Qatar Airways CEO threatens to leave oneworld alliance over subsidy row

Tensions between the outspoken CEO of Qatar Airways and his US counterparts escalated yesterday after Akbar Al Baker reportedly threatened to withdraw from a global airline alliance that the carrier joined less than two years ago.

In an interview with the Wall Street Journal, Al Baker accused one of his partners of actively blocking Qatar Airways’ expansion:

“There is no point in us being in oneworld if an airline that invited us, hosted us in America to sign the entry to oneworld, is today going against us,” he was quoted as saying.

Qatar Airways became the first Gulf carrier to enter an alliance when it joined oneworld in October 2013, which enables airlines to more closely coordinate their flights and easily transfer passengers.

Subsidy row

Al Baker’s remarks come amid a long-running dispute between the major Gulf airlines and their competitors in the US and western Europe and as the aviation industry convenes in Miami this week for its annual general meeting.

The hotly contested issue of subsidies and state support was not on the International Air Transport Association’s (IATA) official agenda.

However, Al Baker pushed the subject front and center as the meeting’s official program got underway by criticizing efforts aimed at limiting the expansion of the Gulf airlines.

According to the Financial Times, Al Baker said the IATA should express concern about the “calls for protectionism coming from certain circles in the US and Europe.”

“Those should be considered as part of the risks facing our industry and the liberal open market and open skies,” he said. “It’s important that IATA reiterates its support for freedom of the aviation industry.”

The meeting’s chairperson, American Airlines CEO Doug Parker – who is seeking to limit the ability of the Gulf carriers to expand in the US – took no action on Al Baker’s request, the Financial Times added.

Oneworld

So far, the dispute over alleged subsidies – which, in the case of Qatar Airways, is said to have amounted to more than US$16.5 billion since 2004 – has largely been a war of words.

The largest American carriers are lobbying US regulators to renegotiate the so-called Open Skies agreements that let airlines, not governments, determine the frequency and capacity of flights.

While US officials have said they’re looking into the request, no regulatory measures have been taken.

But in his Wall Street Journal interview, Al Baker accused one of his US competitors of taking action on its own.

He told the newspaper that American Airlines was withholding information on its bookings system that was hindering the proper transfer of passengers. He also accused the US carrier of blocking its new A350 from accessing the terminals at JFK airport in New York.

An American Airlines spokesperson told the WSJ that the constraints on allocating new gate space at JFK was unrelated to the trade dispute.

Al Baker was quoted as saying he would give oneworld time to address the issue.

The alliance enables passengers to book flights using multiple airlines on a single ticket, allows frequent flyers to use their points on partner airlines and extends lounge access for premium passengers.

However, it’s also been criticized for reducing competition by restricting capacity and driving up prices.

Meanwhile, Lufthansa’s chief executive said this week that the major Gulf carriers could face fresh restrictions on flying into Germany, making it the latest country to consider limiting access to Qatar Airways, Emirates and Etihad in response to allegations that the airlines receive unfair government subsidies.

Thoughts?