Qatar Airways Organizational Change

Introduction

Qatar Airways, the flagship line of the Kingdom of Qatar, is one of the leading and most innovative airlines in the MENA region. Recent global changes in the context of the COVID-19 pandemic, economic downturn, and geopolitical risks, Qatar Airways has been seeking to adapt and continue to find pathways for sustainable growth. The company has significant potential within the industry and through the use of appropriate change management models has been able to adapt and create a new culture and work environment for continued success.

Relevance of Qatar Airways and Drivers for Change

Company Background

Qatar Airways is the flag carrier for the Kingdom of Qatar. It is fully state-owned and is based at Hamad International Airport in Doha which operates as its international hub. The airline was founded in 1993 and slowly grew, but saw explosive expansion in late 2000s as it expanded its fleet and subsequently, destinations and routes. The current Qatar Airways fleet has over 200 aircraft and serves over 150 international destinations carrying up to 32.4 million passengers prior to the pandemic (the number has significantly decreased with the pandemic to 5.8 million) (Reuters, 2021). Qatar Airways is part of the Oneworld alliance, and the company is well-known for its highly luxurious and upper-class offerings as well as long-haul flights it operates through its Doha hub. Qatar Airways has also significantly expanded its cargo fleet, making it a leading international cargo carrier with over 60 freighter destinations (Qatar Airways, 2021).

Drivers for Change

With a range of tremendous global turmoil in the last 5 years, the airline industry has been facing significant hardship on a wide range of issues, both short- and long-term. As a state-owned airline, Qatar has the benefit of having government support. However, the company seeks to establish profitability to operate independently. In fiscal year 2021, Qatar Airways revenue was at QR 29,399 million down from QR 51,121 million the previous year due to the pandemic, this led to doubling of net loss to QR 14,853 million. However, the company has significantly increased its EBITDA margin five-fold to 20.1% (Qatar Airways Group, 2021). The firm, like all other airlines is facing a range of strategic and operational risks and limitations. These are creating a necessity to introduce changes or initiatives to begin addressing them at the strategic level. The following drivers for change impact Qatar Airways and serve as instigators for organizational change.

COVID-19 pandemic

The COVID-19 pandemic was an unprecedented global event, which among others, primarily and strongly impacted the travel and tourism industry, on which airlines ultimately rely. Throughout the two years of the pandemic, lockdowns persisted, borders closed, and travel was severely restricted, especially internationally. This ultimately impacted the bottom-line of airline firms, as passenger traffic decreased anywhere from 3-5 times. Furthermore, those flights that were flying had to adopt a number of safety precautions and adopt new technologies as installing modern filtration systems and conducting UV light sterilization. Airline fleets were grounded but had to be maintained and a range of other additional costs were in place with limited revenue possibilities. Multiple airlines around the world had declared bankruptcy and virtually no airline was profitable in fiscal year 2020/2021. It is estimated that the airline industry revenues decreased by as much as 60% in 2020, and much smaller traffic is expected to remain until 2024 (Bouwer, Saxon & Wittkamp, 2021). The market is oversupplied for the foreseeable future, and even as recovery is expected as countries have learned to manage COVID-19 with vaccines and other measures, there is still continued hesitancy worldwide.

Rising cost of fuel and general inflation

Despite recovery from COVID-19, the airline industry is now faced with other economic risks. The price of oil in the context of global supply chain issues and geopolitical shocks have risen to record levels, leading to fuel prices to skyrocket. However, that is an issue that has been ongoing for years, as fuel prices have been rising. Furthermore, global inflation rapidly rising has led to cost increases across various parts of the industry, ranging from parts and servicing to expendables. There is also the need to increase labour wages, as there is already a severe shortage of workers, and wages have to grow appropriately to inflation growth and job demands. While governments and airlines are striving to subsidize some of the cost increases particularly to keep fares accessible and draw more traffic, it is likely that ticket prices will face increase, particularly during hi