Qatar Airways GCEO on the carrier’s position as a global leader

Transcript

Peter:

Welcome. We were just talking about the link between Australia and Qatar. In a lot of ways, Qatar Airways has very much swum against the tide in the last 12 months. I mean, today, after a really tough year, you're the number one international cargo operator in the world. In fact, you've got about 10% of market share. You're the number three passenger airline in the world in terms of RPKs. That's a really substantial change in the status of Qatar Airways globally. Do you think you can maintain that as time passes? It's a great advantage to be there, to start with.

H.E. Akbar Al Baker:

You know better than me that after this pandemic over, there will be fewer airlines that will be operating. For certain, by the grace of God, we will be one of them because we have persevered, we have established ourself very strongly, we have made everybody aware of our brand, our product, and most importantly, carried the flag of Qatar internationally. I think though, by RPK we are one of the three, but when you look at the number of international destinations, we are the largest international operator connecting people and we will continue to do so. We have increased frequencies from 33 countries at the beginning of the pandemic, to 110 destinations today and we will end up 129 destinations by March. So you can see the commitment we have to our industry and to our passengers, like no other airline.

Peter:

Yeah. It's a remarkable achievement. Given that the great bulk is actually transfer traffic coming through. You obviously have had to work very closely with Hamad Airport in terms of testing, in terms of sanitary requirements. It's obviously been a very strong partnership there to make that work.

H.E. Akbar Al Baker:

Fortunately, we are in a very unique position, which no other airline in the world is, that we both operate the airport as an airline, so it gives us responsibility for total passenger experience. Once you check-in at Qatar Airways, until you board your airplane. So this is something that is helped us to provide to our people a very safe and sanitized way of traveling during this very serious situation the world is facing since nearly over a century ago.

Peter:

This issue of, of network carriers coming through the COVID crisis is quite a complex one, isn't it? Because I mean, the classic recovery that we're looking at is short haul LCCs who seem to be in a much better position, point to point. But at the same time, if you do have that safety factor at the airport, in the transfer process, you do seem to be in quite a strong position.

H.E. Akbar Al Baker:

Yes. If you notice what we did from the beginning of the pandemic, we invested a lot in technology that will make our airport and the airline safe. We were one of the first airports that used UV robots, contactless processes for the passengers, sanitization, and including using latest technology UV equipment to sanitize our aircraft. We were one of the only international carrier to provide mandatory face shield, mask, gloves, sanitizers to every single passenger, and made sure that they use it while they're onboard our airplane. So these are the things that we did to bring confidence of the people. And we have already received five-star rating by Skytrax for the COVID mitigating factors we have introduced in our airport. So we have met all the requirements of our ministry of public health, including international organizations.

Peter:

It's a really important aspect of going through to the future. Let's switch to your partnerships, and very interesting developments. I mean, generally, it's going to be necessary, as you say, with fewer airlines in the marketplace, it's going to be necessary to enhance the partnership status of many airlines, but you've had some fairly interesting I think, from looking at the last four or five years of history, new partnerships, particularly in North America with American and your now dear friends, Air Canada. These are big breakthroughs, aren't they?

H.E. Akbar Al Baker:

Yes, it is and we would continue to achieve this breakthroughs with our other friends. You know that we had huge disagreement with American. Today, we are very close to them and we are very close to JetBlue. We are now going to expand our partnerships with other carriers. Air Canada is an example where two CEOs that have same understanding about the industry, two CEOs that are very progressive, have come to an agreement whereby we contribute to each other traffic. And this is a very good example for everybody else, that in our industry, we are not adversaries, but we are part of a larger aviation family and we can contribute to each other's bottom line, to each other's progress, to each other's increase in traffic, and contributing to facilitations for their passengers and most importantly, to their frequent flyer members.

H.E. Akbar Al Baker:

I hope that this is a very good learning curve for all the other people in our industry that think that we should only keep the pie for ourselves and eat it alone. And now that the pie is very small after this pandemic is over, and it is for everybody else to make sure that they can learn from us of how to generate partnerships and meet the demand that will be very much reduced over the next three to four years.

Peter:

That's a very interesting point and...

PART 1 OF 4 ENDS [00:08:04]

Peter:

That's a very interesting point, and so in a lot of ways there's been a substantial strategic shift just recognizing the fact that we do need to be looking for win-wins despite the previously categorical and somewhat unhelpful differences, I guess. But with Canada, particularly, of course, that's one of your first large agreements with a non-oneworld carrier. Obviously, they're in Star and a senior member of Star.

H.E. Akbar Al Baker:

Yes, it also gives a very good example to other oneworld members who are not openly working with us or working with us to the level that the alliance should work with each other. I'm a businessman, and I look at win-win for two sides. You can never have a relationship with somebody where it is a one-way street. And both American Jet Blue and Canada start to realize that with Qatar Airways, there is a mutual benefit partnership, not like some other airlines that they are only looking to their benefit and using other people in order for them to get and eat the cake for themself.

