Three pitfalls for Qatar Airways to avoid
My top ideas for things that the new CEO should NOT do
Qatar Airways CEO Badr Mohammed Al Meer has been ranked fourth in the Forbes list of 100 travel & tourism leaders. But he has only been in the airline’s top position for six months, hardly enough time to do anything. Meanwhile Ghaith Al Ghaith, flydubai CEO since 2008, sits in twelfth place.
With all respect to Mr Al Meer his place on the leaderboard is down to the success of his predecessor Akbar Al Baker. So what can he do to justify his place?
The problem with large and complex airlines like Qatar Airways is that there are thousands of things they can do and hundreds of things they should do. Yet there is only management time to execute a few of these.
So any forecast of what Mr Al Meer will do is fraught with the chance of error. Instead I have focused on three things that he should NOT do. These are interesting because seeing airlines make what appear to be mistakes is instructive.
Sometimes there is more to a case than seen at first glance. Other times there are simply bad decisions, like buying the A340-600s (pictured above), shattering the illusion that airline CEOs are always and everywhere great leaders doing wonderful things. I remember Mr Al Baker himself saying he wished he could throw the A340s away.
The Qatar Airways Group is much more than just an airline. To my knowledge it has at least seven subsidiaries:
1. Qatar Airways Cargo – the freight hauler
2. Qatar Airways Holidays – the package seller
3. Qatar Aviation Services – the airport operator at Doha
4. Qatar Aircraft Catering Co – the flight kitchen at Doha
5. Qatar Executive – the jet charter arm
6. Qatar Duty Free – the airport retailer
7. Qatar Distribution Company – the alcohol monopoly in Qatar.
Each of these is a significant business. When I was in Doha the Qatar Distribution Company at some points had similar or higher revenue to the actual airline.
Unlike IAG, partly owned by Qatar Airways and which considers IAG Loyalty a separate company, Privilege Club loyalty appears to still be a part of the airline.
For today’s article, I will just be concentrating on the airline.
Mr Al Meer should not take nonsense from vendors and the travel ecosystem
The whole world wants to sell something to Qatar Airways. They reckon the airline has a bottomless pit of money. This is not the case.
Despite spending their personal fortunes on tripping the light fantastic in London, Paris and elsewhere, the Qataris are extremely cost-conscious when it comes to their state organisations.
When we did a chinaware tender in 2011, Royal Worcester came in with some outrageous price for first class plates. These were multiples of any competing bid.
I remember Mr Al Baker looking at the price, shaking his head and saying with a sigh “this is what Emirates paid, they think we will too”. He then moved on.
The effect is not just limited to equipment. Revenue management systems vendor PROS (see article) flogged a poor value optimisation platform to the airline in 2007.
The promises were enormous. The reality was terrible.
The real-time dynamic pricing module was neither real-time nor dynamic pricing. The training was shonky. The instructors and system operators were second rate compared to the boffins at the PROS head off in Houston.
The people provided by PROS to set things up had only a shallow understanding of both the underlying mathematics and the day-to-day requirements of using the tool.
The time wasted installing the PROS systems took resources away from more valuable projects. As a result the airline was under-priced for years, and may still be. Sales reps bought market share by forcing pricing analysts to keep fares down.
When YQ surcharges were increased globally every fare was reduced by the same amount. This cost the airline real time and money to file and actively worked against the management team’s objectives.
Today it is the same with NDC, the multi-billion Dollar communications MacGuffin which has achieved nothing (see article). Airlines like Qatar Airways have the resources to invest piles of cash into IT. Unfortunately they seem to be achieving little.
Look at the NDC functionalities table (here) on the Qatar Airways site. By their own admission there is literally only one small thing that NDC can do which cannot be done with the legacy technology.
Then take a look at the NDC FAQs (here), also on the Qatar Airways site. Here is what they say:
“What is NDC? NDC (New Distribution Capability) is an industry initiative launched and supported by IATA for the development and market adoption of a new, XML-based data transmission standard (NDC Standard). The NDC Standard enhances the capability of communications between the airlines and Trade Partners to meet the future need of Airline Retailing”
Not very informative…
“What are the benefits of NDC? There are various benefits of NDC. Firstly, for the airline, NDC standard enhances the ability of Qatar Airways to distribute its products to Trade Partners, TMC’s, OTAs, consolidators, and other third-party Sellers in a modern way. For the Sellers, NDC means better booking experience and upsell opportunities.
