Sneaky change to 10-across B777
Aug 26, 2015, 11:34 am
#46
Join Date: Dec 2009
Posts: 842
I tried to stay out of this but here goes:
1. QR Shareholders
- QR was founded in 1993 as a completely private airline funded by a group of shareholders that included an insurance company, a travel agency and private individuals. It existed in that sense until 2001 when the Qatari government invested in a 50% stake.
- This status continued to 2013 when the government completely nationalised the airline.
- This is important to note because historically QR was FOUNDED as a profit making venture, not a government tool or for other motives such as PR (at the time).
- When the government invested there were other strategic goals, yet QR was run commercially. Otherwise why wouldn't QR have the prestige of First Class on all wide bodies, why remove the bars of the A346 and so on. This is important in the context of the 10 across in the 77W which is not born out of a sudden desire to make money but rather industry trends and competitive pressure.
2. Financials
- Going by the publicly released information, QR has an overall accumulated loss.
- High levels of expansion are very costly both in terms of unit cost and unit revenues, however expansion is necessary in QR's business model both for long term profits and long term competitive advantage. If QR halts expansion and trims capacity in certain markets they can achieve more consistent profits but it will reduce long term viability of the airline and reduce its other affects on Qatar's economy. Having a long term investor helps achieve that compared to have publicly traded company where there is much more pressure to achieve quarterly short term profits.
- The profits of QJET and QALC (neither of which is a QR subsidiary so their results don't reflect on QR's balance sheets and both of which rely on QR as the main client) along with other related entities are probably sufficient to cover whatever losses QR makes. Both which are owned by the same shareholders (indirectly in the case of QJET) so in effect overall the shareholder's losses in QR are covered by the profits in other holdings which rely on QR to operate.
- QR has highly profitable subsidiaries that rely on QR as the main client, such as Qatar Aircraft Catering Company, Qatar Aviation Services or rely on QR's customers such as Qatar Duty Free which alone generates hundreds of millions of dollars in revenue.
3. Economy and other strategic goals
- QR/Hamad by themselves directly generate a lot of economic activity in Qatar. They have a lot of suppliers and support a lot of businesses that wouldn't exist if Hamad wasn't a major transit hub.
- QR/Hamad Airport directly and indirectly employ tens of thousands of employees, most of which is high quality employment. QR in fact is one of the largest employers in Qatar. This induces a lot of economic activity such as housing demand, retail demand and so on. This is good for the economy, expands the local market and even generates the government money directly in fees, customs duty and in the near future VAT.
- QR generates a lot of its revenue outside of Qatar bringing in foreign exchange that is spent significantly in Qatar and retains a big portion of currency that would have left Qatar if air travel relied more on other airlines.
- Research shows there is a direct correlation between perceptions of quality of life and the availability of air links. An airline that flies frequently to six continents helps improve the quality of life of Qatar's expatriate population.
- The availability of air links stimulates trade and tourism. It is also a factor in the awards of major sporting events, major conferences and exhibitions and it helps in attracting businesses and so on. A lot of the hotels in Qatar (and their tax revenues) would shut down without QR.
- As a country that relies significantly on imports for food, medicine and consumer goods QR is strategically important to ensure security of the supply lines. Belly capacity is very cheap compared to dedicated freighter aircraft and there wouldn't be so much belly capacity in Qatar if it wasn't for QR. This cheap belly capacity helps keep reduce the cost of imports into Qatar, it also makes future exports more competitive and helps the transhipment and logistics industries which will be a big part of Qatar's future plans.
- The often mentioned PR effect, many people heard of Qatar from QR. But as you can see this is insignificant related to all the above.
I could write more but this is frequent traveler forum and not a place to discuss politics and economics.
4. Conclusion
Yes QR accumulated losses, no QR is not a money pit and the shareholder benefits directly and indirectly. QR is a big part of Qatar's economy, no it is not there to substitute oil and gas revenues but it supports the non-oil and gas economy. As for 10 across 77W, sign of the times nothing more nothing less.
1. QR Shareholders
- QR was founded in 1993 as a completely private airline funded by a group of shareholders that included an insurance company, a travel agency and private individuals. It existed in that sense until 2001 when the Qatari government invested in a 50% stake.
- This status continued to 2013 when the government completely nationalised the airline.
- This is important to note because historically QR was FOUNDED as a profit making venture, not a government tool or for other motives such as PR (at the time).
- When the government invested there were other strategic goals, yet QR was run commercially. Otherwise why wouldn't QR have the prestige of First Class on all wide bodies, why remove the bars of the A346 and so on. This is important in the context of the 10 across in the 77W which is not born out of a sudden desire to make money but rather industry trends and competitive pressure.
2. Financials
- Going by the publicly released information, QR has an overall accumulated loss.
- High levels of expansion are very costly both in terms of unit cost and unit revenues, however expansion is necessary in QR's business model both for long term profits and long term competitive advantage. If QR halts expansion and trims capacity in certain markets they can achieve more consistent profits but it will reduce long term viability of the airline and reduce its other affects on Qatar's economy. Having a long term investor helps achieve that compared to have publicly traded company where there is much more pressure to achieve quarterly short term profits.
