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Qatar Airways has exploited some post-Brexit uncertainty to push up its stake in IAG – parent of British Airways, Iberia, Aer Lingus and Vueling.

IAG’s price has dropped by about a quarter since the Brexit referendum, meaning that Qatar’s increase from 15.67 to 20.01 per cent cost it about £100m less than it would have on June 22.

The Gulf carrier had previously indicated that it would raise its stake, though following the latest investment, “we do not intend to increase our percentage shareholding further unless there are material changes to the current situation", says Akbar Al Baker, CEO of Qatar Airways.

Tagged Qatar, IAG, Airline, Brexit

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The Middle East’s challenge: can MROs keep up with growth?

The demand for Middle Eastern MRO services is predicted to double within the next decade. Can Middle Eastern MROs keep up? James Careless reports on this ‘mixed blessing’ scenario.

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As US carriers Delta, United and American continue with their mission to "freeze" the Open Skies agreement held between the US and the Gulf region, Qatar Airways has released a comprehensive White Paper on the hot topic in a bid to disprove the 'big three's' claims of “unfair competition”.

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Middle Eastern promise

James Pozzi blogs on some of the topics discussed at MRO Network's recent Airline E&M: Middle East conference in Abu Dhabi.

For MROs, the Middle East could prove to be one of its most lucrative playing fields, albeit one not without significant challenges.

This was the consensus at MRO Network’s Airline E&M: Middle East conference, which took place in Abu Dhabi at the end of April, bringing together OEMs, MROs, airlines and lessors to share and listen insights about the region.

Home to an MRO industry with an average annual growth rate of 6.7 per cent, the Middle East has expanded rapidly in the past 10 years as a result of large-scale investment from airlines including Etihad Airways, Emirates Airlines Qatar Airways and Saudia. By 2020, the number of aircraft in the region is expected to double from its current figure of around 500, with large orders placed by airlines for the A350 and 787, among others.

With this in mind, looking at the available opportunities for maintenance firms was one of the key topics over the two days. On day one (April 28), a particularly interesting takeaway was the prediction that the number of MRO joint ventures (JVs) in the region will rapidly accelerate in the coming years.

One of the panellists in the discussion about regional sustainable growth, John Bowell, managing director of ADA Millennium — a JV between Abu Dhabi Aviation and JCBA— said due to fleet expansions, it is inevitable more JVs like ADA would be formed.

“There are big moves towards in-house capabilities which open up opportunities for MROs outside the region to come and get into play for business here,” he said. “Technology, new materials and IT are the sector opportunities that should convince people to make a presence here.”

David Stewart, vice-president at ICF International, feels that while the Middle East has a lot of opportunities, MROs must find the answer to exactly what these opportunities are. “The growth is with certain airlines, namely Etihad, Emirates and Qatar, who are signing long-term deals with OEMs, as well as looking to build their own airframe maintenance capabilities in-house. A question to consider is just how much of this growth will actually available to third parties.”

Rahul Shah, senior vice-resident and managing director at AAR, is realistic in his outlook of the independent MRO’s Middle Eastern prospects and predicted OEM dominance in the region will continue. “While the Middle East MRO sector is expected to grow between  seven to eight per cent a year for the next 20 years, for an impendent MRO like us, I don’t see a lot of opportunity right now mainly due to OEM dominance,” he said. “If the major airlines driving growth through big orders have a long-term OEM strategy that doesn’t purchase anything from us, then this market would is a bad entry barring something really drastic happening to change this.”

Like most countries and regions, issues over skilled labour shortages also threaten to inhibit growth in the Middle East. These challenges were debated extensively on day two (April 29) and some of the figures bandied around served to illustrate the challenges that lie ahead.

One statistic showing the gravity of this is the Middle East’s burgeoning MRO sector will require 11 million maintenance man hours within the next 10 years to maintain fleets. So while opinions over where opportunities lay for MROs differed, there was a more common stream of opinions in how to address the skills shortages: investment.

