DOHA, QATAR- Despite experiencing a 21 percent decrease in net profit for the financial year ending in March, Qatar Airways (QR) remains committed to acquiring 203 new aircraft in the upcoming years.
The 2023 annual report of Qatar Airways outlines the capital commitments associated with an aircraft and engine order valued at QR255 billion (equivalent to AUD $109 billion).
Qatar Airways New Aircraft and Financials
The drop in net profit by 21 percent is partly attributed to the surge in traffic due to the FIFA World Cup 2022 held in Doha and the escalation in operating expenses, particularly in jet fuel costs stemming from the Russia-Ukraine conflict.
Throughout the year, the airline facilitated the travel of 31.7 million passengers in total.
John Grant, a partner at Midas Aviation, pointed out that an increase in revenue doesn’t necessarily translate to higher profits, especially when costs are on the rise.
He explained that if a significant portion of the World Cup passengers availed of discounted or promotional fares, this would impact profitability despite the rise in passenger numbers.
He further noted,
“As the world gradually returns to its normal state, airlines like Qatar Airways, which have a relatively small local market and heavily depend on connecting traffic for their primary revenues, are once again facing the challenge of competing for every passenger they serve. This has consequently led to a decline in their financial results.”
John Grant, a partner at Midas Aviation
Australia is a Key Market
Qatar holds a somewhat notable position in the Australian aviation market, accounting for roughly 5 percent of the share. However, this is considerably smaller compared to the dominant player, Qantas, which commands 17 percent of the market.
The state-owned Qatari airline operates 28 weekly flights to major Australian airports. However, they have sought to expand their operations by an additional 21 flights, a move that the Australian government has thwarted.
According to reports from experts within the airline industry, as disclosed in the Australian Financial Report, the repercussions of these blocked flights have led to an estimated loss of over half a billion dollars for the Australian economy.
Virgin Australia Request Extended Codeshare with QR
Virgin Australia has pressed the federal government to extend Qatar Airways’ air rights through codeshare partnerships, while Qantas has downplayed the debate as exaggerated.
During a Senate inquiry session in Adelaide on Monday, Christian Bennett, Virgin’s Head of Sustainability and Corporate Affairs, voiced concerns that the decision by Transport Minister Catherine King to withhold additional direct flights for Qatar is favoring Qantas and affecting Virgin’s position.
As The Sydney Morning Herald reports, Virgin’s codeshare agreement with Qatar has allowed it to capture a 25 percent market share on routes between Australia and Europe, as well as the Middle East. This share could have increased to 27 percent had Qatar been granted expanded air rights.
Despite both airlines belonging to the Oneworld alliance, Qantas has resisted calls to broaden Qatar’s air rights. Qantas International CEO Cam Wallace argued that the ongoing discussion “warps the broader market dynamics and competitive landscape.”
Wallace pointed out that airlines like China, Southern, and Singapore have recently announced more flight expansions than Qatar’s sought-after increase.
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