High oil prices can trigger a ‘second recession’ in aviation industry, says Qatar Airways’ Al Baker

Dubai: High oil prices resulting from the Russia-Ukraine conflict could trigger a ‘second recession’ in the airline industry, according to Akbar Al Baker, Qatar Airways’ CEO.

“Once the cost of energy rises, then the cost to carry goods and passengers rises - all this also could start a second recession in our industry,” said Al Baker in an interview with aviation analyst John Strickland. “I hope I’m wrong, but we need to be prepared. We need to be on our guard too (because) anything could happen over the next 12-24 months - we also don’t know if this conflict will go beyond the borders of Ukraine.”

Al Baker said the airline will let the UK courts come up with a resolution to Qatar Airlines’ legal dispute with Airbus over the A350 long-haul jet. Qatar grounded more than 20 A350s due to paint erosion – the dispute widened in January when Airbus cancelled a separate deal for 50 A321neos.

Al Baker said the airline’s new order for 50 Boeing 737 MAX aircraft will not replace the A321neos. “We have bought those for our subsidiary company - we feel that canceling the A321s unilaterally by Airbus is illegal, and we will let the court decide on that issue.”

Bullying ways

The aviation veteran also accused the European plane-maker of using its dominance in the single-aisle market to “bully” its customers. Qatar Airways is ‘anxiously’ waiting for the delivery of the freighter version of the 777x wide-body aircraft, which could be delayed until 2025. “We are disappointed at the delay of this airplane - we are looking forward to introducing that aircraft this year into our fleet,” said Al Baker.

Qatar Airways will use the more fuel-efficient 777x planes to replace the 777-300ER aircraft in its fleet, said Al Baker. “It has a larger volume and a longer range, so we are anxiously waiting for its delivery.”

Longer flight times

Qatar Airways, which codeshares with American Airlines, is now flying longer to avoid Russian airspace when operating to the US. “When there are such calamities, passengers still want to fly from A to B and this is exactly what we do,” said Al Baker.

China lockdown

Despite the global relaxation of travel restrictions, China is continuing strict lockdowns in its financial capital Shanghai. The government has also placed restrictions on airlines flying in and out of China, which was the world’s largest commercial aviation market in 2020.

Al Baker said the lockdown in Shanghai was impeding the movement of cargo. “It’s affecting our business, because cargo is not moving due to the fact that there is a lockdown in the city,” said Al Baker “At the end of the day, it is the responsibility of the Chinese authorities to open or close their country and we will oblige by whatever decision is made by the authorities.”

Maintaining caution

The airline head has not completely dismissed the COVID-19 pandemic. “We hope that there will not be another mutation similar to Omicron and that the business will come back the way it is coming back now. But we always have to keep our guard up, and even though the pandemic will become an epidemic, it’s still there.”