American continues to make its way around the globe looking for ways to fill its geographical needs. After Gol helped fill in some blank spots in Brazil, the improved Alaska partnership shored up the West Coast. Now, American is looking toward Africa, India, and Southeast Asia by renewing ties with Qatar Airways. I like this move, but I wish the airline went further than it did. American missed a real opportunity to make a definitive statement.
You’ll recall that the American/Qatar partnership was on the rocks thanks to the aggressive fight that American joined against Middle East carrier subsidies. In the summer of 2017, American said it would walk away from its codeshare with oneworld-partner Qatar. At the same time, Qatar said it would buy 10 percent of American, but that all blew up and the airline was forced to backtrack almost immediately.
Relations have been frosty since that time, but in early 2018, the state of Qatar agreed to some restrictions on what Qatar Airways would do. There were three main points. First, it said that it would provide audited, western-style financial reports. Second, it said it would make public any new state money that gets pumped into the airline (and that money should be lent on commercial terms, hahahaha, yeah). Third, it said there were no plans to fly fifth-freedom routes connecting the US with any place outside Qatar nonstop. This sounds good and all, but it wasn’t really enforceable or all that meaningful. Regardless of Qatar’s compliance, it hasn’t changed the fact that Qatar Airways is massively subsidized. I mean, come on… how can an airline that’s banned from flying to its neighbor states continue to grow without finding non-airline sources of cash?
Despite those subsidies, I’ve long believed that the only part of this fight that mattered was keeping the Middle East carriers off of fifth-freedom routes. The rest of it is just noise. But Delta, under former CEO Richard Anderson, really led the charge to apply maximum pressure. Both United and American went along with it.
Now, here we are with American doing an about-face. Here’s what’s happening, all explained with direct quotes from the press release:
- American will place its code on select Qatar Airways nonstop and connecting services to and from the U.S. and Qatar Airways’ hub in Doha
- Qatar Airways will place its code on select flights beyond American’s hubs in Dallas-Fort Worth (DFW), Chicago (ORD), New York (JFK), Philadelphia (PHL), Miami (MIA) and Los Angeles (LAX), as well as on American’s international flights to and from Europe, the Caribbean, Central America and South America.
- …both airlines will discuss new ways to further their partnership through expanded commercial cooperation that will enable long-haul growth for both airlines.
- American will begin exploring the addition of service from the U.S. to Doha.
So really, at face value, it’s just a resumption of the codeshare between Qatar and American, but the ultimate plan is to have it be more than that. Good. This makes sense for both airlines.
For American, this is a way to reach into Africa, the Middle East, India, and Southeast Asia (from the eastern US) more easily. Note that with the Seattle to Bangalore flight going one way, and a Qatar codeshare going the other, American will be covering India quite nicely. And Southeast Asia really opens up from the East Coast via Doha. If American puts its own airplane into Doha eventually, that will help strenghten opportunities even more.
For Qatar Airways, this is the closeness it has craved for a long time. Qatar has already bought into British Airways parent IAG, and it wanted to buy into American. Having all these airlines on the same page will help Qatar get more feed and more connecting traffic to help support its ambitions. That’s hugely important in an era where its neighbors won’t even talk to the country.
The biggest problem for Qatar at this point is simply what to do with its LATAM stake. That is problematic for everyone, but it would seem that a time may come where it has to sell that off and really commit to building an alliance with partners that all want to work with each other.
As much as I like this move, I find myself still feeling like it should be more. In the press release, American CEO Doug Parker was quoted as saying:
The issues that led to the suspension of our partnership two years ago have been addressed, and we believe resuming our codeshare agreement will allow us to provide service to markets that our customers, team members and shareholders value, including new growth opportunities for American Airlines.
The issues have been addressed? Come on. This is the statement I want to see.
I know we’ve spent the last several years fighting every move these Middle East carriers have made, and you know what? That was dumb. If these governments are going to fund these carriers into powerhouses, then we should be participating in this, not fighting against it. IAG CEO Willie Walsh was right. There’s more to gain by joining in. Delta can go fight those battles all it wants. In the meantime, we’ll be growing our network and taking passengers where they want to go with a partner that provides a fantastic product. That’s what our customers want from us.
American trying to thread the needle by saying that the issues have been addressed rings hollow. It’s a missed opportunity for American to take a completely different viewpoint than Delta and United. And it’s a viewpoint that plays as being on the side of the customer. This could have been a bigger win for American, but maybe the airline wants to wait until the bigger partnership comes together.
A codeshare is a fine start, but for it to be valuable, it needs to grow beyond that. The US and Qatar have open skies, so a joint venture is possible. Imagine a world where Qatar, British Airways (and friends), and American all work closely together. That’s some powerful stuff right there.
Of course, nothing here suggests that they aren’t looking at this path in the future. It’s just that the messaging for now fails to match the boldness of the actions the airline is taking. There is an emerging story here for American, and for the first time in a long time, it’s a good one.