One airline doing this is low-cost carrier flydubai. Mike Ainsworth, head of maintenance at the airline, oversaw the building of its MRO division when it was setup in April 2011. The intention, according to Ainsworth, was for a multi-national workforce and flydubai got just that, with its entire maintenance staff currently comprised of expatriates.  While Ainsworth admitted this is not something that will ever be totally reversed, he said the airline is intent on bringing more Emirati technicians into its ranks in the coming years through a soon to be established apprenticeship scheme.

Ashley Davies, senior lecturer of aircraft maintenance at Abu Dhabi Polytechnic, further elaborated on the skills debate in his address. He said the way in which the industry acquires existing talent has also changed. “It was common for military personnel to join airlines once they had left that career, but now with military numbers greatly reduced, there’s no longer that pool of experienced engineers coming out and moving into commercial aviation,” he said.

Davies stated the number of UAE nationals who are licensed aircraft engineers stands at just 349 and it is the industry that must act to change this. “The shortage is only going to get worse with the global aviation industry forecast to double by 2033, and we now have to look to our own to try and bridge this gap,” he said. “Training facilities, OEMs, MROs and aircraft operators are going to have to form alliances and work together in achieving this.”

The conference concluded with a first-hand experience of airline-fuelled growth in the form of a tour of Etihad’s maintenance facility near to Abu Dhabi International Airport. The site, already vast in size, is only set to get bigger with Etihad planning to double its size by next year by adding new hangars — complete with new A380s — and ramping up in-house maintenance capabilities.

Having witnessed first-hand the ambition from airlines such as Etihad, MROs pursuing the right opportunities in the the region could prove a very challenging yet rewarding endeavour.

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The debate over alleged subsidies for Gulf airlines took another turn last week when IAG opted to leave trade body the Association of European Airlines (AEA). The parent of British Airways and Iberia said its departure was down to disagreement with other airline members over “some important policy issues” – generally interpreted to mean Lufthansa and Air France-KLM’s claims of unfair support for Etihad, Emirates and Qatar Airways. In contrast, IAG’s CEO, Willie Walsh, has long been a cheerleader for the Gulf carriers, recognising that it was more prudent to pursue partnerships than agonise over their explosive expansions. Qatar Airways is now IAG’s biggest shareholder with a 9.99 per cent stake, which has set the stage for a power struggle rife with contradictions. British Airways and Iberia, for instance, are transatlantic and oneworld alliance partners of American Airlines (AA) – a co-signatory to a recent white paper calling on the US government to ditch its open skies agreements with the Gulf.

Tagged IAG, AEA, Etihad, Emirates, Qatar

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A great deal of nonsense has been heard recently about a supposed “islamification” of Europe, but while sharia law has no prospects north of the Mediterranean, in the corporate world the Middle East wields huge influence.

Last week’s purchase of 10 per cent of IAG – the parent of British Airways (BA), Iberia and Vueling – by Qatar Airways ended two years of speculation about the state-owned carrier’s interest in Europe’s third-largest airline group.

It also added to the huge portfolio of British assets that Qatar’s government has amassed in the past decade through the Qatar Investment Authority.

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Qatar debuts A380 first class seats

Qatar Airways has unveiled its new first class seating for the A380 at ITB travel trade show in Berlin; the seats will form part of the aircraft’s three class configuration. The new “high-tech” seats feature a 90-inch seat pitch, transforming into a fully flat bed, together with a choice of entertainment options displayed on individual 19-inch television screens.
 

Posted in Airlines and tagged cabin, interior, a80, Qatar, IFE

This time next year Saudi Arabia should have twice as many airlines plying domestic routes, following recent approvals for start-ups SaudiGulf Airlines and Al Maha Airways – a subsidiary of Qatar Airways.
 

These will bring much needed competition to a market dominated by Saudia (Saudi Arabian Airlines), which currently cedes only about 10 per cent of domestic traffic to its sole rival, low-cost carrier Flynas.
 

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