Qatar Airways’ American bid could be political

Qatar Airways’ unsolicited bid to acquire a large stake in American Airlines is indeed “puzzling”, as American CEO Doug Parker put it in a letter to employees.

Qatar Airways’ CEO, Akbar Al Baker, is intimately aware of the frictions in the US over Open Skies agreements with the UAE and Qatar, and allegations of government subsidizing of the Gulf carriers to an extent that they violate those treaties. Al Baker is among the most forceful voices denying those subsidy allegations and pointing to the hypocrisies of the US majors, which until recently did not want to serve the Indian subcontinent destinations that the Gulf carriers connect to the US, did not offer customer service on a par with the Gulf carriers, and which reached their current market dominance by wiping out debt via Chapter 11.

So Al Baker surely knew that his offer to invest as much as $800 million in American would have the “fair open skies” crowd howling, as it did. Here is proof, they cry, that the Gulf carriers have so much government money they can throw millions into other airlines. Parker told employees the move only strengthened his resolve on the subsidies issue.

Al Baker is a well-known and highly outspoken voice in the industry. He is not universally liked, but he has created and runs a very good airline and he’s passionate about that airline. He’s too smart to needlessly toss out such an easy arrow that his enemies would clearly use to stab his airline in the heart.

But the times have changed again, and dramatically so for Qatar, which now has new enemies closer to home. As my colleague, Aaron Karp, explained in his blog, Al Baker is showing his typical defiance as Saudi Arabia and the UAE clamp down on their blockade of Qatar. It’s a political act that directly affects Qatar Airways, shutting off airspace between the neighboring nations and forcing Qatar to take longer, costlier routes in and out of its Doha hub. US President Trump, meanwhile, has essentially endorsed the other Gulf states, while calling Qatar a terrorism sponsor – a stigma that hurts Qatar Airways’ sales, especially in the US and European markets.

One way of looking at the Qatar Airways’ stake in American, therefore, is that it would make it somewhat more difficult to stigmatize the Doha carrier. One of Al Baker’s messages is “we are just an airline” and not part of any larger geopolitics.

And if Qatar Airways’ proposed investment in American becomes the arrow that kills US Open Skies deals with the Gulf carrier countries, it will wound UAE-based Etihad and Emirates at least as much, likely more. But unlike Qatar Airways, neither UAE airline is part of a global alliance. Qatar, as a oneworld member, can leverage its connections with British Airways and, yes, American.

Karen Walker [email protected]