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Tuesday, March 9, 2021

Qatar-backed IAG chooses sides in Gulf airline dispute

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Photo for illustrative purposes only.
Photo for illustrative purposes only.

The International Airlines Group (IAG) has pulled out of a European trade group over differences in opinion about the rapid growth of the big three GCC carriers, Reuters reports.

IAG is the parent company of British Airways and Iberia, which decided to withdraw its membership from the Association of European Airlines (AEA) after not seeing eye-to-eye about the future of the aviation industry.

In a statement to media this week, IAG – whose largest stakeholder is Qatar Airways – said:

“We believe global liberalization of our industry is fundamental to our future growth and we are not willing to compromise on this fundamental matter.”

Quoting Chris Tarry, an aviation consultant, the Financial Times said the dispute between IAG and the AEA has been long in the making.

“IAG and Qatar are partners, the view is that perhaps Lufthansa and Air France have become more focused on complaining as they attempt to put their houses in order to be able to compete effectively.

The reality is that the world has changed, the Gulf carriers are here and customers are clearly making their choices. Clearly with Qatar as a member of oneworld and an investor in IAG this probably brought matters to a head.”

US complaints

The break between IAG and AEA comes as US carriers beseech legislators to investigate Qatar Airways, Emirates and Etihad.

Photo for illustrative purposes only.
Photo for illustrative purposes only.

They contend that the carriers receive certain subsidies from their governments that violate the spirit of the fair trade “Open Skies” agreement signed by the US and these countries.

The Gulf airlines, including Qatar Airways, have denied benefitting from such assistance.

But the carriers’ rapid growth has not been sitting well with European airlines such as Lufthansa and Air France either, who also seem to favor curbing access to their markets to protect their own business.

In response to the complaints, three US government agencies last week agreed to officially look into the Gulf carriers, and will receive comments and materials from interested parties until the end of May.

Thoughts?

11 COMMENTS

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The Reporter
The Reporter
5 years ago

The largest stakeholder of IAG is Qatar Airways – not much point in reading on really.

MIMH
MIMH
5 years ago

So the largest shareholder in IAG wants Europe and others to have open skies so they can have as many landing slots as they want. Now the largest shareholder of the largest shareholder in IAG is the Qatar Government, who stifle competition in Qatar and provides unlimited funds and preferential tax breaks to Qatar Airways. Talk about having your cake and eating it.

Abdulrahman
Abdulrahman
5 years ago
Reply to  MIMH

Money talks, and it talks loud!

MIMH
MIMH
5 years ago
Reply to  Abdulrahman

It does everyone, I guess the question is, “are all playing by the rules, or at least bending them”. Could lead to trade restrictions from both sides.

Lisa Clayton
Lisa Clayton
5 years ago
Reply to  Abdulrahman

lol PRACTICALLY SHOUTS!

But seriously, I would be happy for Qatar Air, Emirates or Etihad to take over any US-based airlines, pumping money into them, training employees & improving them. We deregulated airlines when I was young & it’s been going downhill here in the US since then.

ex_pat
ex_pat
5 years ago
Reply to  Lisa Clayton

US airlines are motivated by a PNL and responsibility to shareholders, hence perceived lack of investment in fleet, product and service. They’ve not always got this right as Chapter 11 experience and tranche of mergers attest. Ownership structures in the US would make it difficult for ME carriers to pump money into US carriers (unlike Europe) and I think they’d justifiably rail at the thought of the likes of Qatar Airways telling them how to run a profitable airline. Delta’s Q1 earnings didn’t look too shabby after all. Anyone know Qatar’s? Of course not…

Cerebus
Cerebus
5 years ago

No conflict of interest issues here….nope, move along folks. This is not taking sides – its taking bribes, err, I mean investment, and certainly not subsidies, no no no…..those are just tax free, interest free loans with no expectation of repayment. The sad truth is that no matter how much the ME3 bark about this, in the end the US/UK/Europe control what planes come in and what planes come out. So in the end it WILL result in less landing spots for these carriers in the destinations they need to be able to fill an A380. Might be better to just say, ok, we understand we took a bunch of state money and built and airline – and move on to running the companies in the open and clear. And stop talking about being 5 stars – the money on flights is made on the cheap seats and the cargo hold.

TruthHurts
TruthHurts
5 years ago
Reply to  Cerebus

and I bet you fly with a Middle Eastern airline back to your home over your crappy national airline.

Cerebus
Cerebus
5 years ago
Reply to  TruthHurts

If Qatar would let my preferred airline from home land here I would still fly with them. They are not crappy at all, have experienced flight crews, and run more planes and passengers in a week than Qatar doesn’t a year. Plus their rewards systems are better, the back end services work better, anywhere I am from if we spend $14.5 billion on an airport, you certainly wouldn’t still be carted off a plane on a bus to a terminal that only half works. If I could use my preferred airline you bet I would fly it. I mean the back end is so broken at Qatar Airways that they can’t figure out a 7 year old is going to want the child’s meal simply because the system has her listed as Ms. Instead of Miss, and that apparently is a non editable field in the database. I just was finally after a full year of tickets and calls able to get them to fix my name, and add more than 60,000 missing miles. Yes I travel quite a bit for work, and use many airlines. The service in the air – for business class – is great. But end to end service matters more to me, and when you fly as much as people do where I live, pricing and other factors are far more important than what the flatware looks like.

One day I will go home and will be thrilled to use an airline that understands the difference between customer service and catering to overpaid passengers. One day the oil money will dry up and this company with have to legitimately compete. Why do you think Emirates is not buying more A380 planes, they understand this and that efficiency does matter in the end.

ex_pat
ex_pat
5 years ago
Reply to  TruthHurts

The likes of Qatar Airways, with no financial obligations or worries can put in the best product, and distort the market with lowest fares in order to generate volume. Why wouldn’t you travel with them when they offer such a good product at a ridiculously low price?

Personally, whilst prices are low and the product is good (still inferior to Etihad / Emirates in my opinion), I find the in-flight service pales in comparison to what you get with ‘crappy’ national carriers. I fly a lot and personally, I don’t like being looked after by someone who is petrified of making a mistake in case I complain, something I feel when I fly Qatar Airways.

Ponnambath
Ponnambath
5 years ago

US and European acft manufacturing consortium should acknowledge that they are receiving massive orders for their aircraft from gulf countries which not boost business but create job opportunities. Allegations being raised by US and Europeasn airlines are baseless without studying the facts and figures of the issues.

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