January 22, 2016 / 11:46 AM / 4 years ago

Qatar Airways CEO rejects consolidation in Gulf region

SAKHIR, Bahrain (Reuters) - The CEO of Qatar Airways said he was not in favor of regional consolidation, rejecting any need for the Gulf region to join in the trend for mergers which has raised airline profitability elsewhere in the world.

Chief Executive of Qatar Airways Akbar al-Baker announces the airline's participation in the oneworld program, at the Hamad International airport in Doha, October 29, 2013. REUTERS/Fadi Al-Assaad

Some industry experts are skeptical as to whether the Gulf region needs fast-growing Qatar Airways and rival carriers Emirates and Etihad with their three big hub airport operations, all within a small geographic location.

In other aviation markets, like the United States, the number of airlines has shrunk as carriers have consolidated, helping them become more profitable, so much so that U.S. airlines now account for more than half of global earnings in the airline industry.

But the chief executive of state-owned Qatar Airways said consolidation could be bad for consumers.

“I don’t agree with consolidation, always done to extract capacity and jack up prices,” CEO Akbar al-Baker said during a panel at the Bahrain Airshow on Friday, pointing to U.S. carriers as an example.

In Europe, there has already been some consolidation, with the five largest airline groups now controlling around half of the journeys made by air passengers in the region.

But there are often calls from aviation industry executives for more consolidation among Europe’s smaller carriers, many of which struggle to post a sustainable profit.

Dan Tok, Minister of Transport for the Czech Republic said during an EU aviation summit in Amsterdam on Thursday that Czech airlines shouldn’t necessarily survive just for the sake of it.

“It was part of the national pride that every country needs to have a national carrier. My feeling is that Europe is too small for so many national carriers,” he said.

Al Baker also took a swipe at legacy European carriers, saying they were disadvantaged by their own inefficiencies, not by the growth of Gulf carriers.

Some European carriers like Lufthansa have criticized the likes of Qatar Airways, which does not publish financial statements, saying they receive unfair state funding, meaning European airlines cannot compete on an equal footing, allegations the Gulf carriers deny.

But Al-Baker said that unlike Qatar Airways, Lufthansa could not operate from its Frankfurt hub 24 hours a day due to night flying rules, common across Europe.

“Lufthansa utilization is a third of ours – because they have to park their aeroplanes at night because people are getting disturbed by the noise,” he said.

Reporting by Nadia Saleem; Additional reporting by Victoria Bryan, editing by Sarah Young

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