- The profits of QJET and QALC (neither of which is a QR subsidiary so their results don't reflect on QR's balance sheets and both of which rely on QR as the main client) along with other related entities are probably sufficient to cover whatever losses QR makes. Both which are owned by the same shareholders (indirectly in the case of QJET) so in effect overall the shareholder's losses in QR are covered by the profits in other holdings which rely on QR to operate.
- QR has highly profitable subsidiaries that rely on QR as the main client, such as Qatar Aircraft Catering Company, Qatar Aviation Services or rely on QR's customers such as Qatar Duty Free which alone generates hundreds of millions of dollars in revenue.
3. Economy and other strategic goals
- QR/Hamad by themselves directly generate a lot of economic activity in Qatar. They have a lot of suppliers and support a lot of businesses that wouldn't exist if Hamad wasn't a major transit hub.
- QR/Hamad Airport directly and indirectly employ tens of thousands of employees, most of which is high quality employment. QR in fact is one of the largest employers in Qatar. This induces a lot of economic activity such as housing demand, retail demand and so on. This is good for the economy, expands the local market and even generates the government money directly in fees, customs duty and in the near future VAT.
- QR generates a lot of its revenue outside of Qatar bringing in foreign exchange that is spent significantly in Qatar and retains a big portion of currency that would have left Qatar if air travel relied more on other airlines.
- Research shows there is a direct correlation between perceptions of quality of life and the availability of air links. An airline that flies frequently to six continents helps improve the quality of life of Qatar's expatriate population.
- The availability of air links stimulates trade and tourism. It is also a factor in the awards of major sporting events, major conferences and exhibitions and it helps in attracting businesses and so on. A lot of the hotels in Qatar (and their tax revenues) would shut down without QR.
- As a country that relies significantly on imports for food, medicine and consumer goods QR is strategically important to ensure security of the supply lines. Belly capacity is very cheap compared to dedicated freighter aircraft and there wouldn't be so much belly capacity in Qatar if it wasn't for QR. This cheap belly capacity helps keep reduce the cost of imports into Qatar, it also makes future exports more competitive and helps the transhipment and logistics industries which will be a big part of Qatar's future plans.
- The often mentioned PR effect, many people heard of Qatar from QR. But as you can see this is insignificant related to all the above.
I could write more but this is frequent traveler forum and not a place to discuss politics and economics.
4. Conclusion
Yes QR accumulated losses, no QR is not a money pit and the shareholder benefits directly and indirectly. QR is a big part of Qatar's economy, no it is not there to substitute oil and gas revenues but it supports the non-oil and gas economy. As for 10 across 77W, sign of the times nothing more nothing less.
Last edited by N1Rotate; Aug 26, 2015 at 12:00 pm
Aug 26, 2015, 12:19 pm
#47
Join Date: Apr 2009
Location: Doha, Qatar
Programs: QR Gold
Posts: 772
N1, you hit the nerve, spot on:
Another note to point out is that QR owns the subsidiary for all alcohol in Qatar; including that of hotels, restaurants, and the airline itself. Therefore, if you look at the whole picture, Qatar Airways "might" be profitable.
I think QR by itself is profitable (albeit perhaps not by a big margin). Why would QR increase frequencies to destinations, where it could save money and not increase frequencies? QR relied recently since 2012 on ultra-dense 787s and flew them to destinations to increase capacities. There must be cost-savings in those routes.
Another note to point out is that QR owns the subsidiary for all alcohol in Qatar; including that of hotels, restaurants, and the airline itself. Therefore, if you look at the whole picture, Qatar Airways "might" be profitable.
I think QR by itself is profitable (albeit perhaps not by a big margin). Why would QR increase frequencies to destinations, where it could save money and not increase frequencies? QR relied recently since 2012 on ultra-dense 787s and flew them to destinations to increase capacities. There must be cost-savings in those routes.
Aug 26, 2015, 3:53 pm
#48
FlyerTalk Evangelist
Join Date: May 2007
Programs: BA Gold
Posts: 12,046
Nonsense. If that were the case, then:
i) Ihab Amin, Fathi Al Shehab and Ali Al Rais would have been sacked long ago
ii) Akbar Al Baker would not be allowing all the commercial decisions that he does which are not aligned with commercial best-practice, including:
* premium fares from Qatar that do not effectively capture the business and first class market's willingness to pay
* lack of fare families across the network that allow travel agents to churn PNRs without any penalty
* overly generous free and often unpublished excess baggage allowances
* a black market in Privilege Club points for Qatari nationals
* discounts for all the Qatari nationals with a family member at the Ministry of the Interior which is, you guessed it, all of them!
iii) Akbar Al Baker would not see fit to bug the phones and personal Internet connections of his executives, or to install CCTV in their offices
iv) QR would increase the pay bands within a particular pay grade rather than recruiting at higher grades because at the pay scales applicable to a grade which was used for a particular role in the past are no longer appropriate to recruit the talent that the airline needs, resulting in overpayment (rather than appropriate payment) for many positions and increasing churn as people who do not want to be promoted find their real pay shrinking year after year and so leave
v) QR would allow all staff, not just managers, and also children to take ID90s in business and first class (this would generate USD 10 million annually and would be pure profit)
vi) QR would offer intelligently designed ancillary products, including the sale of high quality food and beverage that people actually want to eat rather than rubbish that just goes in the bin on short haul routes.
