Qatar Airways To Invest In Two African Airlines

Qatar Airways To Invest In Two African Airlines

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Qatar Airways is reportedly close to announcing investments in two different African airlines, which could have some interesting implications for aviation on the continent…

Qatar Airways’ creative plan to expand in Africa

Africa is one of the trickier continents for aviation, especially when it comes to long haul connectivity. You have some airlines in North Africa that do reasonably okay, and then you have Ethiopian Airlines, which is Africa’s most successful global airline. But beyond that, Africa lacks global players, with much of the intercontinental connectivity provided by foreign airlines.

While the “big three” Gulf carriers all have a respectable presence in Africa, airlines are always trying to find a competitive advantage. Along those lines, Qatar Airways CEO Badr Mohammed Al Meer has just shared some updates about two investments that the airline has planned in the region.

As he explains, Qatar Airways currently flies to over 30 destinations in Africa, and the carrier’s network in North Africa, West Africa, and East Africa, is growing organically. However, he notes that the airline is struggling with growing in Central Africa and Southern Africa, but the airline has plans to address that.

By the way, before we discuss the actual substance of what’s said, can I just note what a breath of fresh air Al Meer is, compared to his predecessor? He’s smart, he’s to the point, and he’s no drama. He doesn’t provide the same viral soundbites that Al Baker did, and I’d say that’s a good thing.

Qatar Airways plans RwandAir investment

Qatar Airways already has a partnership with RwandAir, and the airline soon plans to take this to the next level. The plan is for Qatar Airways to acquire a 49% stake in RwandAir, which is Rwanda’s national airline. This is part of a much bigger play, as Qatar also owns a 60% stake in the country’s new international airport, which is expected to take aviation in the country to the next level.

Kigali is getting a new international airport

Currently RwandAir is a small airline with just over a dozen aircraft. I imagine that once Qatar Airways invests in RwandAir, we’ll see the airline grow its fleet and network. For that matter, I imagine Qatar Airways will considerably increase service to Kigali, and possibly even add fifth freedom tag flights from the airport.

Really there’s nothing here that’s terribly surprising, as this investment has been in the works for years. However, it’s expected to be finalized soon.

Qatar Airways plans to invest in RwandAir

Qatar Airways plans investment in Southern African airline

Here’s the interesting new development. Qatar Airways’ CEO states that the airline is in the final stages of an equity investment in an airline in Southern Africa. As he explains it, this airline will be complementary to RwandAir, allowing a hub in Southern Africa, in the same way Kigali will be a hub in Central Africa.

Al Meer stopped short of revealing which airline Qatar Airways is investing in, though pointed out that there are only two or three airlines in Southern Africa that would be considered, and it should be easy to guess from there.

I could be missing something, but it seems like there are only two potential airlines that this could refer to — either South African Airways or Airlink. There aren’t any other major airlines in the region. I suppose some might argue that Air Mauritius or Air Seychelles are in Southern Africa (though they’re more in East Africa, in my opinion), but either way, those airlines don’t have good geography for a strategic regional hub.

So let’s talk about those two airlines a bit. We know that South African Airways has struggled financially. South Africa’s government has been trying to privatize the airline with no luck, though perhaps that’s finally changing. I’m curious how Qatar Airways would position South African Airways, though.

Presumably the primary goal would be to have strong regional connectivity to feed into Qatar Airways’ global network via Doha. I hope Qatar Airways’ plans aren’t too ambitious beyond that, because we’ve seen over and over that running South African Airways as a global carrier doesn’t work.

Airlink is another interesting option, as it’s an airline with a huge regional network in Southern Africa, and it has historically performed a bit better than South African Airways. That being said, I’m not sure what exactly Qatar Airways would gain by investing in the airline, rather than just having some sort of partnership for connectivity? The airline can provide Qatar Airways with feed in Johannesburg and Cape Town, though I’m not sure what more there could be to this?

Could Qatar Airways invest in South African Airways?

Bottom line

Qatar Airways is planning on expanding its connectivity in Africa, with investments in two African airlines.

We know that Qatar Airways is betting big on Rwanda, between Qatar’s 60% stake in Kigali’s new airport, plus Qatar Airways nearing a 49% equity investment in RwandAir.

The latest development is that Qatar Airways also plans to take a stake in an airline in Southern Africa in the near future. I have to imagine that South African Airways or Airlink are the airlines being considered, though it’s possible that I’m missing something.

What do you make of Qatar Airways’ Africa strategy?

Conversations (33)
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  1. PVM Guest

    Interestingly South African media are suggesting it is likely LAM Mozambique Airlines or Air Zimbabwe. Not a South African carrier. Apparently South Africa has foreign shareholding issues.

