A Gulf mega-carrier would be “formidable” but would face European opposition.
A potential merger between Emirates Airline and Qatar Airways would have made for a “formidable” force in the global aviation market but regulatory opposition from European authorities mean it “will never happen”, the Dubai-based carrier’s president Tim Clark was quoted as saying.
Speaking to the Arab Air Carrier Association’s AGM in Algeria earlier this month, Qatar Airways CEO Akbar Al Baker revealed that prior to joining the oneworld aviation alliance it had been his ambition to create a “mega-carrier” by merging the Doha-based carrier with Dubai’s Emirates Airline, the largest carrier in the world in terms of international passenger traffic.
“Unfortunately, that dream of mine did not come true, but we then got invited to join oneworld,” Al Baker said.
Tim Clark, president of the Dubai-based carrier, said no formal talks had taken place with his Doha counterpart but said while the idea would work economically it would face strong political opposition from Europe.
“You put the two together and you would face the most formidable international airline group that has ever been formed,” Clark told UK-based Aviation Week. “That’s why it will never happen.”
“Can you imagine the Europeans allowing two or three of the Gulf carriers coming together and then moving into Europe,” he said, adding such a merger would have had “seismic repercussions in the aeropolitical framework”.
The prospect of a Gulf “mega-carrier” seems even more remote following recent reports that the region’s three biggest carriers have aligned with large global carriers and alliances.
Qatar Airways in October became the first major Gulf airline to announce plans to join oneworld alliance. Members of the alliance, which includes American Airlines, British Airways and Cathay Pacific, cooperate in areas such as route networks, frequent flyer schemes and parts procurement.
That deal was announced shortly after Abu Dhabi rival Etihad Airways signed a codeshare deal with Air France-KLM, under which they will share flights.
At the same time, Emirates entered into a ten-year alliance with Australia’s Qantas earlier this year, the first for the Dubai-based giant, which had previously steered clear of tie-ups and relied on organic growth by expanding its fleet.
“This is great news for the consumers,” Tony Tyler, CEO of the International Air Transport Association (IATA), said at an industry conference in Abu Dhabi last month.
“Alliances help airlines offer very competitive fares on other airline networks. So consumers can go around world at competitive prices.”
Airline alliances were set up in the 1990s to help carriers benefit from each other’s marketing efforts and route networks in the face of national regulators’ tight control over traffic rights. In addition to oneworld, the big alliances are Star, which includes Lufthansa, and SkyTeam, which includes Air France-KLM and US carrier Delta.
The current strength of the Gulf airlines, compared to other carriers, puts them in a good position to negotiate the terms of their entry into the alliances.
“I guess necessity is the mother of invention here…The advantage the three Gulf carriers have is they have network, a quality product and funding. They make attractive dance partners,” said Peter Morris, chief economist at aviation consultancy Ascend.