Akbar Al Baker is advised, wrongly in my view, that first class is a dying breed globally. This is because the people who are involved with the aircraft configuration are all sourced from other markets (where F is indeed going out of fashion) and do not understand the mindset of first class travellers like those living in Doha.
All the evidence shows that Qatar is such a strong first class market and that it would be more profitable to sell F on a commercial basis (which they do not do currently because of the political need to bribe the Qatari nationals with [relatively] cheap premium travel) and to take out Y seats which are currently obtaining such rubbish yields after agency commission and other costs of sale that it is barely worth taking the passenger at all.
To be fair nobody actually used the bar. What they should have done, which they would have done if they were a commercially-run airline, was to have opened it to business class passengers and conducted research to show whether or not it really drove revenue enough to be worth it's while. This analysis was not done and instead the bar was taken off on a whim.
There is a big difference between the advice which Akbar Al Baker receives, which is based mainly on people panicking and fearing for their jobs, and sound, commercially robust decisions.
Having worked with almost every area of operations at QR (apart from flight ops and maintenance) I have seen the panicking and plucking of figures out of the air that goes on.
In fact, sensible airline groups like IAG who start from the principle that aircraft should only deviate from maximum density and minimum weight do not and will not operate 10-abreast on the 777. I am quite sure that we will be hearing from BA soon that their 787 will be reconfigured from 9-abreast to 8-abreast.
They are definitely not profitable. They increase frequencies because they have to put the aircraft somewhere.
9-abreast on the 787 is an awful configuration that is based on "market practice" but does not actually, when you read all the complaints and analyse the lost revenue opportunities properly, stand commercial scrutiny.
i) Ihab Amin, Fathi Al Shehab and Ali Al Rais would have been sacked long ago
ii) Akbar Al Baker would not be allowing all the commercial decisions that he does which are not aligned with commercial best-practice, including:
* premium fares from Qatar that do not effectively capture the business and first class market's willingness to pay
* lack of fare families across the network that allow travel agents to churn PNRs without any penalty
* overly generous free and often unpublished excess baggage allowances
* a black market in Privilege Club points for Qatari nationals
* discounts for all the Qatari nationals with a family member at the Ministry of the Interior which is, you guessed it, all of them!
iii) Akbar Al Baker would not see fit to bug the phones and personal Internet connections of his executives, or to install CCTV in their offices
iv) QR would increase the pay bands within a particular pay grade rather than recruiting at higher grades because at the pay scales applicable to a grade which was used for a particular role in the past are no longer appropriate to recruit the talent that the airline needs, resulting in overpayment (rather than appropriate payment) for many positions and increasing churn as people who do not want to be promoted find their real pay shrinking year after year and so leave
v) QR would allow all staff, not just managers, and also children to take ID90s in business and first class (this would generate USD 10 million annually and would be pure profit)
vi) QR would offer intelligently designed ancillary products, including the sale of high quality food and beverage that people actually want to eat rather than rubbish that just goes in the bin on short haul routes.
Akbar Al Baker is advised, wrongly in my view, that first class is a dying breed globally. This is because the people who are involved with the aircraft configuration are all sourced from other markets (where F is indeed going out of fashion) and do not understand the mindset of first class travellers like those living in Doha.
All the evidence shows that Qatar is such a strong first class market and that it would be more profitable to sell F on a commercial basis (which they do not do currently because of the political need to bribe the Qatari nationals with [relatively] cheap premium travel) and to take out Y seats which are currently obtaining such rubbish yields after agency commission and other costs of sale that it is barely worth taking the passenger at all.
To be fair nobody actually used the bar. What they should have done, which they would have done if they were a commercially-run airline, was to have opened it to business class passengers and conducted research to show whether or not it really drove revenue enough to be worth it's while. This analysis was not done and instead the bar was taken off on a whim.
Having worked with almost every area of operations at QR (apart from flight ops and maintenance) I have seen the panicking and plucking of figures out of the air that goes on.
In fact, sensible airline groups like IAG who start from the principle that aircraft should only deviate from maximum density and minimum weight do not and will not operate 10-abreast on the 777. I am quite sure that we will be hearing from BA soon that their 787 will be reconfigured from 9-abreast to 8-abreast.
I think QR by itself is profitable (albeit perhaps not by a big margin). Why would QR increase frequencies to destinations, where it could save money and not increase frequencies? QR relied recently since 2012 on ultra-dense 787s and flew them to destinations to increase capacities. There must be cost-savings in those routes.
