Sunday, 30 October 2011

Qatar Airways about to invest in Spanair and why this is good news for Barcelona airport (I)

I just learned that Qatar Airways might be about to acquire a 49% stake in Barcelona-based troubled airline Spanair. While I do not know the details of the deal, I can think of a few reasons why this could be a good move for all parties involved, as well as for Barcelona's airport.

First of all, is a matter of financial necessity and of urgency. Spanair is in a critical financial situation and, despite strong backing from the Catalan government, is quickly running out of cash. Since I wrote this note a few months back it seems Spanair's cash-flow position has only got worse.

An investor with deep pockets is needed in order to keep the airline flying and allow the Catalan government to save face and disentagle itself from an operation that is difficult to justify at a time of tough budget cuts, while claiming a partial success at keeping Barcelona's long-haul hub aspirations alive.

And this takes us to the next factor that I think it makes a tie-up with Qatar Airways a potentially interesting proposition and this is none other than opening a window to the East and to the globe's currently most dynamic economies. On June 2010 I commented on this blog how commercial aviation's center of gravity is moving East and any carrier and airport with aspirations should try to ride this trend. A link with Qatar would certainly help Spanair and Barcelona airport gain this intercontinental dimension they have been so much longing for.

A side effect of a re-capitalized Spanair is that it will put pressure on Vueling, Barcelona's other airline, that is already being squeezed by Ryanair's increasing presence at BCN. Having to face renewed competition from a stronger Spanair will certainly not help recover its margins. It will also prevent Vueling from becoming the only carrier able to build some sort of air hub at Barcelona. Although Vueling has been developing some flight connectivity at BCN there are serious doubts about Vueling's capacity to build a fully fledged hub at the shadow of Iberia, that remains its main shareholder, since any such move would risk cannibalizing Iberia's operations in its main Madrid hub.

In my next post I am going to present some interesting strategic questions that arise from the possible imminent completion of this deal...


aomd88 said...

It would be a lifeline for Spanair for sure ... I am not so confident about the long haul flights, though. I think Qatar is already flying to BCN, IIRC. I think the "new-new" Spanair would just act as a regional feeder for short-haul European flights for Qatar airways, just it was once a regional feeder for SAS. btw, I just find the proposed name change to "Barcelona airlines" just another stupid move. Not catalan enough, not really the name of a global airline (Air Berlin is a paneuropean airline with longhaul flights and the name also sounds tacky) and yet a rather "disturbing" name for the right-wing zealots in Spain. Spanair, on the other hand, is a strong name/brand in the Spanish market, even if the airline is just a faint shadow of what it once was.

Allplane: all about aviation, airlines and air travel said...

You are right, even with Qatar Airways on-board long-haul flights are far from becoming a reality, and neither I see how the "feeding" would work, since Gulf carriers normally operate as super-connectors always through their own hubs, for example I see the rationale for a Manchester-Doha-Melbourne, but Manchester-Barcelona-Doha-Melbourne is maybe a stopover too much and Gulf markets are not that big o their own to support dedicated feeding in Europe, although Qatar Airways might have enough cash to do experiments...I totally agree with airlines named after cities, I always thought that names such as Air Berlin or Hainan Airlines become a marketing liability once the airline expands, however, I doubt Spanair is in a position to run this type of multicity, pan-Euroepan operation, it seems to be betting everything on its identification as a "Barcelona airline" brand, focusing its network around its BCN base and its Barcelona roots (it might work for a niche operation as it works for other consumer brands that identify themselves with a particular place, "champagne" for example), also not sure the Spanair brand is strong enough to be worth saving, whereas internationally Barcelona is quite a strong brand (at least while football victories last, and sorry for the implicit other link to Qatar here!)

faseeh ilyas said...


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