It also provides the opportunity to improve the end-to-end airline distribution process, e.g. introducing flight details and ancillary products in a faster, richer and more dynamic way. It enables airlines to deliver enhanced customer experiences through personalised offers, rich content and dynamic pricing.”
Notice how there are no benefits for the customers…
I remember people in revenue management who were talented and smart who are now on the NDC team. They could have done so much more. Their talents have been wasted.
If Qatar Airways had given them money to develop their own thing rather than giving the same money to the snake-oil salesmen at Amadeus, SABRE and the rest I think they would be a real industry leader today.
The Qatari travel market is one of the most buoyant and high value in the world. A bit more creativity in real retailing from Qatar Airways would go a long way in this market.
Mr Al Meer should be sceptical of big and expensive projects and move on, especially when it comes to industry fads like NDC.
He should do what Mr Al Baker did with Royal Worcester, walk away.
Qatar Airways can and should do better than what it is achieving with NDC.
Mr Al Meer should not move too fast with the onboard product & service
Qatar Airways can sometimes move almost at lightning pace.
The Qatar Super Diamond was launched in 2012, the Qsuite (see article) was revealed in 2017 and the Business Class Suite appeared in 2021. At the same time Qatar Airways was also operating the B/E Mini Pod on some of it’s 777s and old Recaro models on some of it’s A330s.
The pace of innovation is impressive. In the same time British Airways moved from Club World (introduced in 2007) to Club Suite (introduced 2019).
Unfortunately, rapid innovation in the seating department leads to inconsistency in the cabins. It is hard for passengers to know what they are going to get. Connecting passengers, who probably provide 33% to 50% of Qatar Airways’ revenue, might have a different seat on every one of their flights.
Too many seats also makes it hard for sales teams to sell the product, especially to high volume corporate customers.
I remember my boss Xia Cai, who recently returned to Qatar after a stint in Oman, being asked to present Qatar Super Diamond to the commercial team at the Oryx Rotana hotel. I tagged along.
It was an impressive show. Xia set up boards showing renderings of the cabins around a room. Marwan Koleilat the Chief Commercial Officer said “we have to sell this at a premium”.
Meanwhile the Corporate Planning department was maximising aircraft efficiency. Equipment swaps were endemic, especially at the last minute. Some passengers would have bought tickets expecting one type of seat, paying a premium to do so, and ending up being disappointed.
The right hand did not know what the left hand was doing. Marwan’s sales team could not carry out their strategy.
Unfortunately the sort of people who run Corporate Planning departments like to switch aircraft around. CEOs should not try to stop them. It is a virtue not a vice as they try to try and get the most out of a fleet.
So Mr Al Meer should make it easy for them and avoid buying too many different types of seat in too short a time.
Fortunately there are good alternatives. Like their oneworld alliance partners British Airways and Finnair, among many other airlines, Qatar Airways is going digital in the cabin with Apple devices used to facilitate service.
In a recent interview with Xia and Joe Leader of APEX the Airline Passenger Experience Association, I read that Qatar Airways crew now uses iPhones to manage food orders. The trend is not just limited to large carriers or even airlines. In an article coming soon I will be writing about how the future of airport systems is mobile.
Mr Al Meer should not buy any more Boeings
The aircraft themselves are related to the opportunities to do good things in the cabin. Unfortunately Qatar Airways’ current fleet is a real mixed bag.
Serving regional routes are both A320-family and 737-family single-aisles. Meanwhile the longer missions are operated by both A350s and 777s, as well as 787 both -8 and -9.
A330-200s and -300s of my generation are up for retirement. There are no A330neos, but there should be. The reason that is that while Boeings are built for and have always been built for pilots, Airbus are no longer built for engineers but for passengers.
At a carrier like Qatar Airways, service is integral to the brand. The airline’s brand values are “naturally generous”, “confident” and “progressive”, all suggestive of the softer touch.
Modern Airbus planes are literally designed to facilitate service in every respect imaginable. The technical backbone of the aircraft is designed to transmit messages between passengers and galleys as well as between flight crew and avionics.
It collects a wealth of data that airlines can use to tailor services on a flight-by-flight basis (see this article and this article). The ecosystem as a whole is called Skywise.
Helping Airbus develop the economics of this concept between 2018 and 2022 was one of the highlights of my career so far. The technology is truly transformational. It turns the aircraft themselves into revenue generating platforms.
Boeing has none of this. Qatar Airways should not buy any more.
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