Qatar Airways chief executive Akbar Al Baker says the day could come when airline safety rules will require passengers to fly in their underwear. It's a bizarre prospect but there's a sense he's only half joking. "You never know with the way things are going," he observes.
His airline is one of a number based in Muslim-majority countries from where passengers flying to the US were recently barred from bringing laptops on board. After Washington's Department of Homeland Security announced the ban, the UK followed with one of its own though it excluded Qatar. So far, the Republic has not followed either country. This should come as some relief to Al Baker, as his airline plans to launch a Dublin to Doha service in June.
His underwear remark is to emphasise that airline passengers are the ones ultimately inconvenienced by the blizzard of safety measures.
“I think people are getting concerned that this kind of shooting from the hip is really not what the travelling public wants,” he says. “We [Qatar Airways] have to make our systems very robust. And you know, if that was the concern, then the [US] authorities should have said ‘you have to do a 100 per cent ETD’.”
ETD stands for explosives trace detector. Now a normal part of airport security – including in the Republic – it involves swiping passengers’ luggage, equipment such as laptops, hands and whatever else, with a cloth that can be instantly machine-read to pick up virtually any molecule of explosive material. Qatar already tests 40 per cent of passengers, while on US flights, those coming on board have to remove watches, shoes, belts, jackets and so forth for screening.
Laptop ban
Al Baker argues that ETD is so sophisticated there is no escape. “This is a 100 per cent solution,” he says. “Okay, it will inconvenience the passenger but at least they will have their laptop.” Surprisingly given the fuss, he points out that only about 12-15 passengers bring laptops on board Qatar’s US flights.
At the same time, the terrorists whom this is meant to foil are unlikely to use the airports affected, as those hubs already have tight security.
“Instead of going from the airports where there is a ban, they will go to airports where there is no ban. And there are no bans in certain airports that are very risky – I don’t want to name them – but it is far easier to get on to aeroplanes from those places than it is with us,” Al Baker says.
The laptop row and US president Donald Trump’s travel ban, which the courts have neutralised, created a lot of heat and light for airlines from parts of the Muslim world, including the Gulf carriers. However, it remains to be seen if those companies will suffer any damage to their bottom line. In reality, there are more potent threats looming in both the US and EU.
In the US, the big three airlines, Delta, American and United, lobbied former president, Barack Obama, to limit the rights of the Gulf carriers, Qatar, Emirates and Etihad to operate in the country. The US players claimed their rivals enjoyed $42 billion worth of government subsidies and other unfair advantages. Obama did not bite but there is a view that Trump's administration might prove more sympathetic.
Al Baker dismisses the subsidies claim. “It is a load of bullshit,” he says bluntly. He argues that those doing the complaining are legacy carriers who benefitted from years of taxpayer-funded support. “The story with us is different, we got equity, not taxpayers’ money,” he says. “And we were given enough equity for us to be independent, which we are today, and we have to show profit.”
He believes Trump’s business acumen will win out should the complaint be resurrected. “We are buying American aeroplanes in big numbers and we are providing jobs, every single flight we do brings economic benefits to the US. So to us, America is first.
“While we are giving people good value for money, the three American carriers actually are swindling their own people by reducing capacity so that they can artificially raise ticket prices and make record profits.”
Across the Atlantic, the European Commission is drafting new regulations that could give Brussels the power to suspend non-EU airlines' flying rights for "unfair competitive practices" that injure or threaten one or more of the bloc's carriers. This is widely seen as a bid to counter the rise of Qatar Airways and its fellow Gulf players. Germany and France, along with their flag carriers, Lufthansa and Air France KLM, have been pressing the commission to tackle competition from the Gulf, which has shifted long-haul passengers to the east.
Crying wolf
Al Baker responds with the same argument he makes about the US airlines. The EU’s legacy carriers, he says, are crying wolf because they cannot get their own act together, control costs or operate efficient airports – even though they are still profitable. Qatar Airways’ problem is that Brussels appears to be listening to Lufthansa and Air France.
"Yes," he agrees, "but we have contributed to the economies of Europe. If you look at the big three Gulf carriers put together, the orders we have with Airbus, the direct and indirect jobs that we create, are far more than Lufthansa and Air France. It's all about jobs and we are creating jobs."
