Qatar’s state airline is set to become the biggest loser from the
diplomatic breakdown in the Persian Gulf — with competitors in Dubai and
Abu Dhabi also set to suffer.
Some 76 daily flights are likely to be grounded, of which 52 are
operated by Qatar Airways, after Saudi Arabia, Bahrain, Egypt and the
United Arab Emirates suspended ties with Qatar, according to data from
scheduling firm OAG.
Some 30 per cent of the carrier’s revenue could be affected, aviation analysts at Frost & Sullivan estimate.
Among Qatar Airways operations set to be shut is a shuttle to Dubai that operates 14 times a day.
Plans to bar Qatari jets from entering airspace over the countries
that could be even more problematic, inflating expenses by forcing
significant diversions and putting the viability of some routes in
jeopardy.
“Diverting around closed airspace means higher fuel costs and longer
flight times,” said Mark Martin, head of Dubai-based Martin Consulting.
“Destinations in Africa and across the Indian Ocean may no longer be
sustainable as part of the Qatar Airways network.”
Earnings at Qatar Air, like other Gulf carriers, are already being
squeezed as the low price of crude weighs on economic growth in the
region and hurts demand for travel among oil-industry executives.
An American ban on people using laptops aboard US-bound flights amid
concern about potential terrorist attacks is also taking a toll on
business-class demand.
The Saudi bar on flights was introduced immediately Monday, with the airspace ban taking effect on Tuesday.
Egypt and Bahrain have also stated that overflying their territory
will be denied to Qatari carriers, though the UAE has indicated that its
airspace will remain open. Qatar Air declined to comment, beyond saying
that it has suspended Saudi services.
Emirates and fellow long-haul specialist Etihad Airways PJSC of Abu
Dhabi are set to cease operations to Doha on June 6, along with
discounters FlyDubai and Air Arabia of Sharjah.
South China Morning Post says, Saudi Arabian Airlines, Egyptair and Bahrain-based Gulf Air will also halt services.
Foreign airlines may also have to seek permission for overflights to
Qatar, according to a statement from the state-run Saudi Press Agency.
More than 10 per cent of all airline seats in and out of Qatar are
assigned to flights involving the four nations imposing the travel ban,
said Diogenis Papiomytis, director of aerospace at Frost & Sullivan,
with most passengers who use those links transferring on or off the
long-haul services from which Qatar Air derives the bulk of its
earnings.
On routes between Qatar and the UAE eight out of every 10 passengers
have an origin or final destination beyond the two countries, according
to the analyst, who said the measures represent a “major headache” for
route planners at all carriers concerned.
His estimate that Qatar Air could see a 30 per cent revenue hit
includes the loss of direct traffic, the operational cost of diverting
flights, the idling of planes, a disproportionate decline in premium
bookings given the relative wealth of the countries imposing the ban,
and a possible slump in leisure demand.
Even at Etihad and Emirates—which last year began deploying an Airbus
SE A380 superjumbo for some Doha services—as much as 15 per cent of
sales could be impacted by the measures, Papiomytis said.
Qatar Air code-share partners including IAG SA’s British Airways and
American Airlines could also see an impact from the measures, Papiomytis
said.
“The network impact is huge; the financial impact depends on the length of closures,” he said.
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