Airlines in trouble as Gulf rift widens

Saudi Arabia, Bahrain revoke operating licence of Qatar Airways, order closing of offices within 48 hours

>

Saudi Arabia and Bahrain on Tuesday revoked the operating licence of Qatar Airways and ordered the airline's offices to close within 48 hours, state media reported, as a regional diplomatic crisis escalated.

"The General Authority of Civil Aviation has decided to cancel all licenses granted to Qatar Airways and to close all of its offices in the kingdom within 48 hours," read a statement carried by the official SPA news agency.

Over the past two decades, Qatar Airways has grown from a regional player into a world-straddling colossus, with flights to more than 150 destinations, some of the industry’s newest planes, and ambitious plans for overseas alliances. The diplomatic spat between Qatar and its Middle East neighbours threatens to scuttle those ambitions.

Hours later, Qatar Airways, which flies to nine cities in Saudi Arabia alone, announced it had suspended all flights to Saudi, the UAE, Bahrain and Egypt.Qatari share prices closed down 7.58 per cent on Tuesday.

According to scheduling firm OAG, other regional airlines will also take a hit, though not as dramatically as Qatar. Etihad and Emirates — which last year began deploying an Airbus SE A380 superjumbo for some Doha services—could see their revenue fall by as much as 15 per cent if the ban continues, according to Frost & Sullivan. Qatar Air code-share partners such as British Airways and American Airlines could also be hurt by the measures, the consultancy says.

Earnings at Qatar Air, like other The windfall from being the world’s largest exporter of liquefied natural gas has allowed Qatar to amass about $335 billion of investments around the world through its sovereign wealth fund. Now, a diplomatic spat with neighboring countries threatens to hamper the Qatar Investment Authority’s ability to continue making headlinegrabbing global deals. Gulf carriers, are already being squeezed as the low price of crude weighs on economic growth in the region and hurts demand for travel among oil-industry executives. And an aboard US-bound flights amid concern about potential terrorist attacks is also taking a toll on business-class demand.

On Monday, Saudi Arabia, Bahrain, Egypt, and the United Arab Emirates suspended ties with Qatar, shutting down flights and maritime Volkswagen Rosneft Oil Glencore Barclays Deutsche Bank Royal Dutch Shell Sainbury Credit Suisse links to the country. That will force state-owned Qatar Air to ground more than 50 daily departures — or about 10 per cent of its total — according to scheduling firm OAG.

The carrier operates a shuttle to Dubai 14 times daily, as well as frequent flights to Riyadh, Cairo, and more than a dozen other destinations in the countries imposing the blockade. If the ban continues, Qatar Air’s revenue could fall by 30 perc ent due to lost traffic and idled planes, the cost of diverting

17 9.75 8.49 5.97 6.1** 2.13

22 5.01 flights, a decline in premium bookings, and a possible slump in leisure demand, consultancy Frost & Sullivan estimates. Saudi Arabian Airlines, Egyptair, and Bahrain-based Gulf Air will also halt services; all told, those carriers will cancel about two dozen daily departures, according to OAG.

More than 10 per cent of all seats in and out of Qatar are on flights involving the four nations imposing the ban, said Diogenis Papiomytis , director of aerospace at Frost & Sullivan.