Peter:

And extrapolating on that, you've been a fairly aggressive investor internationally in airlines, LATAM, Cathay, attempt at American, obviously IAG. Now that the things have changed with the other Arab States in the Gulf anyway, will your investment strategy continue? Will you continue, for example, Rwanda. Are you still interested in expanding into those markets through acquisition?

H.E. Akbar Al Baker:

Yes, we have already done what we needed to do. If you really look at the way we have invested, we have invested right across the globe from South America, with LATAM to North America, our relationship with American Airlines, Jet Blue, and now with building relationship with Alaskan, then going back to the Far East, doing it with China [inaudible 00:10:30] and Cathay, and now investing in Africa. So we are really covering nearly the entire globe, and with our developing strong relationship and the shareholding with IAG. So we ought to be satisfied that we have enough exposure to our business growth over the entire globe.

Peter:

You're a relatively low cost carrier in terms of unit costs per kilometer, per route mile. The absence, and I think it's indisputable, the absence of a large part of the corporate or the business travel market for the next year or two is going to make a major difference to the full service carriers, particularly in Europe, I would think who've relied on it so much. How do you see that shaping your relationships with them? Will you be effectively operating a lot more in those partnerships pro rata?

H.E. Akbar Al Baker:

My dear Peter, I want to stress that we are not a low cost airline in the sense our costs are not that low as a lot of people think, because we have to provide for facilities and amenities to our employees because they are all from foreign countries working in my country. So we are not that low cost as people think. However, what gives us the opportunity to do what we do is because the way we are structured and the dedication and commitment from our employees and the strong team that we have put together over the years at Qatar Airways.

H.E. Akbar Al Baker:

Yes, you are correct that there will not be too much business traffic, but this is only for the time being. I am certain that the business traffic will start growing once the pandemic is brought under control. To a lot of people that I spoke to always feel that they can do and conduct their business better when it is a face to face meeting than doing it over a TV screen or on a laptop. What is very important for people to know that we have passed through epidemics, not a pandemic, but we have passed through pandemics which also indicated that business travel will be affected, it didn't happen. And I think the same will happen keeping in mind that there will be so much reduced capacity of premium carriers that we think people will still fill our premium seats in not too distant future.

Peter:

Yeah, that's an important point. It doesn't help them very much of course that they're not going to be able to fill their seats because they don't have the same superior product that you have. Which of the business routes do you think will come back first in the Gulf long haul?

H.E. Akbar Al Baker:

I think mostly the traffic in the premium will come from the high-net-worth people who are now fed up by being locked in their countries, and would suddenly want to go and start traveling. I'll give you an example. Even at the peak of the pandemic, people are still traveling to the Maldives, Seychelles, Zanzibar on Qatar Airways. So our premium seats in these routes are full. We operate, we started with one flight a day to Maldive, and now we are operating three flights a day to Maldive, and they are wide body. Two of them is wide body, and one is a narrow body, and the narrow body is because that aircraft is operating between two bubbles carrying point to point traffic between my country and the Maldive.

H.E. Akbar Al Baker:

We came up with a very clever system where people can go, being tested and then go to dedicated islands that has been requisitioned. When I say requisitioned space, we have taken the entire capacity of those three islands. People go to those islands and then come back straight without going to quarantine because they are on the return again, tested. So by this way, we have generated a model that is giving a very good high value traffic between these two destinations. So we always come up with new types of inventions to keep our airline continuing to fly.

Peter:

That's good, but the business markets themselves, do you see Europe coming back? Do you see the Americas coming back earlier?

H.E. Akbar Al Baker:

I think that the entire network, business traffic will start growing once the pandemic is brought under control, and I hope that it will happen sooner than later, even though there's no 100% guarantee that the vaccine is going to work.

PART 2 OF 4 ENDS [00:16:04]

H.E. Akbar Al Baker:

That the vaccine is going to work. You don't know how long will be the effect of the vaccine. Will it be six months, nine months, one year? Will it be permanent or will you have to get vaccinated every year? Will the vaccine producers will have the capacity to cater for the world's population if it is to be taken year-round?

Peter:

Mm-hmm (affirmative).

H.E. Akbar Al Baker:

Every year? And even if you get vaccinated, still science cannot prove that you will not be infectious to other people. Especially when not everybody will get vaccine.

Peter:

Yes.

H.E. Akbar Al Baker:

So you could still be a carrier, though you are not getting effected because you have been vaccinated. So all these things need to be clarified. And I don't think it will happen in a day or two.

Peter:

Mm-hmm (affirmative). No, I totally share that view [Akbar 00:00:54]. We're talking passengers. Of course, you're now a major, as we're talking about the beginning, a major cargo operator. Do you see that really shifting the balance of your operation in the medium to long-term? That you can become an even bigger cargo operator?

