Growing Middle Eastern airline continues foray into OneWorld hubs by launching service to DFW in 2014, in addition to previously announced Miami and Philadelphia
Qatar Airways recent transition to joining the OneWorld alliance has generated a few game-changing executions as it continues to expand in the Americas. Not long ago, Qatar CEO Akbar Al Baker had stated ambitions to gradually create services from its main Doha base to US markets with limited or underserved connectivity to the Middle East, such as Detroit, Boston and Atlanta, according to a USA Today article published in October 2012. Such had been the case in prior years when Qatar added services to destinations such as Houston, New York and Washington, D.C., markets where significant local demand to the Gulf region exists thanks to military, oil and visiting friends and relatives (VFR) ethnic traffic.
Now, however, holding the distinction of being the only one of the “big three” Gulf Coast carriers to participate in one of the major global alliances, Qatar appears to have shifted gears and is instead looking more favorably on tapping into OneWorld strongholds in the US that can support ample connection opportunities, rather than end-of-line stations without a partner carrier on the other end.
Both Miami and Dallas/Ft. Worth are the two most profitable hubs for founding OneWorld carrier American Airlines, and Philadelphia is the second largest hub for US Airways. American and US Airways received approval from the United States Department of Justice last week to merge and form the world’s largest airline. The combined carrier will retain the brand American Airlines and remain a key member of the OneWorld alliance.
It is doubtful that these three markets could support individual flights to Qatar alone based on origin and destination (O&D) traffic alone, and will rely entirely on connections facilitated by being hub-to-hub routes on either ends. Qatar presently flies to two other cornerstone hubs for American Airlines: Chicago O’Hare, which it launched in April 2013, and New York JFK, which has been served since the late 2000s. Qatar also serves Washington Dulles, Houston Intercontinental and Montreal airport in North America nonstop from its global hub in Doha.
Screen shot of new service to DFW promoted by Qatar, via e-mail
New DFW flight propelled by growth in North Texas – Indian Subcontinent traffic
Aside from being a key OneWorld hub, Dallas/Ft. Worth airport is also home to one of the largest growing Indian subcontinent immigrant populations in the United States. Qatar will place a major emphasis on targeting this traffic sector to support the Dallas/Ft. Worth to Doha connection when the service goes live next July.
Over the past six years, the DFW-India market has grown by leaps and bounds, buoyed by the strong North Texas local economy and increasing job opportunities. Core Indian markets like Dallas/Ft. Worth – Delhi has experienced 98% growth, while others such as Mumbai have only experienced marginal growth at 10%. However, the real diamonds in the rough have come from non-core Indian cities such as Kochi (201%) and Ahmedabad (613%). Numbers to Hyderabad and Bangalore are also on the steady rise at 186% and 311%, respectively.
Unlike Miami and Philadelphia, DFW already has a nonstop link to the Middle East by way of Emirates Airline, which launched daily service to North Texas in February 2012. Emirates has allegedly been pleased the market response to its DFW services, although the carrier has maintained a regularly-scheduled 777-200 on this route since inception and not revealed any intentions to upgauge the service to a larger-density aircraft in the near future. The likelihood of this happening is still highly probable once the market has a bit more time to mature.
The Qatar services to Dallas/Ft. Worth will complement – rather than compete – with the Emirates flight into DFW by arriving and departing from DFW at a much later hour in the day. This will facilitate connections on the DFW end, both outbound and inbound, and will also to ideally connect with Doha’s largest bank of flights departing to and arriving from the Indian subcontinent.
Qatar’s DFW flights are available for display and booking in the Global Distribution System with the following published times.
QR733 DOH0810 – 1615DFW 77L D
QR734 DFW1935 – 1820+1DOH 77L D
In fact, the DFW flight will arrive into and depart from Doha using time slots that nearly mirror those of Qatar’s Miami flights, with an early evening arrival into DOH and a morning departure from DOH. As explained previously,
Whereas the Philadelphia flights are timed to connect to Qatar’s network across the Middle East, Gulf and North Africa, the Miami – Doha flights are primed to arrive into DOH to facilitate connections to India, Pakistan, Bangladesh and Sri Lanka, in contrast to Philadelphia. CAPA schedule analysis shows convenient departure times out of Doha to Kolkata, Bengaluru, Thiruvananthapuram, Hyderabad, Kochi, Chennai, Amristar, Lahore, Colombo, Karachi, Mumbai, Goa, Delhi, Dhaka and Amritsar on the outbound, and similarly with early morning arrivals from the above named cities on the inbound flight departing for Miami at 8AM local Doha time.