  2. glenn t Diamond

    hmm...... will this be yet another 'tears befor bedtime' episode?

  3. Sean M. Diamond

    You miss the very critical point that the Air Services Licensing Act states that any license holder in South Africa must meet the requirements of 51% ownership by South African citizens, as well as 75% ownership and control by residents of South Africa.

    Consequently, any investment into an airline licensed by South Africa would necessarily be limited to no more than 25% voting control.

  4. NS Member

    By the way, before we discuss the actual substance of what’s said, can I just note what a breath of fresh air Al Meer is, compared to his predecessor? He’s smart, he’s to the point, and he’s no drama. He doesn’t provide the same viral soundbites that Al Baker did, and I’d say that’s a good thing.

    The differences are really showing up, especially if you compare this to the investment decisions that have...

    By the way, before we discuss the actual substance of what’s said, can I just note what a breath of fresh air Al Meer is, compared to his predecessor? He’s smart, he’s to the point, and he’s no drama. He doesn’t provide the same viral soundbites that Al Baker did, and I’d say that’s a good thing.

    The differences are really showing up, especially if you compare this to the investment decisions that have been made under Akbar Al Baker administration (namely Air Italy) - though I can't criticise the IAG investment. QR also considered an acquisition of TAAG at one point during his administration, so...

    1. NS Member

      Sorry, I just made a typo and it somehow bolded all the comments below. Maybe writing an extra could help...

  5. InceptionCat Gold

    Actually it was the South African government that suspended what was apparently well advanced privatisation talks with Takatso Aviation around March 14th this year.
    Takatso was to take over 51% of SAA.
    SAA then announced a tiny profit and the government decided that SAA can survive on its own.

  6. Andy Guest

    I hope this does not become another Etihad style story. Could the new leadership at Qatar airways planning something along the lines of what Etihad did years ago. That wont end well.

  7. No more Colonies for Britain. Guest

    Plenty of Business in Future when Britain starts Deporting Refugees arriving to Britain to be sent to Rwanda. Relatives will be visiting those stuck in Rwanda.

    1. UncleRonnie Gold

      If more than two refugees actually end up in Rwanda, I’ll buy you a shower on a A380.

  8. Leigh Guest

    Let's not overlook FlySafair based out of JNB with a good regional network, with a route all the up to Zanzibar.

    When I was last traveling via JNB this time last year, it seemed the number of their aircraft stood out, exceeding both SAA and AirLink

    1. Haydon Guest

      Definitely not FlySafair

  9. stogieguy7 Diamond

    So, Qatar Airways must be doing well and having a lot of money piled up in their accounts. That means it's time to throw some into the incinerator. Etihad knows a thing or two about this method of getting rid pesky funds quickly.

  10. Icarus Guest

    Kigali, for all those people the U.K. conservatives want to deport in return for huge amounts of cash to rebuild their infrastructure.

  11. Throwawayname Guest

    It doesn't have to be a 'major airline'- after all, Rwandair is no KQ or ET. LM and TAAG both have reasonable networks with some intercontinental service, there's oil and gas traffic and the respective governments are looking to develop inbound tourism. South Africa is already well served by numerous carriers, it seems more sensible to try and open new markets with better yield potential.

  12. Scott Guest

    Surely they are looking at AirLink instead of SAA? It has great regional connectivity without all the baggage.

  13. Portlanjuanero Member

    I am really impressed by Rwanda as a country but Rwandair is that classic government owned model with goals more related to connectivity and economic growth than profitability. That makes this feel like an extremely ambitious and objectively questionable investment

    1. jhes Guest

      Build your economy first and the profit will follow. Plus Rwanda is landlocked with limited connectivity. Kagame is playing the long game with Rwandair.

  14. BenjaminGuttery Diamond

    Whatever airline it is, I just hope OneWorld snags them into the alliance. Can't wait for RwandAir to join, and if South African Airways was to leave Star Alliance that would be great news!

  15. Nico Guest

    Maybe not related but I have flights booked with Qatar to Maputo (Mozambique) in august, and yesterday Qatar airways did two things that are out of ordinary
    - They updated my direct Doha - Maputo to add a 1 hour stopover in Durban, South Africa, they kept the flight number but the original flight is also still sold with the same flight number, so i am confused on what will be actually flying that...

