Qatar blockade impacts to GCC – Whitepaper

Context of the Qatar Blockade

Following a series of diplomatic events between GCC countries, a land, sea, and air blockade was imposed on Qatar in June of 2017, restricting Qatar’s maritime, land and airspace, and imposing additional challenges to the aviation sector in the Gulf. Led by Saudi Arabia, the United Arab Emirates, Bahrein and Egypt, the blockade was further adopted by other countries, including Jordan (until 2019), Yemen, Djibouti and other countries in both Africa and the Middle East.

While several measures were taken by Qatar to ensure the continuity of its supply chain and trade relations outside the GCC – including the strengthening of its air cargo operations and the establishment of new maritime routes – the blockade limited Qatar Airways operation, both in routing and in total traffic matters.

Countries with transit restrictions towards Qatar

Figure 1: Qatar Blockade Countries in the Middle East

Does not include countries with partial restrictions against Qatar (e.g. Jordan, Kuwait)
Source: OACI, ALG Analysis

The blockade had an immediate effect in passengers and flights to and from Qatar, that after a continuous growth path – with roughly 16% CAGR since 2009 – saw a -5,3% decline in the number of passengers in Doha International Airport (DOH). Nonetheless, the country managed to regain growth and reach similar Pax numbers to pre-blockade levels.

Doha Int. Airport (DOHA) Pax (Mn Pax)

Figure 2: DOH Int. Airport Passenger Traffic

Source: CAPA, Doha Hamad International Airport and Ministry of Development of Planning and Statistics

The blockade was announced to finish in January 2021, with airspace and sea restrictions officially lifted through the signing of the Al-Ula (KSA) declaration. Although as seen as a first-step, GCC Countries are expected to work towards solving political issues and reorienting trade and diplomatic relations with neighboring country Qatar.

Benefits expected after the end of the blockade

The lifting of the restrictions, effective January of 2021, brought direct flight time reductions to some routes, with other routes updated accordingly.

Figure 3: Comparison between restricted and unrestricted flight routes

Illustrative. Average of flight durations during and post blockade, January 2021. Source: FlightRadar, Qatar Airways, OACI

The less need of diversion for the Doha (DOH) Lagos (LOS) route has already resulted in a 20% flight time reduction. Being more attractive to passengers and directly saving costs to the airline, these shorter times will better position Qatar in the post-pandemic scenario.

International seat generation in GCC and Egypt (Mn seats by country)

Figure 4: International seat generation in the GCC and Egypt

May not add up due to rounding.
Source: OAG, CAPA, Press search, ALG Analysis

The new airspace restriction configuration pushed the Middle East market to a reshuffle of offerings between players during the 3 years of blockade, which include:

  • Oman & Kuwait experienced the largest increases in market share, with a combined + 8.8 Mn seats offered;
  • Qatar increased the number of seats offered by roughly 3.0 Mn, maintaining its 15% market share in the gulf;
  • The UAE has lost significant share in international seats offered in the region, with around – 8,1 Mn of seats less when compared to 2016. Key reasons include the grounding of the Boeings 737 Max, the planned re-paving of DXB’s runway and the shutting down of Jet Airways in 2019 due to financial insolvencies, India’s 2nd largest airways and the 5th larger international airway operating in the UAE.

The main route for Qatar Airways, Doha-Dubai (DOH-DXB), saw a steep decrease in its total traffic, from roughly 2,0 mPax in 2016, to an estimate less than 0,2 mPax in 2018. The route, largely used by business travelers, shifted to Muscat (MCT) as the main connecting point between the UAE and Qatar. This shift, as well as other similar market strategies, resulted in Qatar strengthening its business relations with neighbor gulf countries Oman and Kuwait, who became Qatar’s 2nd and 3rd largest commercial aviation markets, respectively.

Qatar’s main O/Ds by countries in GCC and Asia (share of number of seats per country over total number of seats)

Figure 5: Qatar’s main O/Ds by country

Source: OAG, ALG Analysis

Due to the blockade, UAE, KSA and Bahrain, previously Qatar’s 1st, 3rd and 4th largest markets, had no flights to/from Qatar. This new market configuration resulted in India surpassing the UAE as Qatar’s main O/Ds. Similarly, Oman and Kuwait grew to the 2nd and 3rd main markets for Qatar O/D flights in 2019. If the additional flights between the market leaders UAE, KSA and Qatar might not be significant in absolute numbers for these countries, the re-capture of part of the transit market offered by Oman and Kuwait during the blockade could result in severe challenges for the latter.

Figure 6: Dubai to Doha Flight Path – direct flights vs selected layover options

Illustrative. Average of flight durations during and post blockade, January 2021. Source: FlightRadar, Emirates, OACI

A flight from Dubai to Doha used to take an average of seven hours accounting for a layover in Oman or Jordan, whereas a direct flight between the two cities can take less than one hour. As a result, the transit market in Oman for the DXB-DOH route is expected to die-off as both countries increasingly start to offer direct routes. In a moment where the aviation industry struggles to generate traffic, Oman and Kuwait will face the challenge to compensate for similar routes directly affected following the end of the blockade.

In the short term, this market opening will create an immediate opportunity for Qatar Airways to re-capture transit traffic to and from Europe, Africa and Asia. In the long term, however, the increased competition over the last years over some well-established routes (mostly in Europe and Africa) will pose challenges to Qatar to regain previous customers and attract new ones. Even in pre-blockade numbers, Qatar’s share of O/D traffic was significantly lower than its direct competitors – at roughly 20% in 2016, with Emirates reaching over 40% – illustrating the opportunity for O/D traffic growth for Qatar.  Historically important trade and business routes in the region, such as Doha-Dubai, Doha-Riyadh, as well as touristic and religious routes, such as Doha-Jeddah or Doha-Cairo, should bring additional flights to the country.

Figure 7: Qatar Airway’s 2022 World Cup Campaign

Source: Qatar Airways

Looking forward, while the opening of the airspace should bring new opportunities for the aviation sector to all countries in the Gulf, Qatar tends to be benefited the most from the now unrestricted airspace. As the 2022 World Cup is expected to take place in less than 18 months, Qatar will now have additional incentives and means to achieve its goal of successfully hosting the event – expected to bring an additional 1.7 Mn visitors to the country in pre-Covid forecasts. Combined with positive prospects of the continuous rollout of the Covid-19 vaccine in the Gulf and the world, the post-pandemic and post-blockade scenarios are positive for the country. In a context where the Aviation industry is unprecedentedly pressured to reduce costs and generate revenue, consumers should expect to see new tourism & business incentives to travel, with Qatar now being an additional gateway for Gulf citizens and expats.


About the authors
Xavier Esparrich holds a MSc in Aeronautical Engineering and is a Director at ALG.
Lucas Machado holds a BSc in Chemical Engineering and is a Consultant at ALG.
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