No: 17264 Friday, June 23, 2017

B

usiness

FRIDAY, JUNE 23, 2017

Troubled Takata plummets on bankruptcy fears

PAGE 39

Foxconn says 

Toshiba deal 

‘not yet over’   

PAGE 41

Qatar seeks 10% stake in American

Bid unsolicited, but CEOs of both airlines have spoken

NEW YORK: State-owned Qatar Airways is

attempting to buy a 10 percent stake in

American Airlines, triggering US antitrust

oversight of deals that size. American said in a

regulatory filing yesterday that the bid was

unsolicited, but that the CEOs of both airlines

have spoken. Qatar submitted a filing under

the Hart-Scott-Rodino Act, which is subject to

review by the Justice Department’s Antitrust

Division.

Earlier this month Saudi Arabia, the United

Arab Emirates, Egypt and Bahrain cut ties with

Qatar and blocked direct flights with the

country. Qatar Airways, one of the region’s

largest, also stopped its flights to the four

Arab countries in response to the UAE’s

Etihad, Emirates, FlyDubai, EgyptAir and

Bahrain’s Gulf Air suspending flights to Qatar.

A tie-up with American could help it lever-

age influence with both Wall Street and, more

importantly, decision-makers in Washington

as Qatar’s most recognized global brand is

pressed from all sides. American and Qatar

are already members of the Oneworld mar-

keting alliance, which allows passengers to

earn and redeem points on each other’s

flights. An expanded partnership could make

it easier for American passengers to get to

smaller cities in India, and developing coun-

tries in Southeast Asia.

But American, United Airlines, and Delta

Air Lines have been pushing US political lead-

ers to curtail the growth of the Middle East’s

three biggest airlines, Qatar, Emirates and

Etihad, saying that they are all government-

owned, subsidized airlines that have an unfair

advantage. Also, the three Middle East airlines

are cutting into lucrative routes overseas for

US airlines. American said that Qatar’s pro-

posed investment doesn’t change its belief

that there needs to be enforcement of the

Open Air agreements with the United Arab

Emirates and the nation of Qatar and fair

competition with Gulf carriers, including

Qatar Airways. Qatar has been on a global

buying spree of late, mirroring a strategy fol-

lowed by a smaller Gulf rival, Abu Dhabi-

based Etihad Airways. Qatar last year set up a

revenue-sharing partnership with British

Airways parent International Airlines Group,

deepening its partnership with that company.

It owns just over 20 percent of IAG, which also

controls European carriers Aer Lingus, Iberia

and Vueling.

In July Qatar Airways announced a deal to

buy a 49 percent stake in Meridiana, Italy’s

second-biggest carrier. And in December it

announced a 10 percent stake in Chile’s

LATAM Airlines Group, acquired for $608 mil-

lion. Qatar plans to buy at least $808 million in

common stock of American Airlines.

American’s shares are listed on the Nasdaq,

and the airline said that Qatar plans to make

its purchases on the open market.

American’s certificate of incorporation

restricts anyone from buying 4.75 percent or

more of its shares without advanced board

approval following a written request.

American says it hasn’t received such a

request. The US prevents foreign ownership

of airlines to less than 25 percent. American

said that Qatar’s proposed investment would-

n’t change its board makeup, governance,

management or strategic direction. Shares of

American Airlines Group Inc rose 3 percent at

the opening bell. — AP 

This combination of pictures created yesterday shows an American Airlines plane sitting on the tarmac of McCarran International Airport in Las Vegas on Feb 15, 2017, and photo tak-

en on June 12, 2017 showing a Qatar Airways plane landing at the Hamad International Airport in Doha. — AFP 

---

38

B u s i n e s s

FRIDAY, JUNE 23, 2017

DUBAI:  Etihad Airways is to open up its

lounges to economy class passengers for a fee

and will start charging for chauffeur services

that had been complimentary as it joins rivals

in looking for new ways to boost revenues.

The changes, announced yesterday, come

amid a strategy review at the Abu Dhabi carri-

er as once rapidly expanding Gulf airlines face

tighter profit margins amid overcapacity in the

market and tighter corporate travel budgets.

The fee for economy passengers to access

the business class lounge at Abu Dhabi

International Airport will start from 370

dirhams ($101) and will depend on how much

time is spent in the lounge, an Etihad

spokesman said. It will also offer economy

class passengers paid access to its lounges at

other airports around the world.

The changes, effective on July 3, will also

allow business class passengers to pay to use

the first class lounges, whilst a previously

complimentary chauffeur for business and

first class passengers will become a paid for

service outside of Abu Dhabi. Etihad will also

open up the service to economy passengers.

Will Horton, senior analyst at Australian avia-

tion consultancy CAPA, said chauffer services

have always been a high-cost for airlines so to

start charging for them was “not surprising”.

Passengers travelling in the three-room

suite available on Etihad’s Airbus A380s,

dubbed ‘The Residence,’ will not be charged.

Rival Emirates said in January it would allow

economy class passengers who are frequent

flyer members to pay to access its lounges.