Moreover, as with Miami, DFW offers a late-evening connecting bank of services onward to Mexico and Latin America via American Airlines. Even from this perspective, Miami and Dallas/Ft. Worth will complement each other as Miami serves a wider array of connection opportunities to the Caribbean, Central and South America. DFW’s hub connectivity strengths lie predominantly in Mexico as well as its high-volume of domestic connections to major points all over the US and Canada.
Emirates’ schedule from DFW follows a very different pattern, with an outbound departure from Dubai at 02:45 AM and a subsequent 09:00 AM arrival into DFW. The inbound flight leaves DFW at noon, arriving into Dubai just after midnight the following day. Of course, since Emirates has a multi-layered scheduling system out of Dubai, the airport offers several connecting departure banks to various cities all over the Middle East, Indian Subcontinent and East Asia to support connections on both ends. While Qatar is a faster-growing airline, Emirates offers roughly 500 more weekly frequencies out of its Dubai hub than Qatar does out of Doha, which is advantageous.
As such, this underscores the notion that there is room for both Emirates and Qatar to co-exist on their respective routes to DFW, offering more scheduling options for various sets of passengers and leaving it up to the market to decide based on convenience, flexibility and competitive fare.
Of course, some key distinctions will exist, and the consumer will go with the respective option that conforms to passenger type and preferences. Emirates offers a First Class product on its DFW route, whereas Qatar, which will be deploying a Boeing 777-200LR to Dallas/Ft. Worth, will only offer a 2-class cabin configuration, with 42 seats in Business and 217 seats in Economy. Those passengers who prefer the exclusivity of a First Class service will likely defer to Emirates in this case.
For OneWorld frequent fliers, Qatar will emerge on top as the preferred carrier of choice by enabling passengers to accrue frequent flier miles, access lounges and reap other reciprocal OneWorld membership benefits. Qatar already codeshares with American on its services into Chicago O’Hare and New York JFK, and American places its code on Qatar Airways’ flights from Doha to various cities in Europe such as Madrid, Frankfurt, Milan, Barcelona and Manchester. This agreement will likely be extended to include Dallas/Ft. Worth, Miami and the new Philadelphia route (now that the US Airways merger with American has been approved).
It remains to be seen how Qatar’s relationship with existing OneWorld carriers will evolve as it expands in the US; proper diplomacy will be critical.
While Qatar’s service to DFW is a huge boon to the North Texas economy, local travelers and OneWorld frequent fliers, it will be interesting to watch how existing OneWorld member carriers, namely American and IAG, the parent company of British Airways and Iberia, react over time to QR’s expansion in the Americas.
A catalyst for this observation has been the recent codeshare disengagement between Turkish Airlines and Lufthansa in the competing Star Alliance realm. A very detailed, but informative article published in CAPA yesterday outlines the underlying reasons for the “separation” between Turkish and Lufthansa, which could spell a similar story for OneWorld carriers and Qatar Airways if imbalances are created over the long run.
Although Qatar’s entry into OneWorld is practically brand new, compared to the longer-standing relationship between Turkish and Star Alliance (of which it has been a member since 2006) and the durability of Qatar and OneWorld’s budding relationship has to withstand the test of time, the pattern of development may fall on a similar road. Lufthansa sponsored Turkish Airlines’ entry back at a time when it was much smaller, and a less formidable competitor. Over time, as explained by CAPA, Turkish Airlines’ competitive unit costs and relatively robust economic climate enabled the carrier to record double digit RPK growth and profitability consistently each year, eclipsing less-endowed carriers remaining in the alliance.
In the Germany – Turkey market alone, Turkish capitalized on the liberal bilateral restrictions between the two nations and grew to capture over three quarters of the market share. Flustered by its own internal woes, along with the effects of the Eurozone crisis, a much more sluggish Lufthansa suddenly found itself in midst of a major commercial imbalance, precipitating the termination of the codeshare agreement between the two carriers last week.
While not a hostile situation by any means, the disengagement was very sudden, and has been highly scrutinized with raised eyebrows. In the global aviation sphere, Lufthansa’s perceptions of the Gulf Coast carriers is not amicable, and its views towards these competitors are well-known. Though not classifed as a “Big Three” Middle Eastern carrier, Turkish Airlines does straddle the fence a bit, so to speak, reaping the benefits of a favorable geographic position at the cross-roads of Europe, Asia and Africa, low operating costs, fuel-efficient next-generation aircraft (with more on delivery), a relatively well-regarded product and a largely pro-aviation/airport government infrastructure in place.