9-abreast on the 787 is an awful configuration that is based on "market practice" but does not actually, when you read all the complaints and analyse the lost revenue opportunities properly, stand commercial scrutiny.
Aug 26, 2015, 4:18 pm
#49
Join Date: Dec 2009
Posts: 842
Nonsense. If that were the case, then:
i) Ihab Amin, Fathi Al Shehab and Ali Al Rais would have been sacked long ago
ii) Akbar Al Baker would not be allowing all the commercial decisions that he does which are not aligned with commercial best-practice, including:
* premium fares from Qatar that do not effectively capture the business and first class market's willingness to pay
* lack of fare families across the network that allow travel agents to churn PNRs without any penalty
* overly generous free and often unpublished excess baggage allowances
* a black market in Privilege Club points for Qatari nationals
* discounts for all the Qatari nationals with a family member at the Ministry of the Interior which is, you guessed it, all of them!
iii) Akbar Al Baker would not see fit to bug the phones and personal Internet connections of his executives, or to install CCTV in their offices
iv) QR would increase the pay bands within a particular pay grade rather than recruiting at higher grades because at the pay scales applicable to a grade which was used for a particular role in the past are no longer appropriate to recruit the talent that the airline needs, resulting in overpayment (rather than appropriate payment) for many positions and increasing churn as people who do not want to be promoted find their real pay shrinking year after year and so leave
v) QR would allow all staff, not just managers, and also children to take ID90s in business and first class (this would generate USD 10 million annually and would be pure profit)
vi) QR would offer intelligently designed ancillary products, including the sale of high quality food and beverage that people actually want to eat rather than rubbish that just goes in the bin on short haul routes.
Akbar Al Baker is advised, wrongly in my view, that first class is a dying breed globally. This is because the people who are involved with the aircraft configuration are all sourced from other markets (where F is indeed going out of fashion) and do not understand the mindset of first class travellers like those living in Doha.
All the evidence shows that Qatar is such a strong first class market and that it would be more profitable to sell F on a commercial basis (which they do not do currently because of the political need to bribe the Qatari nationals with [relatively] cheap premium travel) and to take out Y seats which are currently obtaining such rubbish yields after agency commission and other costs of sale that it is barely worth taking the passenger at all.
To be fair nobody actually used the bar. What they should have done, which they would have done if they were a commercially-run airline, was to have opened it to business class passengers and conducted research to show whether or not it really drove revenue enough to be worth it's while. This analysis was not done and instead the bar was taken off on a whim.
There is a big difference between the advice which Akbar Al Baker receives, which is based mainly on people panicking and fearing for their jobs, and sound, commercially robust decisions.
Having worked with almost every area of operations at QR (apart from flight ops and maintenance) I have seen the panicking and plucking of figures out of the air that goes on.
In fact, sensible airline groups like IAG who start from the principle that aircraft should only deviate from maximum density and minimum weight do not and will not operate 10-abreast on the 777. I am quite sure that we will be hearing from BA soon that their 787 will be reconfigured from 9-abreast to 8-abreast.
They are definitely not profitable. They increase frequencies because they have to put the aircraft somewhere.
9-abreast on the 787 is an awful configuration that is based on "market practice" but does not actually, when you read all the complaints and analyse the lost revenue opportunities properly, stand commercial scrutiny.
i) Ihab Amin, Fathi Al Shehab and Ali Al Rais would have been sacked long ago
ii) Akbar Al Baker would not be allowing all the commercial decisions that he does which are not aligned with commercial best-practice, including:
* premium fares from Qatar that do not effectively capture the business and first class market's willingness to pay
* lack of fare families across the network that allow travel agents to churn PNRs without any penalty
* overly generous free and often unpublished excess baggage allowances
* a black market in Privilege Club points for Qatari nationals
* discounts for all the Qatari nationals with a family member at the Ministry of the Interior which is, you guessed it, all of them!
iii) Akbar Al Baker would not see fit to bug the phones and personal Internet connections of his executives, or to install CCTV in their offices
iv) QR would increase the pay bands within a particular pay grade rather than recruiting at higher grades because at the pay scales applicable to a grade which was used for a particular role in the past are no longer appropriate to recruit the talent that the airline needs, resulting in overpayment (rather than appropriate payment) for many positions and increasing churn as people who do not want to be promoted find their real pay shrinking year after year and so leave
v) QR would allow all staff, not just managers, and also children to take ID90s in business and first class (this would generate USD 10 million annually and would be pure profit)
vi) QR would offer intelligently designed ancillary products, including the sale of high quality food and beverage that people actually want to eat rather than rubbish that just goes in the bin on short haul routes.
Akbar Al Baker is advised, wrongly in my view, that first class is a dying breed globally. This is because the people who are involved with the aircraft configuration are all sourced from other markets (where F is indeed going out of fashion) and do not understand the mindset of first class travellers like those living in Doha.
