Akbar Al-Baker has attracted attention at Qatar Airways with his ambitious expansion plans, including a launch order for the new Airbus A380. But can the carrier and its small Gulf state maintain the momentum as fleet expansion continues?

Qatar Airways, it seems, is starting to get itself noticed. Just five years ago the fledgling Gulf carrier was plying only a few Middle East and European routes with a handful of ageing aircraft. Since then, the carrier has set about reinventing itself, ordering a whole fleet of new aircraft from Airbus. And at the start of this year it turned more than a few heads when its latest widebody order included two A380s.

At the same time, there have been new route launches and an appearance at the Paris air show with a brand new Airbus corporate jet, not to mention playing host to some international events in Doha. In May, the Qatari capital welcomed this year's annual meeting of the Arab Air Carrier Organisation (AACO). The city is also due to host the World Trade Organisation (WTO) this November.

If Qatar Airways is gaining momentum, then there is little doubt about who is providing the driving force. AkbarAl-Baker, the carrier's ambitious and well-connected young chief executive, has a mission to put Qatar on the airline industry map and seems to have no doubt that he will succeed.

His arrival at the carrier dates back to early 1997, when he arrived at the head of a new management team. Qatar Airways had been established only three years earlier by members of the Qatari royal family, but according to Al-Baker was already running into turbulence.

At the time, he was head of finance and economics with the Civil Aviation Authority (CAA). He had made a fairly impressive rise up the ranks, having started as an assistant accountant in 1980 - he is still only 39 years old.

From within the CAA he says it was clear how close the airline was to being grounded, not least because of lack of records on one of the ageing Boeing 727s then still in the fleet. Al-Baker was clearly keen to get his hands on the carrier and was granted his wish in a takeover which ultimately saw the state assume ownership. His task was to restore discipline and pride to the national carrier. "Even if we had just two passengers we would still fly. Before they would cancel. There was no consistency," he says. "People knew that Akbar was a very efficient operator and business man and in our business, credibility matters." The relaunch was completed within only five months, he adds stressing the figure with a disconcertingly intense stare, which is something of a trademark.

Qatari pilots and passengers who had fled to Gulf Air started to return. The airline, which had carried only 200,000 passengers in 1996, saw that number double in 1997 and passengers have "just kept on rising" says Al-Baker. In 1999 the airline came in at around the 1 million mark and last year saw some 1.4 million passengers. New routes are coming on stream, including Paris earlier this year, plus the Maldives and Kuala Lumpur (codesharing with Malaysia Airlines) to be introduced in December.

And the growth continues. The Airbus fleet stands at seven A300s and four A320s, but at least another five A320s are due to arrive over the next couple of years, while five A330-200s will start to arrive in 2002, replacing the A300s on key routes. There are also plans for dedicated cargo service in the next few years, converting two A300s to freighters. The carrier estimates that in a few years, cargo will account for 30% of airline revenue, with imports to Doha and transhipment of perishable goods from India and Pakistan to Europe forming the majority of the freight carried.

Then there is the headline-grabbing pledge to take two A380s and two options. That helped Airbus to gain the critical mass to launch the programme and Qatar apparently got an excellent deal. Al-Baker has only signed letters of intent, saying that despite some pressure from Airbus, he will not sign a full contract until the design is frozen.

Privatisation ahead

The next step for Qatar Airways is to bring the airline back to profit and eventually proceed to a public flotation - provided that Qatari nationals retain 50%. Al-Baker has set a target of profitability within three to four years, and insists that it must be met before any privatisation. Profits should be helped by rights to lucrative government monopolies that the airline has won. Not only does Qatar Airways control handling, catering and cargo at Doha airport but has the country's alcohol concession too.

The key to managing this heady growth, Al-Baker believes, is a "ruthless" discipline. He notes with pride his old-style English boarding school education at an Indian hill station. "We don't have room for complacency - we're growing too rapidly," he says. It is clear that Al-Baker himself does not lack energy, regularly breaking off from the conversation to field calls on his cell phone as he stays in touch with his business empire. And his management team now includes a number of seasoned senior executives that have come out of British Airways.

Yet the growth in prospect for Qatar confounds forecasts for the small Gulf state. Latest passenger five-year forecasts from the International Air Transport Association (IATA) show the Qatari market with only around 1.8 million passengers in 1999, rising to around 2.3 million after five years of relatively steady 5.4% growth. Admittedly the forecast dates back to October last year, but it illustrates the radical nature of the airline's expansion.

Ambitious growth

Al-Baker brushes aside such doubts. He believes that there is "more than enough demand" coming from Qatar as a destination, including a combination of guest workers, business travellers, tourism and locals. Although Qatar has only 150,000 nationals, a large volume of foreign workers helps swell the population to 600,000. That number is due to double by the time that the first A380 arrives in late 2007.

The guest worker traffic flows principally from Bangladesh, India and Pakistan, as well as the Far East. Qatar's petroleum and natural gas wealth also continues to draw in business travellers from Europe and beyond.

Leisure travel, however, is a relatively new addition. The country and its airline are together embarking on a campaign to promote the local tourism industry, focusing on such sectors as water sports and desert activities, as well as its ever-growing sports offerings. Those include top-flight tennis and golf tournaments. The country is counting on the WTO meeting for further publicity. Al-Baker paints a picture of Qatar as a select holiday destination, perhaps contrasting itself with the volume market that he argues nearby Dubai has now become.

