EU-Qatar agreement: unclear benefits for some, a lifeline for others

The day before yesterday was announced an open sky agreement between Qatar and the European Union, signed after long negotiations. This agreement, which took 8 years to complete, will allow the 27 members of the European Union and Qatar to have unlimited and unrestricted access to the territories of the other signatories.

The agreement deals with fair competition, respect for the consumer and the environmentand should therefore ultimately promote competition by removing certain current protectionist barriers. We should also expect to see Doha serving from more destinations in Europe.

What benefits for European airlines?

According to Qatar Airways CEO Akbar Al Baker, “The agreement will provide a common platform for European and Qatari airlines to better understand each other and create new opportunities for collaboration and cooperation. The principle of fair competition is in our view very simple: fair access to markets, competition for market share based on products and services, on what the customer wants and is willing to buy”.

It is clear where this will lead: more flights between Europe and Qatar and, in theory, at lower fares. But I especially notice the term “platform”: the agreement sets a framework in which the airlines will be able to do “things”. Which ones and to what extent? Time will tell.

On the other hand, if Doha is a popular destination, I don’t think that the market is infinitely expandable either. Despite some efforts, Doha remains a less attractive destination than, for example, its neighbor Dubai, and the size of the country’s population means that we should not expect to see hordes of Qatari tourists flooding into Europe.

So a limited interest on the point-to-point but….there is not only the point-to-point in the life.

An asset for Qatar and OneWorld

One can of course go through Doha to take a connection and it is the feeding of the airport of Doha which will be thus largely favoured. The main beneficiaries are Qatar and its partners OneWorld.

Because, apart from the self-connect enthusiasts, who would go to Doha on a flight of another alliance than OneWorld to leave on Qatar (I don’t really see the point) it is Qatar that will of course benefit from this by being able to increase its own flights to and from Europe to fill its hub or through code-share flights operated by its partners.

A rather attractive approach for the passenger given the quality of the Qatari product, even if one should not lose sight of the fact that the airspace of neighboring countries is forbidden to the Qatari airline, leaving Doha with a connection often involves detours and longer flights. Without adding that, in particular, Dubai and Abu Dhabi are inaccessible from Doha.

Un pied de nez à Emirates

A nice nod to the neighboring Emirates and to Emirates, which took advantage of the isolation of its bulky neighbor. Qatar’s problem has not been solved, but this boost to the Doha hub should logically come partly at the expense of Dubai (Emirates) and Abu Dhabi (Etihad).

Anti-Brexit insurance?

One can also see the maneuver in the perspective of a no-deal Brexit. In permanent disagreement with OneWorld and in particular American, Qatar has the idea to leave the alliance or to stay in it, but within the framework of a reinforced collaboration with IAG, owner of British Airways, Iberia and Vueling. And the 21% of IAG held by Qatar Airways is not neutral in the constitution of a privileged alliance.

But while IAG can be the arm of a strategy in the European market, the usefulness of this partner would suddenly drop in the event of a hard Brexit. We will talk about it again soon on TravelGuys but in this case, if the consequences for passengers will be minimal, they could be dramatic for British, Iberia and Vueling which could be grounded even temporarily, or in any case banned from European skies.

The open skies agreement would therefore allow Qatar to develop in Europe without having to rely on codeshares of IAG airlines, which must reassure people in Doha.

But this is an argument I only moderately believe in. Assuming that Iberia, British and Vueling are grounded (which is possible but far from being done and certainly not desirable….at least it depends for whom) this cannot go on indefinitely and the agreement will not come into force before the end of 2019. And even in the craziest disaster scenarios, we cannot imagine IAG being unable to serve Europe for so long.

But in the long term this agreement makes Qatar less dependent on its British partner (and to date even gives it a more favorable position in the absence of an agreement on the Brexit).

In short, if we wait to see what the Europeans do with the open skies agreement, it is clear that it is a real breath of fresh air for Qatar Airways. Is it enough? Time will tell.

Counterparts?

One may well wonder if, given the beauty of the deal for Qatar,there is not a little political and economic game behind it. While the first Rafales were delivered to the Emirate yesterday, and Emirates is gradually giving up on the A380, followed by Qantas, we can also say that if this helping hand to the airline Qatar was in exchange for a few orders it would not be totally illogical.

Photo : Qatar Airways by Fasttailwind via Shutterstock