… by buying a 49% stake in fast-growing African carrier, RwandAir. Last week, the state-owned Arabian airline confirmed ongoing acquisition negotiations between both companies. If successful, RwandAir will enlarge the Gulf carrier’s spreading empire.
The intended step follows Qatari investments in South American LATAM Airlines, Cathay Pacific, China Southern and Italian carrier, Air Italia (49%). In addition, Qatar Airways intends to get on board India's IndiGo and Morocco's Royal Air Maroc. However, both transactions are still pending.
In contrast, recent attempts by Qatar Airways to buy into the British-Spanish IAG Group and American Airlines have failed. Both belong to the oneworld alliance, as does QR. Following the rejection, QR threatened to leave the oneworld club, but has not done so up until now.
Yet, it would appear that these exit plans are temporarily shelved, since the Doha-based carrier seems to prefer a different strategy: Forming an own airline group by buying into carriers that promise added value in the mid-term. One such a candidate fitting the role as a promising QR satellite, is Kigali-based RwandAir. Provided the forthcoming deal is concluded, of which there is little doubt, RwandAir will become a cornerstone in Qatar Airways’ African strategy. This aims at building a continental hub and spoke system and simultaneously feeding passengers and cargo into QR’s global network via their Doha-based Hamad International Airport.
It would allow QR to bypass the Saudi Arabian embargo, banning all QR flights from overflying the KSA's territory, including that of the United Arab Emirates, Egypt and Bahrain. QR could operate under RwandAir flight numbers, while RwandAir could codeshare with QR
On the Qatari side, a future rapprochement would allow Qatar Airways to bypass the embargo that forces all its flights to Africa to avoid Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.
The new Kigali airport could thus attract everyday air traffic from African countries to Doha, where Qatar Airways’ aircraft could fly under RwandAir flight numbers. Inversely, those of Rwandair could be code-shared with Qatar Airways. This would enable them to use the mentioned airspaces without difficulty, which would intensify competition with Etihad and Emirates.
Mota-Engil is sidelined, QR is stepping in
The decision is result of an agreement signed by Rwanda's government and Qatar Airways on 9 December last year, concluding a partnership for building and running the projected Kigali Bugesera International Airport. Main part of the deal is that QR will take a 60% stake in the project, which, as a whole, is valued around US$1.3 billion.
The facility is still under construction.
A main condition to implement the plan was a transaction with Rwanda purchasing 75% shareholding by Mota-Engil in order to retain 100% ownership prior to entering the new partnership with QR.
In a statement, the Kigali government points out that the third part of the agreement is one of security, considering that Aviation Travel and Logistics Holdings is entering the agreement on behalf of the Rwandan Government. This requires comprehensive security protection for those involved, guaranteed by the state authorities.
In contrast to local Rwandan and African media reports that speak of a forced ousting of the Portuguese investor Mota-Engil by the Kigali government, Rwanda's Minister of Infrastructure, Claver Gatete, claims that the company remains in the Bugesera Airport project as a constructor. The politician assured: "we will continue working with Mota-Engil in construction activities."
Confidence in Rwanda
Originally, Kigali Bugesera Airport was designed to accommodate 4.5 million travelers a year. However, the capacity was upped by the government to 7 million passengers, doubling their number to 14 million until 2032, once a second runway is scheduled to be operational.
At a meeting in Doha, restless Qatar Airways CEO Akbar Al Baker pointed out that the intended cash injection into RwandAir is based on the confidence his carrier has in the East African country. As a reason for this financial engagement, he lauded Rwanda’s political stability, attractive strategic location, and the positive business environment. He added to this that Qatar Airways is considering investing in a hotel to accommodate cabin crew, technicians and aviation experts near to the new airport.
The three projects - Kigali Airport investment, QR-RwandAir partnership, and the hotel plans - might further stimulate the East African country’s economy and open up doors for further financial initiatives by Qatari businesses or the Doha government.
At the same time, however, dependence on a very potent, politically and religiously influential, and economically powerful major investor is the price the Rwandan government will have to pay, critics hold.
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