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Qatar had the highest contribution of travel and tourism to GDP (10.3%) in the GCC region in 2021, according to an Alpen Capital study. Majority of travel and tourism spending in Qatar was in the leisure segment ($12.3bn), which constituted 75% of total travel and tourism spending in the country last year, Alpen Capital noted. Travel and tourism spending in Qatar was valued at $16.5bn in 2021, the researcher noted. Prior to the Covid-19 pandemic, travel and tourism had become one of the most important sectors in the world economy, accounting for 10.3% of global GDP ($9.6tn) and more than 333mn jobs (10.3% of all jobs) worldwide as of 2019. Qatar had the highest contribution of travel and tourism to GDP (10.3%) in the GCC region in 2021, says Alpen Capital; Majority of travel and tourism spending in Qatar was in the leisure segment ($12.3bn), which constituted 75% of total travel and tourism spending in the country last year In 2020, the global travel and tourism sector suffered a loss of almost $4.9tn with GDP contribution dropping to 5.5% due to the ongoing travel restrictions. Total spending declined 51.9% y-o-y to $2.9tn with business spending declining by 61% and leisure spending falling by 49.4% during 2020. As restrictions to mobility eased during 2021, the global travel and tourism sector’s contribution to GDP revived to 6.1%. Total spending improved 26.1% y-o-y to $3.7tn with business spending recovering by 30.9% and leisure spending rising by 25.1% during 2021. Domestic visitor spending increased by 31.4% y-o-y, while international visitor spending rose by 3.8% y-o-y during 2021. According to Alpen Capital, the GCC too witnessed a swift recovery in travel and tourism revenues as contact-intensive services key to the sector were boosted by reopening of the borders and effective crisis management strategies adopted by the regional governments. The sector’s contribution to GCC GDP increased from 6.1% ($98.3bn) in 2020 to 6.6% ($108.8bn) in 2021. The contribution to GDP increased by 10.7% in 2021 compared to the previous year. Total spending increased by 39.1% y-o-y to $77bn during 2021. Notably, the share of business spending in 2021 increased to 19.6% from 18% the previous year, and higher than the global share of 18.2% during the year. Domestic visitor spending in the GCC increased by 27.6% y-o-y to $34.4bn, while international visitor spending rose by 12.6% y-o-y to $42.7bn. Due to the fall in international tourist arrivals in the region, the share of domestic spending increased from 41% in 2020 to 45% in 2021. The share of total employment generated by the sector in the GCC improved from 9.2% of all jobs in 2020 to 9.8% in 2021, representing an y-o-y increase of 5.9%. Prior to the pandemic, total travel and tourism spending in the GCC grew at a CAGR of 14.1% between 2016 and 2019. Prior to the pandemic, total business spending in the GCC grew at a CAGR of 16.1%, while total leisure spending grew at a CAGR of 13.6% between 2016 and 2019, Alpen Capital said. However, the GCC countries have not been immune to the pandemic with both the business and leisure spending witnessing a windfall in 2020. As economic and health conditions improved across the globe, total business spending in the GCC recovered by 51.2% y-o-y and total leisure spending rose by 36.4% y-o-y in 2021, both higher than the global averages. The UAE accounted for 42% of the total business tourism spending in the region during 2021, the highest in the region, as the country hosted the EXPO 2020 Dubai. It was followed by Qatar (27.6%), and Saudi Arabia (10.6%). The share of business tourism in these three GCC nations have been witnessing significant rise, largely driven by the governments’ efforts to promote themselves as a leading destination for meetings, incentives, conferences, and exhibitions (MICE). On the other hand, UAE also accounted for the highest share of 34.1% of the total leisure tourism spending in the region during 2021, followed by Saudi Arabia (33.2%), and Qatar (19.8%). Within Saudi Arabia, the share of leisure tourism stood to be highest (93%) amongst all the GCC nations during 2021, primarily driven by the government’s ongoing initiatives to broaden its scope beyond religious tourism.

