Qatar Courts U.S. Corps., Ramps Up Service

Qatar Airways this month is transitioning its New York-area services from Newark Liberty International Airport to JFK International Airport as it plans to launch daily non-stop flights between New York and Qatari capital Doha. The airline, which also flies from Washington Dulles International Airport to Doha, is in the midst of carrying out an aggressive growth strategy with a keen focus on the corporate market. Next year, Qatar plans to launch Los Angeles-Doha service as well as routes from several international cities.

As the company increases its presence in the U.S. business travel market, it is expanding its sales force, aggressively acquiring corporate contracts and eliminating first class on its U.S.-originating Boeing 777 flights to increase business seat capacity, according to senior vice president of the Americas Tony Hughes. "It's where corporate is going to go and that's really where we aim to be as a corporate airline," he said in reference to the seat configuration plan.

Although the airline "has a goal and strategy to become one of the major network carriers in the world" and has interline arrangements with several major U.S. carriers and codeshare agreements with Star Alliance members British Midland Airways, Lufthansa and United Airlines, Hughes said, "There are absolutely no plans for this airline to be part of an alliance."

The United codeshare agreement is an important lever for U.S. corporate growth, as it gives Qatar access to U.S. military and government contractor traffic that dominates the Dulles -Doha route and would not be permitted otherwise, due to the Fly America Act, which prohibits government employees from flying on non-U.S. flag carriers when U.S. airline alternatives exist.

Qatar Airways has experienced an average revenue growth rate in the past several years of more than 30 percent and this year load factors are up 4 percent on flights originating from the Unites States and Western Europe, according to Hughes.

Overall, the company plans to expand its fleet from its current 63 planes to more than 200. It has more than 150 aircraft on order, including five Airbus A380s scheduled for delivery in 2010, in time for the opening of the Doha International Airport in 2011, which is specially outfitted to handle the massive aircraft.

Meanwhile, some of its growth plans have been delayed by delivery postponements of new aircraft due to building delays, including the Boeing union strikes. Qatar planned to launch Houston-Doha service on Dec. 8, but has postponed it until March 2009.

While Middle Eastern airlines, such as Qatar, are buoyed by the region's increasing passenger traffic and a thus far solid economic growth, the airline is not immune to high oil prices, noted Hughes. In turn, neither are Qatar's corporate customers, who are subject to fuel surcharges.

"As a business, we don't get as good a deal on petrol in Doha as we do in some other parts because there is only one supplier in Doha," Hughes said. "We are not getting a free ride, unfortunately. We did not hedge before, but obviously now we look to hedging as a business in general."