The GCC Crisis and Qatar Airways

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The ongoing Qatar crisis has posed a series of dilemmas for the tiny Arabian emirate. With three fellow Gulf Cooperation Council (GCC) states – Bahrain, Saudi Arabia, the United Arab Emirates (UAE) – and Egypt, collectively known as the quartet, having imposed land, air, and sea blockades on Qatar, officials in Doha had to make major adjustments to keep their country solvent, sovereign, and open for business with the outside world. It is worth asking, what this row in the GCC means for one of Qatar’s largest economic players, Qatar Airways.

In reaction to the crisis, Qatar Airways added new flights to the Czech Republic, France, Macedonia, Oman, which will be implemented by the end of 2017. They also announced new services to Australia, Brazil, Chile, and the US for 2018. Qatar seems to be doubling down on new destinations to counteract the effects of losing a large portion of their Gulf flights.

Qatar Airways seeks to purchase 10 percent stock, worth over $81 million, in American Airlines. The diplomatic shake up reminded Qatar that it needs a diversified portfolio and cannot rely on its GCC partners. US air travel accounts for 8 percent of Qatar Airways flights and with plans to expand over 20 percent by next year, Qatar Airways do not seem to be fazed by the Saudi backlash. Dublin Reuters reported that American’s CEO Doug Parker recently told Qatar Airways CEO, Akbar al-Baker that he would not recommend the purchase of the board which must give approval for purchases over 4.75 percent. Al-Baker vowed that he would buy 4.75 percent with hopes the smaller purchase will prove Qatar Airways value, despite American Airlines’ decision to halt marketing agreements with them and Etihad on the 24th of March this year. When asked about further investments, possibly in Europe, Bloomberg reported that al-Baker said that “a general never lays down his battle plans in advance.” The rhetoric suggests that Qatar views diversification as a defensive move against the quartet.

Source Credit: International Policy Digest
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