Beyond the Tarmac The oil price has been sliding on concerns of global economic slowdown hurting energy consumption, but the airline industry has little to cheer given elevated prices for jet fuel. Rising energy prices will have an impact on the airline industry’s bottomline as fuel bill accounts for 20-30% of its operating costs. Latest IATA data show the global industry would have to churn out $131.6bn on fuel costs in 2022. So far this year, jet fuel price averaged $142/barrel, the global body of airlines noted. Fuel is a major cost component of operating an airline, which means a rise in energy costs will force airlines either to reduce costs elsewhere or increase fares. “In the current operating environment neither is easy,” points out OAG, a UK-based global travel data provider. Jet fuel prices have long driven airline profitability and the aviation industry as a whole, representing between 14% and as much as 31% of airline operating costs in the past decade, an IATA estimate shows. One report, however, suggests 40% of the raw material cost in any airline, is for jet fuel or aviation turbine fuel (ATF). Consequently, airlines hedge a large portion of their annual fuel consumption at lower oil prices in order to protect themselves from the volatility in oil prices. But given the global economic uncertainties, it is easier said than done. “Because of oil price volatility, we cannot hedge anymore as banks are not ready to hedge. This is because they don’t know where the price is going – north or south,” Qatar Airways Group Chief Executive HE Akbar al-Baker said in Doha recently. “That said, oil price is not in the hands of anyone – it is based on demand and supply and the political climate around the world,” he said. Al-Baker also urged the oil industry to invest more in alternative fuel that will protect the environment. “As I stated, I have no issue in paying a bit more, but I cannot pay four of five times the price of the normal Avgas (aviation gasoline), because it will not be affordable to us. And if we are pushed to do that… you as a passenger are going to pay for it. “This is because airlines’ operate with very low margin. I don’t think there is any other industry in the world that operates with 4% or 5% margin.” In 2021, Qatar Airways committed to using sustainable aviation fuel for at least 10% of combined fuel volumes by 2030, provided that a few suppliers produce more SAF. Speaking on the sidelines of the 41st General Assembly of ICAO, IATA Director General Willie Walsh said: “I think everyone will be familiar with the rising oil price and the impact that energy prices will have on consumers. Starting at the beginning of this year, we saw what we call the crack spread, the difference between Brent (crude price) and the price of jet, widened very significantly. “Although we have seen crude prices ease in recent months, we are still seeing elevated prices for jet fuel, and some of that is understandable, given that the demand reduced significantly in 2020 and 2021. So refining capacity moved away from jet. As that capacity came back online, we would have expected to see this crack spread narrow significantly.” It is still at rates that are significantly elevated from historical rates, which you can see there going back to 2015. Between 2010 and 2019, the average spread was about 18%, so Brent averaged $80 a barrel throughout that 10-year period. “We have seen that spreads go over 60%. At the end of September, it was at 56%. Now it has eased a little bit, but still a very big difference between crude prices and jet prices, which means that we will see costs continue to challenge the industry in 2022, and in 2023,” Walsh noted. Gasoline prices have seen a sustained downtrend over the past three months. Gas prices fell for 13 consecutive weeks, a fresh record. Meanwhile, the Airline Association of Southern Africa (AASA) warned that higher fuel costs and supply shortage may lead to flight disruptions and cancellations in the continent. “The escalation of jet fuel rations throws into sharp focus South Africa’s vulnerability because of its reliance on imported jet fuel,” said AASA. The group called on government and fuel suppliers to move with urgency and put in place a robust and resilient plan to ensure sufficient stocks of aviation fuel are always available. Kirby Gordon, chief marketing officer at FlySafair, said that jet fuel has increased by around 220% over the last year and makes up about 50% of total operating costs – up from 30% previously. “This is a huge deterrent for airlines to expand flights and operations, especially because they have to fly further between economic hubs in South Africa,” he said.

