Flying In

Qatar

Economic News

22 Jul 2010
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The announcement of plans for a major new aircraft order from Qatar Airways has dovetailed nicely with news of further expansion planned in the country's hotel and tourism sector. Meanwhile, news from across the Indian Ocean is also likely to have an impact on traffic at Doha International Airport, both incoming and outgoing.



On August 4, Qatar Airways Chief Executive Akbar al-Baker told the press that the airline intended to sign deals worth $15.6bn for 80 Airbus and Boeing jets.



"We have committed and hopefully by September we will sign the official documents... and we will sign the purchase agreement in November," he said.



The order will consist of a mix of 60 Airbus A350-800 and A350-900 planes and 20 Boeing 777-200LR and 777-300ER aircraft.



Al-Baker then added that US industrial giant General Electric (GE) would likely provide the engines for the planes.



"The engine selection is in the final stages and we are looking favourably at GE," he said.



The deal represents a major boost for Airbus's order books, as well as underscoring confidence in the A350 jet, a medium-sized plane which beat off its Boeing rival to secure the bulk of the order.



At the same time, the order also represents Qatar Airways' continuing efforts to update its fleet, with nine of its older Airbus A300s now scheduled for either retirement or sale.



"We want to keep our fleet with an average age of six years old," al-Baker said.



This expansion comes at a time of increased activity by many of the Gulf's airlines. This has been connected to hikes in overall traffic through the region, but also to determined efforts by most Gulf Cooperation Council (GCC) members to boost their domestic tourism industries.



In Qatar's case, this expansion also comes ahead of the 2006 Asian Games in Doha and can be seen in the increasingly frantic efforts being made to expand hotel capacity. In this, Qatar Airways has taken a direct role in planning addition hotel capacity at Doha International Airport, while elsewhere in the city, the existing 3700 hotel rooms are set to be joined by an additional 1700.



At the moment too, demand for rooms is high. Occupancy rates are averaging around 82% currently, as Qatar's economic boom also brings in many business chiefs, contractors and workers needing accommodation.



"The line-up of mega projects, both in the energy and non-energy sectors, is long," one analyst told the Gulf Times in its August 7 edition. "Investments in excess of $100bn are expected both in the energy and non-energy sectors in the next few years. This warrants a lot of outbound and inbound travel by top executives and project managers among others."



High demand means finding a room is currently a tough task without some extensive advanced booking, while prices have also escalated. Most analysts also predict that this supply shortage is likely to persist in the short term, though ease off into the next two years as more high-end hotels come online.



The most recent of this class to open its doors was the Four Seasons at the West Bay, while next year should see Grand Hyatt and Ramada hotels also arriving. The following year, 2007, Renaissance, Marriott Courtyard and Marriott Executive Apartments, Shangri La and Accor are also expected to open.



Meanwhile though, at the lower rent end of the spectrum, accommodation and transport for the thousands of expatriate workers who come to Qatar is also an issue facing some strain.



In particular, there are controversies around cheap airlines, with Indian expatriate organisation Incas currently fighting a legal case over allegations of excessively high air fares being charged by Indian carriers heading for Gulf countries such as Qatar. With India a major source of expatriate labour, this has implications for traffic in and out of Doha. It was also an issue being hotly debated at the annual gathering of non-resident Keralites - who make up a giant slice of expatriate labourers - held in Thiruvananthapuram from August 6.



There, talks got underway on the formation of a new airline specifically targeted at Keralites and aiming to undercut the fares currently charged by Air India and others.



"We have made a study on the funding of the ambitious project," Doha-based businessman and general manager of the Behzad Group of Companies, CK Menon, told Gulf News on August 5. "Ways to mobilise funds have already been explored," he added, saying that shares in the proposed airline would be allotted to Keralites in the Gulf.



Time will tell whether the Keralites manage to achieve take off with this idea, but in the meantime, there is still no shortage of traffic coming in and out of Doha. With the economic boom likely to continue for some time to come too, there look to be clear skies ahead for both Qatar Airways and the capital's hotel owners.

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