On Tuesday American Airlines and Qatar Airways announced a renewal of their codeshare agreement and American floated an expectation of their flying to Doha.
That reverses the position American has held for the past five years, that Qatar Airways represents an existential threat to its business. Since early 2015 Delta, American, and United have lobbied aggressively to limit access to U.S. markets of Emirates, Etihad, and Qatar arguing they shouldn’t have to compete against subsidized airlines (though they are subsidized themselves).
American ceased codesharing with Qatar (and Etihad) in 2017 going all-in on this attempt to have the U.S. government transfer wealth from U.S. consumers to airline shareholders through higher prices.
In making the announcement of the renewed codeshare American said that “the issues had been addressed” between the two airlines. That’s bullocks, the U.S. airlines failed completely in their effort to get meaningful government action against their Gulf rivals. That’s as I predicted because not only were they seeking bad policy, it was always going to be less of a priority than security cooperation in the region.
Some readers speculated that the collapse of Air Italy two weeks earlier, 49% owned by Qatar, is what paved the way for this deal. However that’s not accurate because according to American the renewed codeshare has been underway for months.
On Wednesday American Airlines CEO Doug Parker spoke to employees at an internal town hall, a recording of which was shared with View From The Wing. He tried to explain the carrier’s change of heart.
First he claimed that issues between the airlines have been resolved for two years.
A couple of years ago the Qatar government at the demands of the U.S. government signed an agreement that provides things like they will provide exposure on their financials so we can see what level of subsidization is or isn’t occurring, and more importantly they signed a side letter that said they don’t intend to fly any flights from outside of Doha to the United States. So Qatar has agreed to those things. Emirates hasn’t. Well, Emirates kind of has but they’re nonetheless still flying to the United States from outside the UAE. In our view Qatar has addressed our concerns.
First of all, at the start of 2018 the U.S. airlines got absolutely nothing of value from Qatar. Second American’s President Robert Isom called their beef ‘still a big issue’ after Qatar and the U.S. government put the issue to bed.
What’s more, American along with Delta and United publicly prosecuted their campaign through the summer of 2019 even going so far as to secure an Oval Office meeting with President Trump to press their case.
What happened was that – just as the U.S. airlines got nowhere asking the federal government to abrogate its Open Skies treaties with the U.A.E. and Qatar during the Obama administration – President Trump was unpersuaded as well and mocked Doug Parker for his airline’s flailing stock price.
So in the face of total political failure, American picked up the pieces and – just as they’re making the best of a partnership with Alaska Airlines that they had once shunned and have turned to Gol as a second-best after losing partner LATAM to Delta – they’re focused on actually generating value for the business which they can get by working with Qatar.
Parker went on to explain the value of working with the Doha-based airline which serves about 18 destinations in India and Pakistan alone,
They are an airline that is quite large and serves a lot of parts of the world that we would never be able to serve as efficiently as they do. So it’s good for our customers, it’s good for us, part of this announcement we believe – nothing to announce just yet but we certainly hope that this will get to the point where a flight from the United States to Doha makes sense instead of just having Qatar fly it because we’ll have the code behind it.
Parker concludes by explaining why American isn’t announcing new Doha service today. He says “[w]e need some things to happen before that happens.”
As I wrote this past week, in the ultimate of ironies, that’s probably a commitment of subsidies from the Qatari government or its an agreement for Qatar to give up one of its current routes to an American Airlines hub.