Qatar Airways says excess capacity putting pressure on fares

Qatar Airways Chief Commercial Officer Thierry Antinori said the carrier is experiencing some pressure on airfares as rivals particularly in southeast Asia and Australia pump more capacity into the market and the post-pandemic travel rebound begins to moderate.

“The seat factor has stayed high, so we’re able to generate traffic in line with our seat growth, but we have pressure on yields because we have more capacity in the market, and maybe a bit less of a catch-up effect in general,” Antinori said in an interview in Hamburg, a day after the airline began its daily direct service to the northern German city from its hub in Doha. 

Antinori said the pressure points are most noticeable in business that’s eastbound from Doha, while operations into the western hemisphere are “quite stable.” Business is also steady into Africa, where Qatar Airways has opened several new routes, including to Kinshasa in the Democratic Republic of the Congo last month. 

Part of the yield pressure is down to some major carriers in southeast Asia showing growth of as much as 40% that’s adding capacity at a time when the post-Covid pent up demand for travel is “normalizing,” Antinori said. Still, capacity is partly being kept in check as airlines are not getting new aircraft at the rate that they’ve ordered, he said, because jet manufacturers Airbus SE and Boeing Co. are struggling to ramp up output. 

The company continues to do very well in its cargo operations, Antinori said. 

Business into markets like Paris has remained strong, Antinori said, with close-to-full occupancy on the four daily flights the airline operates into the French capital. Air France-KLM said earlier this week that it’s noticing a drop-off in its French operations this summer because passengers are avoiding Paris to skirt possible disruptions and high prices during the Olympic Games. 

Antinori spoke on the same day that state-owned Qatar Airways announced earnings for its fiscal year, achieving what it said was the strongest financial performance in its 27-year history, with a profit of about $1.7 billion. Like larger regional rival Emirates, Qatar Airways has leveraged its geographic position at the crossroads of global flight paths, connecting more than 170 destinations from its Doha airport.

The Hamburg destination gives Qatar Airways a fifth access point into Germany, Europe’s largest economy. The carrier has also sought to gain more landing rights into Australia, though the local government has denied the airline more slots for the time being. Now Qatar Airways is in talks to acquire about 20% of Virgin Australia Airlines Pty, people familiar with the matter said last week. 

Antinori declined to comment on any discussions regarding an investment, which would require Australian government approval.

Closer to home in Saudi Arabia, the oil-rich kingdom is building a new airline with Riyadh Air that will seek to take back more business from established competitors like Qatar Airways and Emirates once it starts operating next year. Antinori said he’s not concerned about ceding some of the lucrative regional business to the startup because his airline is not “overexposed” in that part of the world. 

Besides, the new airline will help put the region on the map with more tourists, he said. 

“We wish them well,” Antinori said of Riyadh Air.