Reports: Qatar Airways to join oneworld alliance; tie-up may spark price hikes at home

UPDATE: Qatar Airways confirmed it was joining the oneworld alliance last night:

Its membership is expected to take effect at the end of 2014. 

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Qatar Airways is expected to announce that it is joining the oneworld alliance this evening, a move that may not be entirely good news for Qatar’s residents.

International news reports, including from Reuters, as well as our own sources say that the airline will announce the tie-up at a news conference in New York tonight. 

Currently, oneworld has 11 members, including industry heavyweights British Airways and American Airlines. Qatar would be the first major airline in the GCC to join the alliance.

Reuters says that QR will make its announcement alongside IAG chief executive Willie Walsh (IAG owns British Airways and Iberia), American Airlines CEO Tom Horton and oneworld CEO Bruce Ashby.

When asked about the tie-up by Doha News, a Qatar Airways spokesman refused to comment.

If the alliance is announced, it will directly contradict remarks Qatar Airways CEO Akbar Al Baker made over the weekend, in which he denied the tie-up would take place, saying “No, we will not. It is all rumours.”

Pitfalls

According to Australian travel journalist Clive Dorman, alliances actually restrict competition rather than improve the passenger experience.

He argues in a recent article:

“My theory of why Oneworld and Star Alliance, then Sky Team, were invented was more to do with inhibiting competition than increasing customer convenience” he says. “If an alliance could imprint every region of the earth with a brand, any new competitor was going to think twice about taking on a new patch of territory.”

Furthermore, a European Commission report published in 2007 about the impact of airline code-share agreements raised this issue:

“It is possible that part of the motivation of carriers in entering into code-share agreements is to allow them, jointly, to dominate a market, allowing capacity to be restricted or prices to be raised (or to remain high), resulting in disadvantages for purchasers and discrimination against other airlines.”

British Airways, for example, could stop flying to Doha from London if an alliance is in place, potentially restricting choice and leading to higher air fares for customers flying to the UK from Qatar. 

Oneworld’s website, however, lists multiple benefits for customers, including collaborative frequent flyer programs, access to shared premium lounges and smoother transfers at airline hubs. 

Meanwhile, Etihad has just announced a “strategic partnership” with Air France/KLM. 

Emirates has also shunned worldwide alliances in favour of a deal with Qantas. The deal ended the Australian airline’s previous relationship with British Airways and means that it will now use Emirates for all of its European connections.

Thoughts?

Credit: Photo by Qatar Airways

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