GCC Insights: Qatar Airways helps invigorate economy

Qatar Airways is increasingly playing a more vital role in the Qatari economy. The airline has been vested with the job of running Doha International Airport and has recently undertaken tourism projects.

Ever since Qatar pulled out of the regional carrier, Gulf Air, in May last year, Qatar Airways has emerged as the country's sole flag-carrier. Qatar relinquished its 25 per cent stake in Gulf Air citing inefficiency and management problems of the Bahrain-based airline.

Abu Dhabi, Oman and Bahrain remain as Gulf Air's shareholders. Gulf Air has posted losses in the last few years but expects to register profit within the next two years.

Launched in 1995, Qatar Airways has ambitious plans. It desires to increase its operations to cover some 50 destinations and to expand its fleet to 33 planes by next year. Thus far, Qatar Airways has only been flying Airbus aircraft, as part of a drive to help maintain operation efficiency.

Recently, Qatar Airways added Rome to its scheduled flights, which became its 41st destination. Withdrawal from Gulf Air has allotted more traffic rights to Qatar Airways. The government owns half of Qatar Airways with remaining shares held by members of the Al-Thani ruling family and by Qatar Insurance Company.

Ever since taking over responsibility for Doha International Airport last year, Qatar Airways has moved to modernise the premises. During phase one, it has invested money in upgrading the arrival baggage handling area, the cargo terminal and a technical building.

Recently, Qatar Airways disclosed plans to invest some $200 million in expansion work at the airport in two phases. Costing $150 million, phase two development involves increasing capacity of the arrival terminal to handle throughput of some 6 million passengers annually versus 3.5 million a year at the moment.

Other work calls for the construction of five bays to take the total to 24 bays, plus two hangers as well as a covered car park capable of accommodating some 2,000 vehicles.

Phase three involves construction of an additional five bays at a cost of $50 million. For years, Doha airport was rightly regarded as the most backward in the GCC, better known for its limited facilities. But over the last eighteen months, the airport has received a facelift with expanded duty-free retail outlets and departure hall seats, among others.

Construction of phases two and three is scheduled to commence in the second half of the year and to be completed in time for the start of the Asian Games. Doha will host the 15th Asian Games, due to start in December, 2006. This marks the first time a GCC country is staging such a sporting event.

However, expansion of the existing airport confirms speculation that construction of a proposed new airport will not be ready for the launching of the Asian Games. For months, hopes have been running high that the authorities will move to construct a new airport to the east of the current structure, capable of handling 12 million passenger annually.

To be sure, the government has not appropriated funds for the newly proposed airport in the budget for the fiscal year 2003-04. Total expenditure for the existing budget is put at $6.4 billion. The proposed new airport is projected to cost between $750 million and $1 billion.

Qatar Airways has recently ventured into tourism projects, ostensibly to attract visitors. Lately, it has acquired state-owned Qatar National Hotels Company (QNHC). Set up in 1972, QNHC enjoys a virtual monopoly over five-star hotels in the country.

The Sheraton, Marriott, Ritz Carlton, and Movenpick plus Doha Golf Club and Sealine Beach Resort are among a host of facilities owned by QNHC.

The government had planned to sell off its holding in QNHC as part of a privatisation programme. If only to confirm its interest in the tourism sector, the airline had recently acquired Qatar Leisure and Tourism Company, owners of Aladdin Kingdom theme park for children. The fun park is being redeveloped at a cost of $12-million.

Qatar Airway's moves are coinciding with fresh government measures aimed at boosting the tourism sector. For example, the Qatar Tourism Authority had relaxed visa restrictions last year. Nationals of 33 countries can now obtain visas on arrival. Also, similar to Dubai, Qatar has started staging festivals during the winter and summer seasons.

Qatar Airways is trying to be to Qatar what Emirates is to Dubai, in terms of helping the development of the aviation and tourism industries. Emirates had basically succeeded in placing Dubai on the world's tourism map, and possibly Qatar Airways can do the same to Qatar.

The author is assistant professor, College of Business Administration, University of Bahrain