The last component of the direct traffic base will be Qatari nationals, who despite their modest numbers enjoy one of the world's highest per capita gross domestic products, at $117,000. With each national averaging three international flights per year and the economy said to be growing at 30% annually, the airline is confident of growth.

At present, around half of the airline's traffic is from transfer rather than origin and destination (O&D), typically connecting Europe to the Far East. But Al-Baker is certain that the direct elements of his traffic base will bring the mix of O&D up to 60%.

Qatar Airways will certainly need all these traffic predictions to come good if it is to fill its growing fleet. Last year, load factors stood at an unexciting 61% across the fleet, although Al-Baker says that they are much higher on services such as those intra-Gulf and to India or the Levant.

Neither is the airline planning to pack the seats into its aircraft. Rather than cramming 550 passengers or more into the A380, Qatar plans to present the aircraft as an extra-plush 450-seater with four classes. It is a recurring theme of Al-Baker's that his airline must offer a "top quality personalised service" never rising above the 30-35 aircraft mark.

Crowded markets

Nevertheless, Qatar will have to compete for space in a Gulf market already dominated by two major players in the form of Gulf Air and Emirates. Despite its recent spell of growth, Qatar Airways remains only a fraction of their size.

Al-Baker is familiar enough with Gulf Air in which Qatar owns a share along with the governments of Abu Dhabi, Bahrain and Oman. Al-Baker was involved with the carrier as part of his finance remit at the Qatari CAA.

The Gulf Air story in recent years has been one of a struggle to turn around its fortunes. In fact, the turbulence surrounding the carrier provided a backdrop for the launch of Qatar's own national carrier.

Indeed Al-Baker characterises Gulf Air as an "airline in decline", noting that it has recently shed both routes and aircraft. Al-Baker does not predict that the Qatar Government will terminate its support. However, he does hint that it will make continued funds conditional on improved managerial accountability. The carrier received yet another $160 million cash infusion in June although that was used to pay down debt rather than reorganise. However, Gulf Air is still a sizeable competitor with a strong presence in the region. It recently began a three-times weekly non-stop service from Doha to London.

Emirates, however, is a competitor of a whole different order. The Dubai-based carrier arguably has the region's strongest reputation for service and sound management. It also has undertaken its own large capacity expansion campaign, planning to bring its 36-strong, all widebody fleet up to 100 aircraft by 2010. Its fleet plans also include five passenger A380s and two freighters.

Although he recognises the power of Emirates, Al-Baker is confident that there is room for more than one international-sized carrier in the region. Furthermore, the Doha-based upstart says its own model is different from that of its more established neighbour.

Al-Baker characterises Dubai as a connecting hub and close to becoming a mass tourism market. Because of the focus on O&D traffic, Qatar Airways will not have to make Doha a transfer hub on the same scale, nor will it aim at such a wide-flung route network. For example, it has no intention of serving North America, while Emirates has declared that New York will be added to its route network early in 2003.

The diplomatic relations that the Qatari state has maintained with regimes such as those in China, Vietnam and even Iraq, may help provide access to less travelled network points. For example, the carrier is pondering an extension of its flight to Kathmandu through to Lhasa, Tibet.

Qatar will also aim for a more controlled growth in leisure markets than Dubai, aiming for high-end travellers and "business tourists". By keeping the numbers lower Qatar aims to maintain its traditional values.

Al-Bakar believes that Qatar can also make a virtue out of its size by paying attention to service details in the way that a larger airline could not. The airline's motto is "taking you more personally" and Al-Baker is keen to point to a series of small service innovations. His airline will offer individual cabins in first class on its A330s, while all business class passengers on the A330s and A300s will have lie-flat beds. The first class cabin on the A320s will also have the world's first DVD on a narrowbody, he claims, also pointing to some pioneering touches in premium class sleep products, which he proudly proclaims were introduced ahead of Emirates.

Even so, Doha will have its work cut out if it is indeed to challenge Dubai for even a small slice of its business. As a centre of commerce and tourism, Dubai has a significant head start on its would-be challenger. It spent decades building a reputation as an open and reliable place to do business or relax on the golf course. One industry insider well versed in the region says: "I'm not sure why Qatar believes it can compete as a destination. It's no better positioned geographically than the Emirates. And Dubai - which has plenty of room to grow - is where everyone wants to do business." He concludes that the region does not need a second Dubai.

It will also take time to build a reputation for Doha as a tourist centre and to overcome its somewhat lacklustre billing of the past. One trendy western travel guide unkindly labels Doha as "the dullest place on earth". But if there is anyone at Qatar Airways who stands intimidated by the magnitude of the task ahead, then that it is not the current chief executive.

IATA passenger market forecasts

International pax (million)

























Source: IATA Passenger Forecast October 2000

* f = forecast aagr = annual average growth

Airline competition in the Persian Gulf - three year growth

Daily capacity ASK (000)* Daily departures Destinations Pax (m)






















Gulf Air











Qatar Airways











Note: Figures from OAG schedule data and carrier reports. OAG capacity data for July 1998 compared with July 1998. e=estimate

* ASK = availiable seat kilometers 1 mile=1.609km.



Source: Airline Business