Qatar Airways Has The Resilient Strategy Emirates Needs For Covid-19

Qatar Airways might be grouped with Emirates Airline for connecting far-flung cities via a Middle East hub. But to achieve that goal they’ve taken different strategies now more apparent than ever.

Emirates built itself around large aircraft – not just the A380 but also 777s that will be difficult to fill in the sluggish years ahead. Qatar favored medium-size jets like the A350 and 787 that can be viable with fewer passengers. A mediocre Emirates loading would be solid on Qatar’s lighter fleet.

“Our rebound will be organized around the A350 and the 787,” said Qatar chief strategy and transformation officer Thierry Antinori. “They’re the ideal aircraft to start to develop a network in Europe and in Asia at a scale where you can generate cash.”

That’s better, he said, “than flying around the world with half-empty A380s.”

If Emirates defined last decade’s expansion, Qatar will lead the recovery out of coronavirus and back into growth. Emirates may have been first as a Middle East super connector, but it now urgently needs Qatar’s strategy.

For widebodies with under 350 seats, like A350s and 787s, Qatar has 111 aircraft. Emirates has only ten, its 777-200LRs.

Aircraft size at Qatar Airways and Emirates

“Qatar Airways will be ready before the others because we have a better fleet,” Antinori said. “We connect to 19 points in Europe, most of them with a 787 or A350. We couldn’t do that with bigger aircraft.”

Emirates belatedly realized it needs smaller widebodies. But its A350s and 787s won’t arrive until 2023, too late to help in this downturn.

Qatar’s combination of fleet, onboard product and modern hub airport makes it bullish on emerging from coronavirus ahead of peers.

“We see the opportunity at Qatar Airways to take a higher share of the corporate and business” markets, Antinori said. “If I was other airlines, I would be very, very concerned.”

Qatar is rolling out its QSuite that gives business class passengers a private enclosed seat with direct aisle access, far more premium than at Antinori’s previous airline – Emirates.

“The 777-300ERs of our competitor are flying in a 2-3-2 configuration,” he said. Before joining Qatar, Antinori spent over seven years at Emirates, mostly as CCO. Such a high-profile change is not the first for Antinori: he joined Emirates from the Lufthansa Group.

Eleven cities rejoined Qatar’s network on Wednesday, and it plans to serve 65 destinations in mid-July compared to around 160 pre-virus.

Qatar is returning to some destinations with narrowbody aircraft, which Emirates does not have at all.

Antinori recalled one recent relaunch. “We went there because we have the A320. We can operate without taking a big economic risk. If it’s working, we go to a 787,” he said. “It means a mix of up-gauging and down-gauging but we will be there.”

Qatar reckons its presence speaks enough. It wants to offer a reliable schedule without gimmicks or dishonesty.

“We are not like the airlines publishing all their flights to try to catch business and consolidate everything in the last minute,” Antinori said. United Airlines on Wednesday said it’s selling its full pre-virus September schedule and won’t make cuts until later.

Changes are frustrating to passengers and unfair to travel agencies that have to laboriously rebook tickets without further commission. Early in the virus outbreak Qatar won praise for its generous refund and rebooking conditions that other airlines have still yet to offer.

Hub airlines are intertwined with their hub airport. While Qatar is slowing aircraft intake, its home airport in Doha will continue a project to expand gates, terminal area and lounge space.

“To increase the gap between Hamad International Airport and the other hubs in the region, we are continuing that plan,” Antinori said. “There is no deceleration of this project. That is also a difference between Qatar and other countries.”

Doha offers a modern single-building terminal with fast connections. Dubai is an older facility spread across multiple terminals while Turkish Airlines’ new Istanbul hub is faulted for long taxi times and airside transfers. Abu Dhabi’s upcoming midfield terminal might be comparable, but home airline Etihad is shrinking.

Qatar may be able to restore passenger service faster since cargo demand can cover substantial costs of operating a flight. That was important even before the virus. A regional blockade against Qatar shut it off from nearby imports, increasing the need for the airline’s worldwide freight network.

Re-building from coronavirus mostly with the A350 and 787 gives large cargo compartments but moderate passenger cabins. That should hopefully insulate Qatar from any complaints it’s saturating markets or “dumping” capacity.

Even with the retirement of around 20 A330s, Qatar has ample medium-sized widebodies, and 787-9s that started arriving before the downturn.

Its 777 fleet won’t exit until 2024, so coming years can still avail of the type’s large belly for freight. “We still have the 777 that we use for cargo a lot today,” Antinori said.

Qatar’s strategy was showing advantages before the virus. Having narrowbodies and smaller widebodies enabled Qatar to fly to more cities than Emirates, which was limited to large destinations that could sustain its big 777s and A380s.

Offsetting gaps at Emirates are Dubai’s advantages: larger local business demand, regional hub status and more tourism.

On Emirates, 32% of passengers are local – the same as Lufthansa in Frankfurt – with the rest transiting through Dubai, Air France-KLM estimated last year. Emirates wants to increase local traffic, shifting from the more competitive transfer traffic that could comprise around 90% of Qatar’s passengers, according to industry estimates.

Emirates has a growing partnership with sister carrier flydubai, whose all-737 fleet helps Emirates access thinner markets as Qatar and Etihad do. But stronger Emirates-flydubai cooperation depends on foreign regulatory approval for codeshares or route integration. Qatar’s narrowbodies are already wholly integrated.

“We have different sizes of models from the A320 to the A380. That will be an asset in the future,” Antinori said, although he does not expect A380s to be flying again soon.

Qatar’s 10 A380s are its only aircraft bigger than its 412-seat 777s, themselves a sub-fleet. Most of Qatar’s fleet has under 360 seats.

In comparison, Emirates’ fleet effectively starts at 354 seats with its 134 777-300ERs, some of which go up to 442 seats. Its 115 A380s, as of March 30, seat 489 to 615. The smaller 266-seat 777-200LRs are few, numbering only 10.

Airlines last decade often boasted of a singular vision. Now for Antinori the strategy is about having options: “We cannot plan the future but we can plan out to be ahead, how to be more flexible and agile, and how to take a higher share of this pie.”