Moreover, aside from leveraging the power of its Istanbul hub as a global, cross-continent connecting point, the local catchment area of Istanbul and Turkey as a whole is one of the most densely-populated regions in the world, a key distinct advantage that the Middle Eastern hubs cannot claim.
Returning to the analogy, the critical thing to consider is that as Qatar Airways increases its footprint in the US, maintaining key relationships with IAG (its official sponsor into OneWorld) and American will be of utmost importance. For American, Qatar Airways as the panacea to establishing OneWorld access to India, without having to invest in its own resources to serve the Indian market nonstop. American previously flew from its Chicago O’Hare hub to Delhi from 2005 to 2012, an extremely popular, yet unprofitable route that it simply could not sustain due to its high cost structure and the low-yielding nature of US-India traffic.
In the interim, American has relied on routing US-India passengers over London Heathrow, the primary hub for its transatlantic Joint-Venture partner British Airways, which flies from LHR to Bangalore, Chennai, Delhi, Hyderabad and Mumbai. However, therein lies the challenge for AA/BA competing against Qatar Airways, which offers, in addition to the above mentioned Indian cities, services to smaller secondary and tertiary Indian markets such as Ahmedabad, Amritsar, Kochi, Thiruvananthapuram, etc with faster connection times.
It is also unfortunate that American and British Airways are housed under separate roofs at London Heathrow airport, requiring an onerous connection between Terminal 3 (AA) and Terminal 5 (BA) for OneWorld transit traffic. Conversely, Qatar is slated to move to New Doha International Airport (Hamad International Airport) at some point in the future. The airport will open in early 2014, although it has encountered several delays and challenges due to a review of safety related concerns. Assuming those issues are smoothed out, the new Doha airport will likely be a much more seamless transit point than Heathrow.
Hence, it is crucial that future relationships between these players are managed strategically and not forcefully. As I’ve mentioned before, one thing that does play favorably into this situation is OneWorld’s traditionally “looser” degree of relationships between member carriers. Extramarital affairs outside of the alliance are not encouraged, but not necessarily looked down upon, either, as evidenced by Qantas’ joint venture relationship with Emirates, which went live earlier this year. Conversely, at Star Alliance, more or less everything is about tight integration and alliance concentricity, and an agnostic view towards external relationships is frowned down upon.
Even more broadly speaking, Qatar Airways’ global market profile and aggressive strategic vision going into 2014 is far more transparent to its partners than Turkish Airlines’ in 2006. Both IAG and American had plenty of data points to determine whether or not Qatar would represent a good fit for OneWorld long before the invitation was extended. As such, it can be safely assumed that there will not be any major surprises, at least in the near-term, leading to any acrimonious relationships between the various groups.
Wrapping it all up: which Gulf airlines (+Turkish) are flying where?
The second half of FY 2013 has literally been an arms race among the “Big Three” Middle Eastern carriers, (Emirates Airline of Dubai, Etihad Airways of Abu Dhabi and Qatar), of launching new services to the Americas. These three, along with Turkish Airlines, another high-growth carrier hailing from a similar geographic region, continue to gain momentum in expanding their footprints in the US and Canada.
Indeed, 2014 will entail much fanfare from these carriers, aside from Qatar’s expansion into PHL (April 2), MIA (June 1) and DFW (July 1). Emirates is launching Boston, as well as up-gauging its daily flight to Los Angeles from a 777-300ER to an Airbus A380. Etihad is adding Los Angeles, its first appearance on the North American West Coast. Turkish is adding frequencies to Toronto and launching thrice-weekly services to Montreal, as well as a new route to Boston.
These of course do not discount the possibility of further route announcements before the end of the fiscal quarter, which are quite probable. Emirates is allegedly in the final stages of confirming their arrival and departure times into Chicago O’Hare, and Turkish Airlines may have 1-2 more US destinations in the pipeline ready for launch.
That being said, there is still plenty of low-hanging fruit to go around, and as the list grows, DFW airport is always more than ready to extend a Texas-sized welcome to more carriers from rare and exotic points all over the globe.
Emirates, Etihad and Qatar Airways services, Summer 2014 | *Indicates future service announced but not officially commenced
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