All the evidence shows that Qatar is such a strong first class market and that it would be more profitable to sell F on a commercial basis (which they do not do currently because of the political need to bribe the Qatari nationals with [relatively] cheap premium travel) and to take out Y seats which are currently obtaining such rubbish yields after agency commission and other costs of sale that it is barely worth taking the passenger at all.
To be fair nobody actually used the bar. What they should have done, which they would have done if they were a commercially-run airline, was to have opened it to business class passengers and conducted research to show whether or not it really drove revenue enough to be worth it's while. This analysis was not done and instead the bar was taken off on a whim.
There is a big difference between the advice which Akbar Al Baker receives, which is based mainly on people panicking and fearing for their jobs, and sound, commercially robust decisions.
Having worked with almost every area of operations at QR (apart from flight ops and maintenance) I have seen the panicking and plucking of figures out of the air that goes on.
In fact, sensible airline groups like IAG who start from the principle that aircraft should only deviate from maximum density and minimum weight do not and will not operate 10-abreast on the 777. I am quite sure that we will be hearing from BA soon that their 787 will be reconfigured from 9-abreast to 8-abreast.
They are definitely not profitable. They increase frequencies because they have to put the aircraft somewhere.
9-abreast on the 787 is an awful configuration that is based on "market practice" but does not actually, when you read all the complaints and analyse the lost revenue opportunities properly, stand commercial scrutiny.
Would you say that Nokia or GM or AOL are not commercially run or profit driven, they have all made wrong decisions, missed opportunities and mistakes. Is Airbus not commercially driven because the A340 and A380 were flops? Is Boeing not commercially run as seen with the tanker scandal or the 4 year delay, battery issues and huge cost over runs on the 787 along with selling a big bunch of them at below production cost while the huge backlog even with the subsequent increased pricing indicates that Boeing didn't have to discount as much? Is Cathay Pacific not commercially run because they had an ill advised fuel hedging strategy that cost them hundreds of millions? Is Delta (one of the most profitable airlines in the world) not commercially run because they tried and failed at running a low cost airline? Does BA have the wrong advisors for choosing one the least popular and more problematic IFE systems (Rockwell) on the market? Is Amazon not run commercially because they use CCTV to monitor employee productivity?
Regarding IAG/BA, you do realise they just increased the density in the A320 fleet with 30" seat pitch in Business, have one of the most dense long haul first and flat business class seating (effectively 8 across on the 777 / they fit 32J between L1 and L2 on the 777 vs 24 at QR for example) and have just unveiled the 787-9 configuration at 9 abreast (which is operated 9-abreast by every airline except JAL and some ANA aircraft). At the last financial results presentation they announced that they are considering 10 abreast in the 777 fleet as a way to "enhance" capacity.
In any case I don't wish to continue discussing this subject, there is a fine line between me being unprofessional and talking about internal issues of my ex-employer in a public forum and talking about the industry and Qatar (the country) in general.
Last edited by N1Rotate; Aug 26, 2015 at 8:00 pm Reason: Clarity and final note.
Aug 27, 2015, 2:25 am
#50
FlyerTalk Evangelist
Join Date: May 2007
Programs: BA Gold
Posts: 12,046
Just because it is not run the best or most optimum way doesn't mean it isn't run on commercial terms, the aim at the end of the day is to build a profitable and sustainable company. By the way with regards to large government linked entities in Qatar "run commercially" means run with the aim of being self sustaining financially.
and have just unveiled the 787-9 configuration at 9 abreast (which is operated 9-abreast by every airline except JAL and some ANA aircraft). At the last financial results presentation they announced that they are considering 10 abreast in the 777 fleet as a way to "enhance" capacity.
But now the complaints about tight seating will be flowing in I am confident that they will find the business case for a reconfiguration. I also expect that feedback from 787 will be sufficient for them to see the revenue case to stop them moving to 10-abreast on 777.
When you are there you have no rights at all, so when you are gone Qatar law no longer applies and there is nothing stopping you doing and saying whatever you like.
QR recently sent a letter to one of my friends in the UK (the ex-VP of Product Development) telling her to stop talking to other people, both airlines and suppliers, about her experience there. We both agreed that this was a load of nonsense and she should tell them to Foxtrot Oscar.
Aug 27, 2015, 2:54 am
#51
Join Date: Apr 2009
Location: Doha, Qatar
Programs: QR Gold
Posts: 772
Sixth Freedom,
Ministry of Interior employyes to do not get free tickets or subsidized fares as you suggested. My father is a (high-ranking) employee and we get nothing. Nor do Qatari nationals get extra points or black-miles or some other fictional stories that you suggested. How do you make up these stories?
First Class has been removed from QR flights as the loads were terrible. Although there are a few people traveling first, normally the cabin flies empty or fewer than 1 or 2 people. I do not get how you calculated that there is a high demand for First class.
It is highly disturbing that anybody who for five years working for a particular company just turn completely against their employer once they leave their job in that regard. Why on earth would anybody reemploy such a person in their business is beyond me. But, then again, you are enjoying your "freedoms" where it is considered "acceptable" to forgo public decorum and moral responsibility for the sake of "freedom". You have every right to do so, so congratulations.
