Land & Sea Transport Aviation Management

Daimler trucks, DHL, JD Retail, Amazon, DB Schenker, COSCO Shipping, UPS, DSV, Anji Logistics. FedEx Quatar Airways, Lufthansa, China Eastern Airlines, Emirates Airlines, easyJet, Air Chi-na, Austrian Airlines, Iran Air

Patrick Siegfried

• Publisher: Books on Demand
• Year: 2021
• Print ISBN: 9783754312223
• eBook ISBN: 9783753475080
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Business concepts in the Transportation Management

12 Qatar Airways

Hohlbein, L.

1. General Introduction of the Airline
2. Network
3. Fleet
4. Competition
5. Financial Situation
6. Challenges and Opportunities
7. Conclusion
8. Reference List

1 General Introduction of the Airline

Qatar Airways is a wholly state-owned airline that was launched in 1997 and ranks among the youngest global and world’s fastest-growing airlines with more than 46,000 employees. The airline consists of a fleet with latest-generation aircrafts and connects over 160 destinations every day. It is characterized by a high service level and the five-star airport Hamad International which is used as their hub in Doha. Regarding the network, flights from short to long-haul destinations are offered among the whole globe. Due to its performance, the airline has been voted as Airline of the Year by Skytrax five times, most recently in 2019.¹³⁵ Moreover, Qatar Airways is the first airline in the world that achieved the 5-Star COVID-19 airline safety rating by Skytrax.¹³⁶ All in all, the airline characterizes its brand strategy by luxury service, comfort and reliability. These values are transferred to the customers by various marketing campaigns including sponsorship partnerships like FIFA Women’s World Cup 2019.¹³⁷ Regarding the service, Qatar Airways is offering Economy, Business and First-class seats. They also have a frequent flyer program called Privilege Club¹³⁸ and premium onboard service.¹³⁹.

Since Full Service Network Carriers are characterized to operate through a hub-and-spoke network and offering a high service level to their customers (which is reflected to a higher ticket price in comparison to a Low Cost Carrier¹⁴⁰), Qatar Airways can be directly linked to a Full Service Network Carrier¹⁴¹. In other words, their focus is on network profitability. ¹⁴² The airline Qatar Airways is only one division of the Qatar

Airways Group. Other divisions within this group are among others Qatar Airways Cargo, Hamad International Airport and Qatar Executive.¹⁴³ It appears that the group constructed divisions in order to improve overall processes and services for the airline and increase profits. The focus in this paper however, will be on Qatar Airways particularly.

2 Network

The network of Qatar Airways is characterized by their hub-and-spoke concept with the serving hub in Doha, the capital city of Qatar with the purpose to provide a link between the East and West.¹⁴⁴ The airline serves 172 destinations in 82 countries all over the world, with the most destinations in Europe and Asia, 27 in Africa, twelve in North America and a few in Russia and South America, but providing in general a huge network that reaches all continents.¹⁴⁵ In order to increase connectivity, Qatar Airways is a member of oneworld alliance which connects 13 global airlines including among others American Airlines, British Airways, Cathay Pacific, Malaysia Airlines and Royal Air Maroc.¹⁴⁶ Moreover, they have 13 further codeshare agreements across the globe to ensure seamless travel and increase the availability of their network.¹⁴⁷ In the end of 2020, the airline also announced a codeshare agreement with Air Canada¹⁴⁸ and with China Southern Airlines.¹⁴⁹

Figure 1: Network of Qatar Airways; Source: Flightconnections 2021.

3 Fleet

The fleet of Qatar Airways is one of the youngest worldwide with an average age of five years. ¹⁵⁰ The reason for having a young fleet are the maintenance costs that are rising with the age of the aircraft. Especially at an age of seven years, the maintenance costs vastly rise as the engine requires a performance restauration.¹⁵¹ Since the airline needs to serve short to long-haul destinations, it operates a mixture of narrow-body and wide-body airplanes from Airbus and Boeing.¹⁵² The reason for this mixture is that the airline can match right-sized planes to different routes and swap planes depending on demand. This leads to a higher destination and choice offering for the passengers.¹⁵³ The figure below shows that the airline owns 201 aircrafts for their passenger business including 114 from Airbus with eight different models and 87 from Boeing with three different models.

