Fuel prices hamper Qatar Airways

12 November 2004
Qatar Airways (QA)has taken issue with Qatar Petroleum (QP)for refusing to help the airline in dealing with rising fuel prices. QA chief executive officer Akbar al-Baker said in London on 8 November that high oil prices have seen the national carrier's fuel costs almost double in the last 12 months. 'We asked for a reduction [from QP], but it was unwilling to help us,' said Al-Baker.

Al-Baker said that QA had been especially hard hit by rocketing fuel prices as it had not been hedging. 'I would be lying if I said high fuel prices are not affecting us in a big way, if not a bigger way, because unlike airlines that are hedging, we haven't due to the size of our fleet.'

Al-Baker dismissed suggestions that it was easier for his airline to cope, despite being based in an oil producing nation. 'I wish there was competition in the fuel markets in Doha, but the state oil company is a separate entity run on a commercial basis. It supplies the same prices for all the airlines. Ironically we pay less outside of Qatar,' he said.

In recent weeks the International Air Transport Association (IATA) has posted several warnings on the potential impact of high fuel prices on the aviation sector. 'The sad story is that, despite improvements [in the industry], the bottom line is worsening with the extraordinary price of fuel,' said IATA president Giovanni Bisignani in late October. 'If current fuel price levels persist, losses may well exceed the $3,000 million-4,000 million previously forecasted for 2004.'

Despite the fuel cost burden, QA is continuing with its expansion plans. The airline's network is set to increase to 59 destinations by the end of January after announcing it will commence flights to Beijing, Cape Town, Johannesburg, London Gatwick, the Seychelles and Yangon in Myanmar. The carrier is also expected to launch services to North America after Al-Baker confirmed that negotiations with US civil aviation authorities were at an advanced stage. QA is also in talks with The Boeing Companyto acquire the manufacturer's latest model, the 7E7 (MEED 28:5:04).

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