Ministry of Interior employyes to do not get free tickets or subsidized fares as you suggested. My father is a (high-ranking) employee and we get nothing. Nor do Qatari nationals get extra points or black-miles or some other fictional stories that you suggested. How do you make up these stories?
First Class has been removed from QR flights as the loads were terrible. Although there are a few people traveling first, normally the cabin flies empty or fewer than 1 or 2 people. I do not get how you calculated that there is a high demand for First class.
It is highly disturbing that anybody who for five years working for a particular company just turn completely against their employer once they leave their job in that regard. Why on earth would anybody reemploy such a person in their business is beyond me. But, then again, you are enjoying your "freedoms" where it is considered "acceptable" to forgo public decorum and moral responsibility for the sake of "freedom". You have every right to do so, so congratulations.
Aug 27, 2015, 4:39 am
#52
Join Date: Oct 2014
Posts: 404
I tried to stay out of this but here goes:
1. QR Shareholders
- QR was founded in 1993 as a completely private airline funded by a group of shareholders that included an insurance company, a travel agency and private individuals. It existed in that sense until 2001 when the Qatari government invested in a 50% stake.
- This status continued to 2013 when the government completely nationalised the airline.
- This is important to note because historically QR was FOUNDED as a profit making venture, not a government tool or for other motives such as PR (at the time).
- When the government invested there were other strategic goals, yet QR was run commercially. Otherwise why wouldn't QR have the prestige of First Class on all wide bodies, why remove the bars of the A346 and so on. This is important in the context of the 10 across in the 77W which is not born out of a sudden desire to make money but rather industry trends and competitive pressure.
2. Financials
- Going by the publicly released information, QR has an overall accumulated loss.
- High levels of expansion are very costly both in terms of unit cost and unit revenues, however expansion is necessary in QR's business model both for long term profits and long term competitive advantage. If QR halts expansion and trims capacity in certain markets they can achieve more consistent profits but it will reduce long term viability of the airline and reduce its other affects on Qatar's economy. Having a long term investor helps achieve that compared to have publicly traded company where there is much more pressure to achieve quarterly short term profits.
- The profits of QJET and QALC (neither of which is a QR subsidiary so their results don't reflect on QR's balance sheets and both of which rely on QR as the main client) along with other related entities are probably sufficient to cover whatever losses QR makes. Both which are owned by the same shareholders (indirectly in the case of QJET) so in effect overall the shareholder's losses in QR are covered by the profits in other holdings which rely on QR to operate.
- QR has highly profitable subsidiaries that rely on QR as the main client, such as Qatar Aircraft Catering Company, Qatar Aviation Services or rely on QR's customers such as Qatar Duty Free which alone generates hundreds of millions of dollars in revenue.
3. Economy and other strategic goals
- QR/Hamad by themselves directly generate a lot of economic activity in Qatar. They have a lot of suppliers and support a lot of businesses that wouldn't exist if Hamad wasn't a major transit hub.
- QR/Hamad Airport directly and indirectly employ tens of thousands of employees, most of which is high quality employment. QR in fact is one of the largest employers in Qatar. This induces a lot of economic activity such as housing demand, retail demand and so on. This is good for the economy, expands the local market and even generates the government money directly in fees, customs duty and in the near future VAT.
- QR generates a lot of its revenue outside of Qatar bringing in foreign exchange that is spent significantly in Qatar and retains a big portion of currency that would have left Qatar if air travel relied more on other airlines.
- Research shows there is a direct correlation between perceptions of quality of life and the availability of air links. An airline that flies frequently to six continents helps improve the quality of life of Qatar's expatriate population.
- The availability of air links stimulates trade and tourism. It is also a factor in the awards of major sporting events, major conferences and exhibitions and it helps in attracting businesses and so on. A lot of the hotels in Qatar (and their tax revenues) would shut down without QR.
- As a country that relies significantly on imports for food, medicine and consumer goods QR is strategically important to ensure security of the supply lines. Belly capacity is very cheap compared to dedicated freighter aircraft and there wouldn't be so much belly capacity in Qatar if it wasn't for QR. This cheap belly capacity helps keep reduce the cost of imports into Qatar, it also makes future exports more competitive and helps the transhipment and logistics industries which will be a big part of Qatar's future plans.
- The often mentioned PR effect, many people heard of Qatar from QR. But as you can see this is insignificant related to all the above.
I could write more but this is frequent traveler forum and not a place to discuss politics and economics.
4. Conclusion
Yes QR accumulated losses, no QR is not a money pit and the shareholder benefits directly and indirectly. QR is a big part of Qatar's economy, no it is not there to substitute oil and gas revenues but it supports the non-oil and gas economy. As for 10 across 77W, sign of the times nothing more nothing less.
1. QR Shareholders
- QR was founded in 1993 as a completely private airline funded by a group of shareholders that included an insurance company, a travel agency and private individuals. It existed in that sense until 2001 when the Qatari government invested in a 50% stake.