    Maybe not related but I have flights booked with Qatar to Maputo (Mozambique) in august, and yesterday Qatar airways did two things that are out of ordinary
    - They updated my direct Doha - Maputo to add a 1 hour stopover in Durban, South Africa, they kept the flight number but the original flight is also still sold with the same flight number, so i am confused on what will be actually flying that day
    - They updated my return Maputo - Doha so that i received an email the flight has changed but everything remained the same.
    - All reward inventory to Maputo is gone
    So maybe they are adding capacity to South Africa with the take over of South African? and they will force me to connect there. Air Mauritius is also for sale, so I would also bet on them.

  16. Jack Guest

    Is McKinsey advising QR? Their hunter strategy was so successful for Swissair.

  17. vlcnc Guest

    QR should focus on what it does best, running QR. These projects area always a waste of money - as someone else has said below with the example of Etihad. Also QR has had failure with Air Italy, which burned millions.

  18. Jason Guest

    You forget Airlink in South Africa, which is a pretty important player.

    1. UncleRonnie Gold

      Much better choice than SAA, actually properly run and they have a larger fleet. Would love to see some QR Fifth Freedom routes from UK direct to CPT & JNB (maybe using Birmingham instead of LHR or Gatwick) - much nicer than going via Doha; plus they could provide some decent competition to BA and VS who charge way too much on that route. QR could then use Airlink as a local partner to get around the rest of the country and up to the game reserves.

  19. chris w Guest

    Any idea why Africa hasn't seen multi-hub budget airlines spring up like they have in Europe, Asia, Australia and US?

    They could have a hub in a north, west, south and east African country? Surely a Ryanair/Spirit/AirAsia/EasyJet/Jetstar model could work?

    1. Quentin Guest

      High taxes, low volumes of passengers, huge barriers to travel (passports, visas, etc). Impossible to scale. FastJet tried and failed.

    2. UncleRonnie Gold

      Africans don't usually fly from one African country to another on holiday. Business travel is also limited, but that is covered by the national carriers in most countries already. Africa is poor, the market just isn't there.

    3. Indoorsy Guest

      That’s a factor, but markets can be grown in the right conditions.

      The bigger issue for such a capital-intensive industry is that the politics and bureaucracy of ownership, operations, certifications, and infrastructure *across multiple countries* in Africa are unpredictable and maddening.

      The lack of a robust leisure or business market as you outline (plus cumbersome visa processes for many travelers) then means it’s harder for an airline to grow enough to make up...

      That’s a factor, but markets can be grown in the right conditions.

      The bigger issue for such a capital-intensive industry is that the politics and bureaucracy of ownership, operations, certifications, and infrastructure *across multiple countries* in Africa are unpredictable and maddening.

      The lack of a robust leisure or business market as you outline (plus cumbersome visa processes for many travelers) then means it’s harder for an airline to grow enough to make up for those bigger barriers.

      It’s easy to take for granted the (relative) ease of setting up multi-hub budget airlines elsewhere in the world. But given the rising populist pressures against multilateralism and against freer trade and movement, we also shouldn’t assume that the rest of the world has permanently moved beyond such barriers.

  20. Tim Dunn Diamond

    QR only needs to look East to Abu Dhabi to see what happens when airlines invest in failing airlines.
    If there were a commercial basis for investing in any other airlines, there would be candidates lining up to compete with QR for that investment.

    1. A220HubandSpoke Member

      When Delta does it it's genius, when not Delta does it it's a terrible idea.

    2. Tim Dunn Diamond

      Someone above accurately got it - other airlines have invested in airlines that have ended up failing.
      Delta has managed to invest in airlines and keep them alive and in joint ventures.

    3. Roberto Guest

      Like WestJet & AeroMexico? Oh.

    4. Tim Dunn Diamond

      you do realize that AeroMexico and Westjet are both still operating?

      Swissair, Sabena etc are not

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

Sean M. Diamond

You miss the very critical point that the Air Services Licensing Act states that any license holder in South Africa must meet the requirements of 51% ownership by South African citizens, as well as 75% ownership and control by residents of South Africa. Consequently, any investment into an airline licensed by South Africa would necessarily be limited to no more than 25% voting control.

2
Andy Guest

I hope this does not become another Etihad style story. Could the new leadership at Qatar airways planning something along the lines of what Etihad did years ago. That wont end well.

2
UncleRonnie Gold

Much better choice than SAA, actually properly run and they have a larger fleet. Would love to see some QR Fifth Freedom routes from UK direct to CPT & JNB (maybe using Birmingham instead of LHR or Gatwick) - much nicer than going via Doha; plus they could provide some decent competition to BA and VS who charge way too much on that route. QR could then use Airlink as a local partner to get around the rest of the country and up to the game reserves.

2
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