H.E. Akbar Al Baker:

Temporarily, yes. On the long run, we will still be one of the largest cargo operators. But I don't think that once passenger numbers started ramping, that we will still have the same capacity in the belly that we have today.

Peter:

Right.

H.E. Akbar Al Baker:

However, we already have nearly 30 freighters and those numbers are going to increase. We want to be a dominant player in the cargo business.

Peter:

And that has been recently quite an attractive market from a yield point of view. Hasn't it?

H.E. Akbar Al Baker:

Yes. People learnt it from us, of how to convert passenger aircraft into freighters.

Peter:

Right.

H.E. Akbar Al Baker:

We are always leaders in these new innovations.

Peter:

I was particularly struck by some comments you were making about the contrast between the 358, 350 and the A380 in terms of its environmental sustainability. And numbers like almost twice the emissions on a route, say to Melbourne from Doha. These are quite remarkable numbers. Where does this come from? How can they be so much more efficient, the 350?

H.E. Akbar Al Baker:

The 350s and the 78s are very efficient airplane when it comes to emissions. Especially with the 350-1000. We never expected that aircraft to be the efficiency that it is producing today. The 380, I think, is one of the worst aircraft when it comes to emission that is flying around today. This is why we have decided that we will not operate them for the foreseeable future. And even when we operate them, we will only operate half of the numbers we have. So if you are very interested to purchase some for yourself, I will sell it to you.

Peter:

Okay. I'll bear that in mind. Yeah. I'll talk to my wife about it. We've had a few questions about responding to the OEMs in terms of sharing data with them, operational maintenance data. Is that an issue for you?

H.E. Akbar Al Baker:

No, it is not an issue provided we do not get into any data protection violations. We have no problem to share it with... Look like I mentioned, aviation is a large family business, and we need to exchange ideas and information with each other, as long as we are not violating any data protection requirements that is now coming to place.

Peter:

Mm-hmm (affirmative). So is there an issue there though? Is there some confrontation about, or dispute about how much should be shared or shouldn't be?

H.E. Akbar Al Baker:

No, nobody has approached us as yet. And once they do, we will [inaudible 00:20:14] case by case basis.

Peter:

Mm-hmm (affirmative).

H.E. Akbar Al Baker:

And find a way to exchange data that would not be damaging to any of the competitors.

Peter:

Right. So just going back to that sustainability issue. I mean, obviously at the moment, there are other much larger priorities. But it does seem that sustainability will be a key issue even in the next six to nine months as airlines start flying again. Do you continue to see yourself as leaders in that respect? You've got a very new fleet. How do you position?

H.E. Akbar Al Baker:

Yes, we do. At QR, we always like to be leaders. And actually, Peter, you have been in this industry for a very, very long time.

Peter:

Indeed.

H.E. Akbar Al Baker:

You know that every product, every idea, every innovation has always started at QR, which others then copied.

Peter:

Mm-hmm (affirmative).

H.E. Akbar Al Baker:

So I'm very proud to say that, yes, we will always be in the forefront in this race.

Peter:

Right. No, that's good to hear. Just talking in terms of recovery. I mean, that's obviously the thing that everybody wants to know, and nobody knows the answer to. And you were talking about even with the vaccine, that there's a lot of uncertainty about just what impact that will have. You've talked before about not seeing a "full recovery" in quotes to 2019 levels by 2024. Do you still see that as realistic? Do you still see that as likely, or is the time being pushed out a bit more now?

H.E. Akbar Al Baker:

I only see it realistic looking at the current circumstances. If a new variant of COVID comes out, which is then difficult to treat, or the spread is more aggressive than what it was, then yes, we would be in trouble.

Peter:

Yeah.

H.E. Akbar Al Baker:

And this may extend beyond 2024.

Peter:

Yeah. I mean, taking your Maldives example, there is obviously still both the will and the ability to travel for the high end travelers who are discretionary travelers of course. Do you think, given the uncertainty and the likelihood that we're talking probably even optimistically two or three more years before we get back to 2019 levels. Are we looking at effectively at a permanent change in the demographics of the QR traveler?

H.E. Akbar Al Baker:

No. I think this is only temporary.

Peter:

Yeah.

H.E. Akbar Al Baker:

People will eventually forget about this pandemic. Or if it gets extended, I'm sure humans will always find a way around of how to get along and live with whatever is at hand.

Peter:

Mm-hmm (affirmative). Yeah. As we stand obviously, it's very uncertain with both Europe and the US very much looking on a downward track at the moment. And talking of Europe. I mean, Brexit has apparently just gone fairly smoothly and IAG seems to have navigated the ownership changes as a result of splitting the UK up from-

PART 3 OF 4 ENDS [00:24:04]

Peter:

... the ship changes as a result of splitting the UK out from Europe. Does that have any impact on your investment in IAG and do you have to make any changes say with Ireland or Spain, or is it still just a fairly static relationship?

