Consolidation ahead, predicts Qatar Airways CEO

Akbar Al Baker presents vision of airline industry at Mumbai forum

BY A CORRESPONDENT
February 15, 2006

Qatar Airways Chief Executive Officer Akbar Al Baker has spoken of his vision of global aviation describing consolidation as the key issue that will drive the industry over the next few years.

Delivering the keynote address at ‘The Future of the Airline Industry In An Extremely Competitive Environment’, Al Baker reflected on the dynamic growth of the Indian aviation industry citing a plethora of domestic airlines entering the sector.

“What we have seen happening in India is a radical transformation of the skies from a monopolistic environment into a competitive market with a flurry of activity,” he said, speaking to aviation professionals in Mumbai.

Qatar Airways CEO Akbar Al Baker

“The aviation industry in India is seen as one of the main catalysts of the country’s economic growth, making a significant contribution to India’s economic development.”

Al Baker explained that while the Indian aviation scene was experiencing significant growth, it was beginning to mirror developments in North America and Europe where consolidation has been prevalent.

“Mergers, acquisitions, takeovers – you name it, this has been happening in North America and Europe, and now beginning to take place in India.

“I believe consolidation is inevitably an issue that will dominate the global aviation industry over the next few years,” he said.

“This is an industry saturated with players – some of whom jump onto the airline industry bandwagon or are real stalwarts keen to build a realistic business.”

Added Al Baker: “Airlines with clever marketing tactics, powerful passenger loyalty schemes and a strong sales network will be the ones who survive in the competitive battlefield.”

He stressed that established airlines – national flag carriers and private operators – will be forced to change their business models to compete more effectively with new entrants such as low-cost airlines.

“Government-owned airlines have started to restructure through privatisation or change their business practices 180 degrees to remain competitive. I believe that in many parts of the world, airlines will have tailor-made services on specific routes. Full-service on some routes and low-cost on others, such as what has happened already in selected markets. In my region of the Gulf, we have not really seen consolidation because the market is not saturated with airlines. Yet we are in a market where demand for air travel far outstrips supply.”

Al Baker pointed out that the industry will continue to see an influx of ultra long-haul aircraft that will further open up a new era in air travel.

Non-stop flights between Asia and the US are already possible. And additional non-stop capacity was being introduced between India and Europe which, he said, would not have a deterrent effect on the business of Gulf airlines such as Qatar Airways.

“We at Qatar Airways find these changes very encouraging. They make us feel comfortable because in a new world, we have borders for air travel being relaxed and opening up to more competition which has to be good for the travelling public,” said Al Baker.

He explained that Qatar Airways’ rate of growth will be determined by more open skies or more liberal air service arrangements between Qatar and other countries.

“Countries around the world are adopting such trade agreements to facilitate ease of travel and provide passengers with greater choice,” he said, adding, “the future of the aviation industry looks rosy – very rosy indeed.”

Qatar Airways is one of the world’s fastest growing airlines which has developed a global network of 69 routes operated by a modern fleet of 43 all-Airbus aircraft. The airline, ranked as one of a select-few Five Star carriers for service and excellence, has matured into a leading force in global aviation under the leadership of Chief Executive Officer Akbar Al Baker.