Qatar Airways’ American Airlines investment exposes hypocrisy


American Airlines Airbus A319
American Airlines Airbus jet.
American Airlines

  • Qatar Airways wants to buy up to 10% of American
    Airlines.
  • An analyst says this is evidence that Qatar receives
    subsidies, something the US airlines have been insisting for
    years.
  • Still, even as it demonizes Qatar and its Middle
    Eastern rivals, American Airlines is a Qatar partner.

Qatar Airways wants to buy a significant stake in American
Airlines. American says Qatar expressed interest in acquiring up
to 10% of the company, and a Qatar Airways spokesman told
Business Insider that it plans to open its investment in
American with a 4.75% stake and remain a passive investor. 

A deal like this adds a whole new dimension to the simmering
hostility between the US’s three major legacy carriers their
Middle Eastern rivals. To be more specific, the
investment exposes an astounding level of hypocrisy of which
both parties are guilty.

At the heart of the controversy is the nastiest feud in the
airline business.

Here’s the shorthand version of the feud: Since 2015,
American, Delta, and United Airlines (the US3) have been
complaining about competition from three huge and fast-growing
Middle East-based rivals — Emirates, Etihad, and Qatar Airways
(the ME3).


Qatar Airways Q Suite
Qatar Airways QSuite
Business Class.

REUTERS/Pascal
Rossignol


According to the US3, the ME3’s growth has been fueled by as much
as $50 billion in subsidies over the past decade, allowing them
to flood the international market and threaten the job security
of US aviation workers. They also say the ME3 are in violation of
the Open Skies agreements that govern air travel between the US
and 120 nations including the UAE and Qatar.

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The feud has resulted in everything from threats by airline CEOs
to businesses losing sponsorship
dollars. From stranded
passengers to large protests at
airports
.

Over the past few years, Qatar, along with the rest of the ME3,
have denied receiving subsidies. Instead, Qatar Airways insists
that it operates like any other major private sector business
with investors for whom the company must deliver results.

However, its willingness to sink more than $808 million into
American in such a turbulent time for the
carrier
undermines that assertion.

Over the past month, Qatar Airways has been caught in the middle
of a diplomatic crisis between the nation of Qatar and its Middle
Eastern neighbors. The dispute has resulted in Qatar Airways’
expulsion from major markets in the United Arab Emirates,
Bahrain, Egypt, and Saudi Arabia.

These countries have also either severely restricted Qatar
Airways’ access to or outright banned the airline from their
airspace. In addition, the Doha-based airline has been dealing
with the financial fallout from restrictions on travel and large
electronics issued by the US and UK governments earlier this
year.


Qatar Airways Boeing 777
Qatar Airways Boeing 777.
Qatar Airways

All of this makes the Qatari airline’s decision to spend this
kind of money out of the ordinary.

“By making this investment at a time the airline is facing such
disruption to its business points out that it has access to
financial assets beyond what it has just in its own bank
account,” said Atmosphere Research Group travel industry
analyst Henry Harteveldt. “It only strengthens the argument that,
at least in Qatar Airways’ case, it is a government subsidized
airline.”

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However, American Airlines is far from innocent in all of
this.

As much as American and the rest of the US3 would lead you
to believe that their relationship with the ME3 is unadulterated
hostility. It isn’t really the case.

Since 2013, Qatar Airways has been a member of Oneworld —
the same airline alliance American helped found in 1999.
Membership to Oneworld gave American and Qatar access to each
other’s route networks and the ability sell tickets on one
another’s flights. As a result, the two airlines have been
working together for years connecting passengers from South Asia
to North America and helping fill each others’ planes.

Passengers flying on Qatar Airways transfer onto American
Airlines planes once they arrive in the US. Conversely, Qatar
Airways’ network allows American to expand its international
network without the need to spend billions of dollars to buy
additional wide-body airliners. The Fort Worth-based carrier has
a similar setup with Abu Dhabi’s Etihad. In fact, American
proudly lists Qatar Airways and Etihad as partner airlines on its
website.


Qatar Airways AmericanScreenshot/Qatar Airways

American isn’t the only one guilty of this. Delta has been the
most vocal opponent of the ME3 and yet has been touting its
partnerships with Alitalia and Jet Airways — both subsidiaries of
the Etihad Aviation Group. United also has a partnership with Jet
Airways.

This means that the US3 and its lobbyists were publicly
demonizing the ME3 while happily making money off the very same
airlines.

“There enough hypocrisy here to fill an A380,” Harteveldt added.

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What will become of Qatar’s investment in American Airlines
remains to be seen. However, what it has done is once again
remind us that there’s always more than meets the eye when its
comes to the airline industry.

Source