H.E. Akbar Al Baker:

No, I think this has not affected our ownership of IAG at all. We still hold 25.1% stake in the organization and this will continue.

Peter:

Yeah. Yeah. It's quite a complex technical issue, isn't it? But I guess as things stand, they seem to have navigated it. Therefore, presumably your investment in it should work.

H.E. Akbar Al Baker:

Yes.

Peter:

You did pick up ... Just jumping around some of the different topics, because there's so many I'd love to talk about you. You did start up some routes effectively because of the impact of the blockade with Saudi Arabia and the other Gulf states. Will you continue to serve those now there's been a relaxation in traffic rights?

H.E. Akbar Al Baker:

Yes, we will. We will continue because that is our growth strategy. So we are not going to walk away from routes that we were already operating. Yes, post-COVID, we will look at which routes we will reintroduce earlier than the other. But we are not going to withdraw from routes permanently. We will only put it in sequence of which route is more important than the other.

Peter:

Right.

H.E. Akbar Al Baker:

But Qatar Airways will serve all the routes that we had launched before the ... Sorry, I meant to say after the blockade, and what we had launched before the COVID restrictions happened.

Peter:

Right. Right. And going back to the traveler profile, you've been on the record of saying some fairly forthright things, as is your want, about premium economy. Do you ... Okay, I probably don't need to ask the question, do I? You don't see a need for or a use for that in Qatar Airways?

H.E. Akbar Al Baker:

No. Peter, next time, when you travel on QR, you should just go for 10 minute at the back and sample the product. You will see that we have one of the most comfortable economy class seats that are today flying in the air because even our economy class seats are designed with feedback from the airline. So we look at all the requirements that you have. We give you the same product that other airlines will give you in premium economy, we give it to you in the economy. So why should we reinvent the wheel?

H.E. Akbar Al Baker:

Frankly speaking, I rather rest my feet on the floor of the aeroplanes stretched under the seat in front of me than have this funny leg rest that comes out from underneath the premium economy seat that is so uncomfortable to your calf that after sometime it starts hurting you. So you need to look at all the comforts, pros and cons of the both product, and you will eventually come to the conclusion that a normal economy seat with proper amenities and ergonomics of the seat, that it is a more comfortable proposition than a premium economy.

Peter:

Point taken. On the issue of the near term, and I'm conscious you have another important appointment so we won't prolong it too far, Akbar. But it does seem the things we're talking about, this broader picture, just focusing in on the impact of all of this over the next two, three, four years, it does seem that travel, long haul travel particularly is going to become considerably more expensive for not just for your high-end travelers who can afford it, but also for everybody else given that it's going to be a smaller industry, that people are still going to want to travel. That's not such a bad thing, I guess, for the airlines who do survive.

H.E. Akbar Al Baker:

I don't think so. I disagree that airlines will start charging people an arm and a leg just because there is reduced capacity or the airline industry has shrunk. I don't think that will be the case. Eventually the airlines really start growing again, but in the short and medium term, yes, there will be a reduction in the number of airplanes and the network. But also keep in mind that less people will want to travel in that period of time. So I don't think that there will be lower capacity or people or airlines will start taking advantage of what is happening to start charging people higher fares. I don't think that is going to happen.

H.E. Akbar Al Baker:

We have introduced in Qatar Airways different fare levels in different classes to encourage people to travel, and this is what we will continue to do. So you'll have different fare classes, which you could choose depending on when you are booking and how close to the date of departure you're booking. So we are not going to change that. We will not take advantage because there is a less airlines flying or there is less capacity available.

Peter:

But that said, you still have to make money, and if you're not getting the cross subsidy from the business traveler, something has to give.

H.E. Akbar Al Baker:

We will always find ways to make money, but it doesn't mean that you have to overcharge passengers.

Peter:

No, no. I'm sure, be overcharging is a consequence.

H.E. Akbar Al Baker:

You have lots of ancillary revenues that you can tap.

Peter:

Yeah. Yeah. Yeah. Interesting part of it. Listen, Akbar, that's a nice positive spot to end. I hope that you will continue to go to greater and greater heights. Congratulations on the reopening of the other Gulf markets, and that must make sleeping a lot easier these days. Thank you for being with us and come back soon.

H.E. Akbar Al Baker:

Thank you, Peter. And I look forward to seeing you in person soon.

Peter:

Likewise, I'd love to get back on a Qatar Airways flight.

H.E. Akbar Al Baker:

Thank you.

Peter:

Thanks very much.

H.E. Akbar Al Baker:

Thank you. Bye-bye.

Peter:

Bye-bye

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