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On 5 June 2017, Gulf Cooperation Council (GCC) members Saudi Arabia, Bahrain, the United Arab Emirates (UAE) and Egypt, severed diplomatic ties with Qatar and imposed an air, sea and land blockade on Qatar. The embargo directly impacted Qatar Airways, with an estimated USD 500 million in lost profit for 2017.

As the crisis reaches its first anniversary with no sign of abating, Quant Intelligence explores the impact of the blockade on the remaining QA routes with a view to assessing how the embargo has affected the company's passenger and cargo operations.

Executive Summary

  • The Saudi-led boycott of Qatar was driven by the long-standing Sunni-Shia conflict, the 2011 Arab Spring and the re-emergence of the Muslim Brotherhood. It intended to diplomatically isolate and financially undermine Qatar. However, our analysis shows that the commercial implications of the embargo have been mixed – particularly to state-owned Qatar Airways (QA). Although the carrier lost 20% of its revenue in the months following the boycott, this was mostly due to the closure of 19 routes to the embargoing countries. The remaining impact has only been substantial on routes to African and Latin American destinations. Business-critical routes to Europe, North America and Asia have seen little or no impact on their operations.
  • Additionally, the embargo has had the unintended consequence of boosting QA's freight operations. Daily freight flights increased by more than 20% between the first and second half of 2017. This was in part due to the introduction of two B747-8F and one B777-F in Q3 and Q4, and in part due to the increased operational tempo of QA Cargo, by increasing the number of stopover per round trip and increasing the number of freight destinations.
  • Finally, QA has been able to open new routes to Accra (Ghana) and Abidjan (Côte d'Ivoire) despite the airlines' increased operational costs. As a result, the Qatari government was able to continue using QA to consolidate its diplomatic and economic ties with these countries and undermine Saudi efforts to court them.

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