Exclusive Interview: Qatar Airways CEO Akbar Al Baker
Qatar Airways Group CEO Akbar Al Baker Interviewed By Robeel Haq
Earlier this year, a staggering 18.8 million passengers from 100 different nationalities voted for their favourite airline, the results of which were announced at the prestigious Skytrax World Airline Awards. Speculation had been mounting for several months about the potential winner, with Singapore Airlines, Cathay Pacific and Asiana Airlines hot favourites to reclaim the title, having collected the award in 2008, 2009 and 2010, respectively. However, dangerously underestimated in the race, it was actually Qatar Airways that walked home with the accolade, much to the delight of CEO Akbar Al Baker, whose sole mission since heading the Doha-based carrier in November 1996 has been developing the ultimate travel experience for airline passengers on a global scale.
That objective seemed far-fetched at the time, with Qatar Airways offering an “inconsistent”, “erratic” and “poor” service, as described by Al Baker himself. In fact, the licensed private pilot admits that his peers from neighbouring Emirates Airline and Gulf Air would often sneer at his grand ambitions back then, but 15-years later, and the Skytrax rankings have somehow charted the airline’s victorious transformation into a global, premium heavyweight.
“Just have a look back at the 2003 Skytrax listings; Qatar Airways was not even placed in the top 20, we took the 24th position. However, we jumped to number seven in 2004 – the highest moving entrant of that year – then number six in 2006, number four in 2007 and last year, Qatar Airways took the third place,” the industry veteran explains. “Now, in 2011, we’ve reached the top. This reflects a long-term vision to be number one and remain number one, not only in terms of aircraft fleet and route network, but also service delivery, product offering, hospitality and attention to detail. Ever since I became chief executive, during the airline’s re-launch, that has been my goal, for Qatar Airways to reach the pinnacle of the airline industry.”
Now that Al Baker has achieved the number one ranking for Qatar Airways, how does he plan to surpass the achievement? “Well, being named the world’s best airline is one thing, but maintaining that title is another,” he states, before taking a pause. “The product must continuously be innovated; we cannot sit on our laurels and expect that Qatar Airways will remain number one. Just because we have reached the pinnacle, our focus cannot be lost. I will constantly be on-guard to ensure the product is always second-to-none.”
Listening to Al Baker speak, it’s hard to imagine Qatar Airways reaching such an enviable position under different leadership. With ambition, focus and dedication – often working 17 hours a day – the executive has a successful track record of turning even his grandest of dreams into a reality. Along the way, of course, he’s also developed a somewhat universal reputation of being a stern taskmaster to several thousand employees around the world, while his dealings with business partners such as aircraft manufacturers are known for being painstaking and scrupulous, ensuring that each and every detail meets his final approval. “It’s true; I place a lot of pressure on my workforce because I’m a hands-on chief executive and always want to feel the pulse of my staff. There are lots of checks and balances, and people have to deliver. There is no room for complacency here,” he admits. “And yes, I’ve also become famous, or should I say infamous in the media for harassing aircraft manufacturers, but in actual fact, I am simply offering my point of view and I genuinely believe those opinions will benefit the aircraft manufacturers and save them great pain in the future.”
With an impressive fleet of 100 aircraft, plus orders worth over US$40 billion for more than 200 additional planes, Qatar Airways has emerged a lucrative customer for international airframers, although its relationship with market leaders Airbus and Boeing has constantly fluctuated. Most recently, Al Baker has openly criticised revisions to the forthcoming A350-1000, after Airbus revealed optimised wings and a more powerful Rolls-Royce engine at this year’s Paris Airshow. Although the changes would result in 400nm more range and improved take-off weight, they would also increase the list price by $9 million per aircraft and lead to a delay of two years, until 2017. Qatar Airways, as the all-important launch customer for the A350XWB family, responded by threatening to cancel its order for 20 of the -1000 variant in favour of the smaller -900 model, which is still scheduled for deliveries from the second half of 2013.
“It never makes me happy when one of the programmes we are so dependent upon is being delayed. This will dent our expansion and fleet replacement programme,” the media were told by Al Baker, who has ordered 80 A350XWBs in total, comprising of 40 A350-900s and 20 A350-800s, in addition to the 20 A350-1000s under jeopardy. “Airbus is not listening to us; I don’t think they’ve achieved anything with this investment and frankly, we are losing confidence in the manufacturers’ ability to deliver contractual commitment.”