That followed an earlier decision to introduce

fees for advanced seat selection for economy

passengers.

Other changes at Etihad include introduc-

ing a bidding system for economy passengers

to pay to have up to three empty seats next to

their own, following similar systems in place

at some other airlines. “Airlines are increasing-

ly asking what they have and do not sell but

could,” Horton said. “Airlines have been allow-

ing passengers to bid for upgrades but guar-

anteeing an empty seat next to you is still

catching on.” — Reuters 

Etihad to open lounges to passengers for a fee

PARIS: An Airbus A380 jet airliner lands during a flying display during the International Paris Air Show in Le Bourget yesterday. — AFP 

Inflight Net ready to take off

LE BOURGET, France: Inflight Internet

access, a nascent market still hobbled by

slow speeds, is set to take off as dedicated

satellites make surfing in the skies a reality,

experts say. Even bans on bringing laptops

and tablets on board imposed by Britain

and the United States on flights departing

from certain airports won’t halt it, industry

players and analysts gathered at the Paris

Air Show believe. “It is undeniably a trend.

The main thing is to jump on the wave at

the right moment,” said Marc Rochet, chief

executive of the low-cost airline French

Blue, about the technology which is rapidly

evolving but comes with a high price tag.

By 2021 more than 17,000 airliners - or

nearly half the global fleet of commercial

aircraft - will be equipped for inflight

Internet, according to a recent study by the

Euroconsult firm. That is close to triple the

6,500 planes equipped in 2016. The

increase is being driven by a new genera-

tion of satellites that allow the use of small-

er and lighter antennae on aircraft, as well

as greater coverage by land-based systems.

This allows for higher data transmission

speeds making the experience for users

much as they get at home, and not the

slow and spotty connections available so

far. It is a far cry from the early systems that

began to be introduced around five years

ago that allowed users to consult emails.

‘Game changer’ 

The United States was the pioneer in

developing a network of ground antennae

for inflight Internet. There, some 4,000

planes are equipped for inflight Internet

compared with just hundreds in Europe. In

2016 new satellites capable of supporting

video and television streaming, games and

social media began to be deployed. “The

ability to support video streaming on a

large scale shall be a game changer,” said

Euroconsult. According to William Huot-

Marchand, sales director at the inflight

entertainment division at the aerospace

firm Thales, there is also a generational

change underway in airline passengers.

If previously most passengers accepted

flights as a time to disconnect, younger

generations, particularly millennials, don’t

appreciate the forced withdrawal from

social media and online access.

Euroconsult estimates that revenues to

suppliers for providing inflight internet

connectivity topped $1 billion in 2016 and

should reach $6.5 billion by 2026. But the

investment isn’t negligible, with the cost of

equipping each plane running up to half a

million euros.

Captive audience 

The airlines which have taken the

plunge are using different pricing models.

Some offer inflight Internet as a free perk.

Others charge by the hour, flight, or even

offer longer subscriptions as a way to

recoup their costs and avoid overloading

the available bandwidth. With passengers

being in effect being a captive audience,

some airlines are considering how to use it

as a means to boost onboard sales. It can

also help reduce losses, helping airlines to

recoup their investments.—AFP 

PARIS: Airbus said yesterday two Iranian airlines had

committed to buying 73 planes in a last-minute flurry

of deals for the European planemaker at the Paris

Airshow. Iranian domestic carrier Zagros Airlines

signed a memorandum of understanding (MoU) to

buy 20 Airbus A320neo jets and eight A330neo air-

craft, while privatized Iran Airtour signed an MoU for

45 A320neos.

Iran has ordered more than 200 planes since inter-

national sanctions against the country were lifted

last year in return for curbs on the country’s nuclear

activities. IranAir has ordered 100 planes from Airbus,

80 from US rival Boeing and 20 ATR turboprops but

implementing the deals has been hampered by

uncertainty over financing. Boeing has also signed a

deal for 30 737 MAX jets with Iran’s Aseman Airlines,

which is managed as a private company and owned

by Iran’s civil service pension foundation.

Iran Airtour was established as a subsidiary of

IranAir and privatized in 2011 but maintains a status

as subsidiary of the national flag carrier, according to

CAPA aviation consultancy. Zagros Airlines is a pri-

vate carrier. Airbus Chief Operating Officer and

planemaking president Fabrice Bregier said he did

not believe the deals were related to political issues.

The company said the MoUs were contingent

upon all necessary approvals, including from the

U.S. Treasury’s Office of Foreign Assets Control.

Airbus sales chief John Leahy said he expected the

U.S. approvals within the next couple of months.

Airbus said it would continue to act in full compli-

ance with the Iran nuclear deal, also known as the

Joint Comprehensive Plan Of Action, and associated

rules. — Reuters 

2 Iran airlines to 

buy 73 Airbus jets

Airlines using different pricing models

PARIS: People wait before entering an aircraft on dis-

play at the International Paris Air Show in Le Bourget

yesterday. — AFP 

---