- This status continued to 2013 when the government completely nationalised the airline.
- This is important to note because historically QR was FOUNDED as a profit making venture, not a government tool or for other motives such as PR (at the time).
- When the government invested there were other strategic goals, yet QR was run commercially. Otherwise why wouldn't QR have the prestige of First Class on all wide bodies, why remove the bars of the A346 and so on. This is important in the context of the 10 across in the 77W which is not born out of a sudden desire to make money but rather industry trends and competitive pressure.
2. Financials
- Going by the publicly released information, QR has an overall accumulated loss.
- High levels of expansion are very costly both in terms of unit cost and unit revenues, however expansion is necessary in QR's business model both for long term profits and long term competitive advantage. If QR halts expansion and trims capacity in certain markets they can achieve more consistent profits but it will reduce long term viability of the airline and reduce its other affects on Qatar's economy. Having a long term investor helps achieve that compared to have publicly traded company where there is much more pressure to achieve quarterly short term profits.
- The profits of QJET and QALC (neither of which is a QR subsidiary so their results don't reflect on QR's balance sheets and both of which rely on QR as the main client) along with other related entities are probably sufficient to cover whatever losses QR makes. Both which are owned by the same shareholders (indirectly in the case of QJET) so in effect overall the shareholder's losses in QR are covered by the profits in other holdings which rely on QR to operate.
- QR has highly profitable subsidiaries that rely on QR as the main client, such as Qatar Aircraft Catering Company, Qatar Aviation Services or rely on QR's customers such as Qatar Duty Free which alone generates hundreds of millions of dollars in revenue.
3. Economy and other strategic goals
- QR/Hamad by themselves directly generate a lot of economic activity in Qatar. They have a lot of suppliers and support a lot of businesses that wouldn't exist if Hamad wasn't a major transit hub.
- QR/Hamad Airport directly and indirectly employ tens of thousands of employees, most of which is high quality employment. QR in fact is one of the largest employers in Qatar. This induces a lot of economic activity such as housing demand, retail demand and so on. This is good for the economy, expands the local market and even generates the government money directly in fees, customs duty and in the near future VAT.
- QR generates a lot of its revenue outside of Qatar bringing in foreign exchange that is spent significantly in Qatar and retains a big portion of currency that would have left Qatar if air travel relied more on other airlines.
- Research shows there is a direct correlation between perceptions of quality of life and the availability of air links. An airline that flies frequently to six continents helps improve the quality of life of Qatar's expatriate population.
- The availability of air links stimulates trade and tourism. It is also a factor in the awards of major sporting events, major conferences and exhibitions and it helps in attracting businesses and so on. A lot of the hotels in Qatar (and their tax revenues) would shut down without QR.
- As a country that relies significantly on imports for food, medicine and consumer goods QR is strategically important to ensure security of the supply lines. Belly capacity is very cheap compared to dedicated freighter aircraft and there wouldn't be so much belly capacity in Qatar if it wasn't for QR. This cheap belly capacity helps keep reduce the cost of imports into Qatar, it also makes future exports more competitive and helps the transhipment and logistics industries which will be a big part of Qatar's future plans.
- The often mentioned PR effect, many people heard of Qatar from QR. But as you can see this is insignificant related to all the above.
I could write more but this is frequent traveler forum and not a place to discuss politics and economics.
4. Conclusion
Yes QR accumulated losses, no QR is not a money pit and the shareholder benefits directly and indirectly. QR is a big part of Qatar's economy, no it is not there to substitute oil and gas revenues but it supports the non-oil and gas economy. As for 10 across 77W, sign of the times nothing more nothing less.
Out of interest what are the loads like for QR? Are they competitive with other carriers? I can't imagine routes like twice daily to Copenhagen make the company a profit?
Aug 27, 2015, 4:49 am
#53
FlyerTalk Evangelist
Join Date: May 2007
Programs: BA Gold
Posts: 12,046
i) QR really looks after the rank and file:
* company housing is easy to get, of not unreasonable quality for Doha and most importantly safe and secure
* on-boarding is great, with plenty of staff to make sure that you are well set up in Qatar with a bank account and knowledge of things to do in your spare time and how to get involved in the community
* services are amazing - exit permits were issued quickly and efficiently, and the one time that my salary did not appear in my bank account HR pulled out all the stops to make sure that it was there the next day
ii) There are great opportunities for dynamic, enthusiastic individuals to really change the world - although QR's pricing is not perfect I was able to take it a long way from where we started - if I had joined a more mature airline like BA it would have taken me two or three times as long to get the experience and understanding I did at QR
iii) Top management have an open door policy and will both listen to what you have to say and attend your presentations, even though for whatever reason very little action will be taken in the end
iv) There are people from so many cultures and backgrounds there that there are tremendous opportunities to grow as a person - having attended the LSE, which has a similarly international mix, I was quite at home
I would absolutely recommend working at QR to anybody considering an expat assignment. However now that the company is more mature the opportunities to form it yourself may be somewhat diminished against when I arrived.
