in Asia in an indirect way through the partner Qatar Airways,” he explained.

But John Grant, chief analyst at global travel data provider OAG and partner of Midas Aviation, played down the significance of the new Qatar Airways-BA deal.

“This is really just a deepening of a relationship that has been ongoing for some time now and of course with the added dimension that Qatar are a major shareholder in IAG, the parent company.

“To the passenger and wider market it will make minimal difference; the two airlines were already actively selling each other’s services and earning points on their respective travel programmes. 

“Perhaps for BA it will hope that deepening its relationship with a carrier with a perceived higher service offering will assist in rebuilding its own service position – but that will take more than just an extension to an existing agreement,” he added.