Figure 2: Fleet of Qatar Airways; Source: Qatar Airways 2021g.

By 2024 however, the airline plans to simplify their fleet construction to Boeing 777, Boeing 787, Airbus A350 and Airbus A321 models.¹⁵⁴ Moreover, the A380 model is planned to retire in 2028 since these types of aircraft have only a little return on investment. All these changes in the fleet structure also come due to reducing carbon emissions. Furthermore, upcoming aircraft deliveries will be delayed to 2022 since the airline business has to deal with huge uncertainty due to COVID-19.¹⁵⁵ In order to still serve the niche market for First-class seats, upcoming B777-8 aircrafts will have exclusive spaces that would otherwise have been ceased by the retirement of the A380. ¹⁵⁶

Regarding the investments of these aircrafts, Qatar Airways built up a mixture of ownerships and leasing agreements. After the outbreak of the Coronavirus and the resulting decrease in demand, the airline firstly returned the leased aircrafts back.¹⁵⁷

Furthermore, before the outbreak of the virus, the airline wanted to grow its aircraft leasing business. That means that their excess fleet was used for generating additional profits.¹⁵⁸ Since the demand fell after the pandemic’s outbreak as mentioned above, it is unclear whether this business model is profitable in the near future.

4 Competition

Regarding the business model to connect the East and West by a hub in the Middle East, Emirates with its hub in Dubai and Etihad Airways in Abu Dhabi are considered the main competitors of Qatar Airways. All three airlines were growing intensely until the outbreak of the Coronavirus and focused mainly on long-haul flights. This business model however, led to difficulties during the outbreak of the pandemic because of travel restrictions especially for destinations with longer travel times. In the western regions, Lufthansa and Air France-KLM are also mentioned as competitors, which have a stronger focus on short-haul flights than the Gulf airlines but operate with higher prices. Airlines that could compete regarding the low prices for long distances are Turkish Airlines, Air Asia X and other Chinese subsidized airlines.¹⁵⁹

Another competitor for Qatar airways is Ethiopian Airlines for their market in Africa¹⁶⁰, as well as American, Delta and United Airlines for the American market.¹⁶¹

Since the intense growth is shrinking now for all Gulf-Airlines, it is necessary for them to collaborate with other airlines. Qatar Airways already made this step by being part of the alliance oneworld. It is also possible that Emirates will become a partner of Star Alliance where Lufthansa and other big players are already taking part.

Moreover, there is a possibility of a merger agreement between Emirates and Etihad.¹⁶²

5 Financial Situation

Until the year of 2019, the airline had a steady growth in revenue, however, increasing losses have been reported over the last years.¹⁶³ In their business year of 2019-20, the airline had to deal with huge financial issues coming from an ongoing airspace blockade against the state of Qatar, the liquidation of Air Italy where they held shares in, policy changes regarding accounting and reporting as well as the COVID-19 pandemic. ¹⁶⁴ All these events led to a net loss for the Qatar Airways group of around 1.9 billion USD. However, the financial statement of the business year 2020-21 is expected be even worse, since the business year of Qatar Airways ends in March and the pandemic’s impact is still noticeable for the airlines today.¹⁶⁵ Regarding the passenger revenue specifically, the airline increased their revenue in the last fiscal year by 8.9 per cent with a growth in Available Seat Kilometers (ASK) of 3.2 per cent.¹⁶⁶

Taking a deeper look into the financial group statement of the fiscal year 2019-20, and calculating with an exchange rate of 3.6137 QAR per USD¹⁶⁷, Qatar Airways made 10.3 billion USD revenue with the passenger service. This business has increased by 830 million USD in comparison to the previous year. Moreover, the operating expenses have been over 1...

Table of contents

• Table of Contents
• I. Land & Sea Transport
• II. Aviation Management
• Copyright