He insists he does not want to tell anyone in Europe their business, but still can’t resist a go at Lufthansa which he argues is the continent’s dominant player.
"All the other 27 European countries should raise an objection because Lufthansa is dominating their skies," he says. "When you, look at Austrian, Brussels Air, Swiss Air, and Lufthansa. They also own Air Dolimiti, which is, frankly, the national carrier of northern Italy. When you put all these five airlines together, you are really controlling the skies over Europe."
On the face of it, Qatar Airways is self-supporting and profitable. Its annual report shows its operations generated a 3.05 billion riyals (€785 million) surplus in the financial year ended March 31st, 2016 while the airline flew 26.6 million passengers. It had about €24 billion in assets, of which close to €6 billion was cash. In the financial year just ended, passenger numbers hit 28 million while overall growth was in double figures. From this year it will serve more than 160 destinations and Dublin is one of 14 it will add in the year ending March 31st, 2018.
Its fleet will shortly pass the 200 aircraft mark. Qatar was one of the first to fly the Airbus A380 superjumbo – taller than a lot of Dublin office buildings – and it will be the launch customer for Boeing’s 777x when it finally takes off, in or around 2020.
This came from a more or less standing start 20 years ago when Al Baker took over as chief executive at the request of Sheik Hamad bin Khalifa Al Thani, the Father Emir of Qatar. His brief was to develop a high quality airline that would plug the emirate into the rest of the world.
Its formula was simple. It offered affordable long-haul flights through its home hub at Doha – Qatar's capital – that connected Europe and the US with Asia and the Far East. It cashed in on a growing appetite for travel and an opening up of the skies in markets such as the EU and the Americas. While Ryanair led the low-cost revolution in Europe, Qatar stuck with full-service.
Despite the impressive metrics, some observers are calling time on Qatar’s double-digit growth. This year it is predicted it will boost capacity by 7 per cent. This would have most legacy carriers reaching for a bottle of business class champagne, but it is slow compared to the speed set by the middle eastern airline over the past decade.
Growth estimate
Al Baker responds that if he gets the aircraft he has ordered, growth is more likely to be 15 per cent. “If I get the aircraft deliveries as promised I think we will achieve that,” he says. He does concede that Qatar will reach the limit of its growth when it matures, which he predicts will be sometime around 2020 and 2021, after that it should add a steady 4 to 5 per cent a year.
He admits he is sceptical of getting the craft he needs to hit 15 per cent growth. Last June he lost patience with delays and cancelled an order with Airbus for its A320neo aircraft. Qatar later announced a new order with Boeing.
The move was not out of character. Al Baker is not known as a fan of excuses. His staff refer to him as “the chief” in a tone that suggests if he wants something done, it gets done. He also has a reputation for calling things as he sees them, a characteristic that means he should feel right at home in the Republic, which is already well known for producing plain-speaking airline executives.
Qatar will begin flying Dublin to Doha on June 12th. As this coincides with Ramadan, Islam’s holy month, it will delay its bells and whistles launch until July 4th. So far, its chief executive says advance bookings are healthy.
“Not what I would want it to be because you know, you always want a 100 per cent load factor [airline jargon for full aircraft] which is very difficult to achieve, but we are on the way up,” he says.
The airline weighs all potential new routes carefully before deciding to launch. It believes one flight a day is what the market here will absorb. Al Baker also points out it does not want to undermine its Oneworld Alliance partner, International Airlines Group (IAG), parent of Aer Lingus, Iberia, Vueling and British Airways.
Not only is it a partner, Qatar owns 20 per cent of IAG, making it the group’s biggest shareholder and giving it an indirect interest in Aer Lingus. It upped its stake from almost 16 per cent when the group’s stock price dipped sharply following the UK’s Brexit vote last year.
Despite being happy with IAG’s performance, Al Baker says his company will not increase its stake in the group.
He notes this could be awkward as IAG already has close to the 49.9 per cent limit allowed by Brussels for non-EU owners. Would he like to see this restriction lifted? "It's not up to me to comment on what the European Union wants to do. As far as we are concerned we just want to work together with the EU to grow our business there together with our competitors," he says.
Are there any EU airlines in which he would like to invest? He pauses before replying: “I would maybe buy Lufthansa . . .”