Concerns about the A350-1000 have also been raised by other customers, such as Emirates Airline and Air Lease Corporate, placing Airbus under immense pressure to find an amicable solution. However, the European airframer will receive some consolation in the fact that its US-based rival, Boeing, was placed under a similar level of scrutiny by Al Baker during the previous Paris Airshow in 2009 over delays to the much-awaited 787 aircraft, a situation that was eventually resolved. “We have some serious issues with Boeing and if they not play ball with us, they will be in for a very, very serious surprise,” the chief executive warned at the time, once again hitting international headlines for his no-nonsense approach. Qatar Airways’ firm order for 30 Dreamliners, plus 30 options, were originally scheduled for deliveries from the middle of 2010, but suffered from a variety of high-profile production setbacks.
For those wondering if Al Baker’s bravado yields results, the airline has since been assured that its first 787 will be delivered by the middle of next year, much earlier than many had initially predicted in light of the programme’s delays. “All the problems with this airplane have been resolved and we absolutely have a good relationship with Boeing. Keep in mind, every good relationship will sometimes have ups and downs, but due to our close friendship, we can have frank discussions and even disagreements on issues. Our 787 slots are now confirmed and delivery could be any time between the first and second quarter of next year,” he confirms to Aviation Business. “Our Dreamliner will be the most luxurious in the sky, I can promise you that, although at this stage it’s not possible to reveal too much detail. When the time is right, we will showcase the high standards of our 787 with a lot of pride.”
Al Baker is reluctant to elaborate on his self-assured statement, knowing that small nuggets of information are guaranteed to develop excitement in the market. He does, however, admit that a big reveal has been earmarked for ITB Berlin, a forthcoming trade show taking place in March 2012, around three months before the airline’s first 787 delivery. “This will be a very exciting showcase, because we are pioneering new innovations in luxury air travel. There are fresh developments with our Dreamliner that have never been witnessed in any other aircraft,” he continues to tease with a knowing smile.
While it’s clear that Airbus and Boeing are working at full capacity to satisfy the fleet requirements of Qatar Airways, rumours suggest the airline will continue its large-scale shopping spree over the next year, with a major announcement expected at this month’s Dubai Airshow. “Why limit this question to the next year, our rapid development will continue for the next decade at least,” asserts Al Baker. “If you look at 2011 alone, our expansion drive has resulted in 12 new route launches, with a further two coming on line by the end of this month. By 2013, Qatar Airways will serve more than 120 routes, so we need more aircraft to support that operational growth. In addition, older aircraft will be retired and replaced with more advanced models to keep the average age of our fleet under five years, leading to even more purchases.”
This means a “multi-billion dollar aircraft order” can be expected at Dubai Airshow. However, whetting the appetite once again without elaborating, Al Baker is careful not to reveal too many details at this stage, in order to create maximum impact at the event itself. “There are several options available and we always encourage both Airbus and Boeing to compete for that business,” he states. However, in apparent contradiction to a recent press conference in Seattle, where he revealed that an order for more Airbus A380s had already been signed and would be unveiled at the Dubai Airshow, while reiterating that Qatar Airways was not interested in Boeing’s equivalent, the 747-8 Intercontinental, Al Baker seems to have changed his tune.
“I mentioned that we are interested in a few more A380s, as the five we initially ordered was insufficient, but the actual order will not be signed until we have agreed on conditions,” he clarifies. “Plus, we are always interested in looking at diverse products.” According to industry hearsay, Qatar Airways is considering up to 50 Airbus A320neos, which could be revealed at Dubai Airshow after a planned announcement at Paris Airshow earlier this year was scrapped due to a stalemate in negotiations. Finally, there are some whispers, although nothing concrete, that a previously-discussed order for the Bombardier C-Series may be resurrected in Dubai – again, the order was expected at Paris Airshow but later placed on hold.
