Qatar Buys Stake in RwandAir, by Travel Radar Correspondent David Hopwood
We reported late last year on the difficulties faced by Qatar Airways; the airline voted best in the world on Skytrax. Due to political difficulties, the airspace surrounding the Gulf state is closed except for a narrow corridor to the east. This requires the airline to fly over Iran for European destinations—with its own difficulties—and a massive dogleg route for southerly destinations. The associated closure of United Arab Emirates, (Dubai, Abu Dhabi) Saudi Arabia and Bahrain meant a huge drop in revenue and excess capacity for the airline.
Necessity being the mother of invention, Qatar was forced to consider other expansion strategies to counteract the closure of airspace and to avoid more direct competition with–amongst others–Emirates. Qatar Airways has opened new routes to Osaka, Langkawi, Isfahan and to Gaborone in Botswana to compensate. More of their strategy has been revealed by their acquisition of 60% of the new airport at Kigali, the capital of Rwanda. The new airport at Bugesera east of Kigali is scheduled for completion this year at a cost of almost $1.3 billion and is designed to welcome up to 7 million passengers.
But Qatar isn’t stopping at the airport; it’s now bought 49% of the central African country’s national carrier RwandAir.
Akbar Al Baker, CEO of Qatar Airways has said recently that ‘…In Africa, there is a big demand for air travel which today is very poorly connected, so we always look at opportunities in our field to do investments similar to what we have done in the past.’
Al Baker also said that the attraction of Kigali was its ‘location, the stability of the country and the very favourable business environment that exists in that country’.
The investments by Qatar articulate well with the Rwandan strategy of being a regional trading hub in competition with other central African states including Kenya, Uganda and to a lesser extent Tanzania. RwandAir would provide traffic from the region to feed into Qatar’s global reach and allow the African airline to even more rapidly; RwandAir has grown at nearly three times the rate for other African airlines. With Ethiopian going from strength to strength to the north, the imminent demise of South African to the south and little competition elsewhere in the region, the collaboration seems ideal for both parties.
We’ll be watching for more developments by Qatar in the future.