I love QR really. But by stating the facts as I see them it is tough love!
Now onto your specific points:
Demand comes almost entirely from Doha, as does a high (but relatively much lower) proportion of business class demand.
QR should be offering compelling premium fares for seats that would otherwise go unsold. On a Monday mid day flight to London for example I would adopt the following pricing strategy:
* First class = current business class (about QAR 14k) + QAR 1k
* Business class = current economy class (about QAR 6k) + QAR 1k
These fares would be closer to international benchmarks for ex-hub off-peak travel entry fares, aligned with decent yields elsewhere on the network and much lower than the current entry fares, which I believe are too high.
This would give people an incentive to upsell to the higher cabin at an affordable price and also free economy seats to sell to other passengers. It is preferable to overbooking in tourist class because there is a small revenue increment and you open and close availability within the booking window to ensure that people who would otherwise pay the fully flexible first class fare continue to do so. It would also capture more price sensitive premium passengers who would otherwise travel on BA, EK, EY or GF and put them in seats that would otherwise be spoiled. Experience suggests that people would upgrade from business to first if the price was right so any revenue dilution effect would not be a show-stopper.
At the same time, you sell first class seats that would otherwise go unsold.
On a Thursday or pre-eid flight London however the fares are too low. International benchmarks and my own elasticity studies using internal data suggested that QR could realistically obtain fares around QAR 70k in first class and QAR 40k in business class. This compares with actual fares of QAR 35k and QAR 27k respectively.
This type of pricing would both increase first class loads and dramatically improve the profitability of the cabin.
Last edited by Sixth Freedom; Aug 27, 2015 at 5:22 am
Aug 27, 2015, 8:13 am
#54
Join Date: Oct 2014
Posts: 404
I do love how this has become a discussion between 3/2 ex/current employees when the original discussion was about a 10 wide 777. Good tangent fellas!
What is anyone going to do about the legroom and width on these damned things? I am awaiting the public health examination of the seating conditions in economy! I can totally see why PE has become so popular.
What is anyone going to do about the legroom and width on these damned things? I am awaiting the public health examination of the seating conditions in economy! I can totally see why PE has become so popular.
Aug 28, 2015, 4:15 am
#56
Join Date: Dec 2009
Posts: 842
Sep 1, 2015, 7:33 am
#57
Join Date: May 2014
Posts: 25
http://flight-report.com/en/report-11429.html
you can see it here http://cdn2.flight-report.com/photos...ept%20(34).JPG
Extra Slim seats.
you can see it here http://cdn2.flight-report.com/photos...ept%20(34).JPG
Extra Slim seats.
Sep 3, 2015, 2:48 am
#59
Original Poster
Join Date: Dec 2011
Location: DWC
Programs: OWS, *A G
Posts: 626
http://flight-report.com/en/report-11429.html
you can see it here http://cdn2.flight-report.com/photos...ept%20(34).JPG
Extra Slim seats.
you can see it here http://cdn2.flight-report.com/photos...ept%20(34).JPG
Extra Slim seats.
The legroom does look a lot. N1Rotate has mentioned the pitch would be one inch more than on the 787, plus we have the effect of the thinner seats in our favour.
BTW, is there a metric that us passengers would rather value over the misleading seat pitch? Due to the varying seat thickness (thinness?) of seats, we are comparing apples and pears.
I am thinking (seat pitch - seat thickness): we could call it pitchness, ha ha
Sep 3, 2015, 3:35 am
#60
Join Date: Oct 2006
Location: London
Programs: Many. Too many. I came here to cut them down. I failed.
Posts: 2,999
I'm fascinated by Sixth Freedom's claim that a Business Case will be put across so that QR drops the 10 across 777, and 9 across 787 - in terms of how long this will take? Will this take many moons to achieve?
Only because QR as an airline impress me in many things they do, however, they will rapidly disappear as my airline of choice unless I can guarantee myself an A380 or A350 (what a great plane!).
I havn't checked the stats, but I hope Airbus doesn't decide like Boeing did with the 787 that they can 'squeeze' in an extra seat on the A350 for 'charter and domestic' configurations. The A350 on QR is a great experience.
As an aside, can anyone advise if culturally (yes i've only ever transitted) it is likely that Hamad International Airport will accept a 'Irish Bar' or similar to be built in? My recent 4 hour from midnight stay led me to wish I was stuck in Dubai airport..!
Only because QR as an airline impress me in many things they do, however, they will rapidly disappear as my airline of choice unless I can guarantee myself an A380 or A350 (what a great plane!).
I havn't checked the stats, but I hope Airbus doesn't decide like Boeing did with the 787 that they can 'squeeze' in an extra seat on the A350 for 'charter and domestic' configurations. The A350 on QR is a great experience.
As an aside, can anyone advise if culturally (yes i've only ever transitted) it is likely that Hamad International Airport will accept a 'Irish Bar' or similar to be built in? My recent 4 hour from midnight stay led me to wish I was stuck in Dubai airport..!