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We reported earlier today about the dramatic political events unfolding in the Middle East, with the tiny Gulf state of Qatar effectively being called out as a supporter of terrorism and ostracized economically and diplomatically by most of its neighbours. Obviously this is a very fast-moving story, but the potential implications are profound and clearly it looks like it could spell massive trouble for Qatar Airways.

Can’t countries just get along?

This isn’t a political site, so I’ll leave the real analysis to the experts, but in (very brief) layman’s terms there are two key areas of dispute:

1. Qatar has been taking a friendlier line with Iran than countries like Saudi Arabia and the UAE would like. Saudi Arabia and Iran are the regional powers of significant influence, and they both see each other as enemy number one for various religious, political and historical reasons. The terrible conflicts in Syria and Yemen have led to a further decline in relations between the two countries in recent years, as the Saudis and the Iranians fund and support opposing groups. Qatar is overwhelmingly Sunni and Arab, so on the face of it, might be expected to take a similar view to Saudi Arabia as regards Iran. But, Qatar shares huge gas reserves in the Gulf (and other interests) with Iran, making its position considerably more complex.
2. Despite its tiny size (about half the size of Belgium, with a population just over 2 million people) Qatar sees itself as a big player in the Middle East and beyond. There is no question that it punches massively above its weight, with media organisations like Al Jazeera, global brands like Qatar Airways, tremendous wealth, and huge investments in iconic and strategic businesses and projects – not least in the City of London. There is also little question that Saudi Arabia sees Qatar as a bit of an upstart and is irritated by Qatar’s relative international clout.

You put the two points together, and you end up with Qatar pursuing an increasingly independent line from Saudi Arabia, and Saudi Arabia getting increasingly annoyed about this. This spiral then becomes self-reinforcing as trust and shared objectives are further diminished at every step.

Why is this trouble for Qatar Airways?

For various reasons, Saudi Arabia and its regional allies have decided that now is the time to flex some real diplomatic, political and economic muscles in the direction of Qatar. Cutting diplomatic ties is one thing (countries do it all the time), but this looks much more serious.

The actions taken so far have clearly been coordinated and they are not messing about: Saudi Arabia, the UAE and Bahrain have given all Qatari visitors and residents two weeks to leave their territory; Saudi Arabia (which shares the only land border with Qatar) is refusing to allow food and materials across the border into Qatar; airlines like Emirates and Etihad are cancelling all flights from tomorrow and Saudi Arabia etc are refusing Qatar use of their airspace.

The direct loss to Qatar Airways of losing the connecting Gulf traffic would be very significant.

I imagine that Qatar Airways could route flights north over Iran and up through Turkey to its European destinations, which will add time, extra fuel costs, and potential bottlenecks. Flying to parts of Africa and South America will involve even more significant detours.

There may be implications for other airlines flying to Qatar too: The Financial Times reports that, “They (Saudi Arabia, UAE, Bahrain) said they would pursue legal avenues in an attempt to block friendly countries and companies transiting to and from Qatar across their airspace”.

There are totally unconfirmed rumours doing the rounds that the entire Qatar Airways fleet will be grounded later this week, but I have seen absolutely nothing yet to suggest that is the actually the case.

Bottom line

This is very, very bad news for Qatar Airways  – but not catastrophic yet.

If the political situation continues to deteriorate though, frankly, all bets would be off. I’ve been very surprised by how coordinated and aggressive the moves have been so far – this isn’t the usual diplomatic ‘slap on the wrist’ stuff, so there is good reason to be concerned.

On the the other hand, given that level of coordination, it would seem likely that there is a clear objective in mind and therefore hopefully something that can provide the basis of a swift de-escalation and eventual deal.

If you are due to be flying Qatar Airways soon, keep a close eye on the news and check the official travel updates here.