Looking a bit further ahead, much has been written about Boeing launching an updated version of its popular 777, offering greater efficiencies at a lower operating cost to the present model. Qatar Airways, which has positioned the 777 at the heart of its long-haul fleet and currently operates 27 of the aircraft, would make a prime candidate for the enhanced version, perhaps even a launch customer. “Let’s not place the cart in front of the horse. We will have to wait until Boeing officially launches the programme,” comments Al Baker, while admitting that Qatar Airways will be keeping close track on the progress. “In terms of the 777, we operate a combination of 25 passenger and two freighter versions, and I’m delighted to say the aircraft has served our needs extremely well, with exceptional operational performance. So, of course we will be interested in upgrades and have absolute confidence in Boeing. However, we never reveal if talks are ongoing until such a time we are very advanced in our discussions.” Does that mean Al Baker has entered negotiations for the aircraft? “I don’t know,” he laughs. “As we stand today, and following our order for additional 777s at Paris Airshow this year, we have a further 12 777s yet to be delivered, which will take our 777 fleet to 40 aircraft, allowing Qatar Airways to tap into various new markets.”
Al Baker has a comprehensive strategy for route developments over the next three years and admits that Qatar Airways is “spot on” with its targeted number of destinations. “The world is very large and we still have a lot of opportunities ahead,” he states with enthusiasm. Naturally, as the airline continues to grow, so does opposition from competitors that are losing market share to Qatar Airways, especially from predominant regions outside the Middle East. “We’ve had a considerable amount of resistance from our European competitors, who are afraid of Gulf carriers and their expansion. It’s ironic, because Qatar Airways and also Emirates Airline have both learned about hubbing from the Europeans and now that we’ve embraced the concept, suddenly there is resistance. They’re afraid because our cost base is efficient, our product is far superior, passenger receive the best value for their money, and most importantly, the Middle East and Asia have the type of hospitality that cannot be matched by them,” states Al Baker, obviously passionate about the topic.
“If you look at the situation historically, European carriers used to operate sufficient services to the Middle East, mainly as a stop-off to other destinations, which allowed our people to travel around the world. Nearly one-and-a-half decades ago, they started to purchase longer-range aircraft and overflew our hubs, stopping services to Gulf countries. It’s natural that we will respond by establishing our own airlines to meet the economic and trade requirements of our countries. Even when that happened, they were indifferent and heavily underestimated our potential. So now the genie is out of the bottle and they are the people that should be blamed.”
European carriers have missed out on a win-win situation in the region, continues Al Baker, with Gulf airlines benefiting from growth in the region’s economy, while at the same time the economy has benefitted from the growth of Gulf airlines. He also predicts that fundamental market shifts are likely, as the regional aviation industry continues to mature. “This is a very progressive and prosperous region, which has resulted in the launch of many airlines over the years. A lot of them are low-cost and I forecast a market downturn in the low-cost segment, leading to a period of consolidation, with companies getting together to mitigate the downward pressure on traffic and bottom line.” In the past, Al Baker has touted the potential of Qatar Airways launching its own low-cost subsidiary, a plan he confirms is still “very much alive”, but will only be implemented if existing regional budget airlines impact his market share. And even with predicted consolidation in the low-cost sector – together with his controversial comments in 2010 that amongst the full-service airlines in the Gulf, only two dominant players will be prominent in the long-term while the others will “just stagnate” - there is no desire for Qatar Airways to acquire any other carriers in the region.
“That won’t happen. With Qatar Airways, and also Emirates Airline, we are two dominant and strong carriers in the region, with a similar mindset and strategy. Our growth has been very strong and I don’t think we need to make any acquisitions,” states Al Baker, who was recently appointed on the executive committee of the Arab Air Carriers Organisation (AACO). Instead, the focus will be ensuring sustained profitability, even with concerns about another global recession. “Our airline is very well-organised in terms of fleet structure, so there is immense flexibility to deploy capacity from areas suffering from a recession to areas with prosperity and growth,” says Al Baker. “Of course, there are still global situations that impact our operations and profits. This year, for example, we have been hurt due to the Arab spring, the Japan tsunami and high oil prices in the first half of 2011. Even then, I believe we will maintain the profitability that has been achieved over the past couple of years, although the scale might be lower in comparison,” he continues with reference to apparent net profits of $205 million in the 2009/10 financial year and more than $230 million in 2010/11.
While Al Baker is confident about weathering a potential storm with the prospects of a double-dip recession, his board has decided to postpone Qatar Airways’ initial public offering (IPO) until further notice. “It’s wrong for any company to launch an initial public offering during a time of economic crisis, so it has been delayed indefinitely,” he states, after hiring consultants to mull a dual listing in Doha and London. “We have not decided a revised timeline at this stage and would not like to set any deadlines until we have a clearer picture around the global economic recovery.”