Market conditions are proving toxic for gold prices, Emirates NBD said and noted the Federal Reserve rate hike and dollar surge are headwinds for the precious metal. Metals prices will struggle in the near term as a combination of slowing global growth, tighter monetary policy and a near complete aversion to risk assets weighs on both precious and industrial metals. Gold prices are already down nearly 10% year-to-date while a broad measure of industrial metals, the London Metal Exchange Index (LMEX) has fallen more than 20%, noted Edward Bell, senior director (Market Economics) at Emirates NBD. “Further downside may be in store particularly as demand conditions will ebb,” he said. Market conditions are proving toxic for gold prices. The Fed has so far hiked policy rates by 300bps this year, as of late September, and we expect that they will add another 125bps before the year ends. After a tortuous journey to moving from highly accommodative policy to restrictive, the move higher in policy rates has also pushed Treasury yields higher, both in nominal and real terms. The 10yr UST yield had added 226bps since the start of the year while the similar maturity TIPS yield has moved up 250bps. With the Fed not showing any signs of moderating their approach to tightening policy, Treasury yields will likely be able to extend their moves higher and attract macro investor interest away from gold, traditionally also seen as a haven asset. A surge in the dollar, generally a negative for all USD-denominated commodities, has also been a headwind for gold prices. As the dollar remains strong both against developed market (witness the collapse in British pound) and emerging market peers, gold prices will struggle given the strong negative correlation in place between moves in the broad dollar index and gold. While gold prices in dollars may have fallen, the depreciation in currencies in some core markets for physical demand means that gold is still relatively expensive. Gold prices in Chinese yuan renminbi (CNY) terms are up by 1.7% ytd while in Indian rupee (INR) terms they are down just 0.8% ytd, Emirates NBD noted. A broader collapse in financial markets — major sell-offs have been underway in equity and corporate credit markets — may also mean investors cut any remaining gold positions to cover losses elsewhere. Futures positioning in gold markets among managed money participants has fallen to a net short position. Longs have fallen by more than 102k contracts since gold hit a peak of USD2,050/troy oz in early March in the wake of Russia’s invasion of Ukraine while short positions have expanded by 76k. “We expect the currency weakness in gold prices to persist in Q4, 2022 with a target for an average of $1,650/troy oz. In 2023 gold prices should recover modestly to an average over the year of $1,725/troy oz though that still leaves them down 3% year-on-year on 2022. “We expect to see a similar trend repeated across the rest of the precious metals complex though with their heavier use in industrial processes, silver, platinum and palladium prices may linger for longer at relatively lower levels,” Emirates NBD noted.

Market conditions are proving toxic for gold prices, Emirates NBD said and noted the Federal Reserve rate hike and dollar surge are headwinds for the precious metal. Metals prices will struggle in the near term as a combination of slowing global growth, tighter monetary policy and a near complete aversion to risk assets weighs on both precious and industrial metals. Gold prices are already down nearly 10% year-to-date while a broad measure of industrial metals, the London Metal Exchange Index (LMEX) has fallen more than 20%, noted Edward Bell, senior director (Market Economics) at Emirates NBD. “Further downside may be in store particularly as demand conditions will ebb,” he said. Market conditions are proving toxic for gold prices. The Fed has so far hiked policy rates by 300bps this year, as of late September, and we expect that they will add another 125bps before the year ends. After a tortuous journey to moving from highly accommodative policy to restrictive, the move higher in policy rates has also pushed Treasury yields higher, both in nominal and real terms. The 10yr UST yield had added 226bps since the start of the year while the similar maturity TIPS yield has moved up 250bps. With the Fed not showing any signs of moderating their approach to tightening policy, Treasury yields will likely be able to extend their moves higher and attract macro investor interest away from gold, traditionally also seen as a haven asset. A surge in the dollar, generally a negative for all USD-denominated commodities, has also been a headwind for gold prices. As the dollar remains strong both against developed market (witness the collapse in British pound) and emerging market peers, gold prices will struggle given the strong negative correlation in place between moves in the broad dollar index and gold. While gold prices in dollars may have fallen, the depreciation in currencies in some core markets for physical demand means that gold is still relatively expensive. Gold prices in Chinese yuan renminbi (CNY) terms are up by 1.7% ytd while in Indian rupee (INR) terms they are down just 0.8% ytd, Emirates NBD noted. A broader collapse in financial markets — major sell-offs have been underway in equity and corporate credit markets — may also mean investors cut any remaining gold positions to cover losses elsewhere. Futures positioning in gold markets among managed money participants has fallen to a net short position. Longs have fallen by more than 102k contracts since gold hit a peak of USD2,050/troy oz in early March in the wake of Russia’s invasion of Ukraine while short positions have expanded by 76k. “We expect the currency weakness in gold prices to persist in Q4, 2022 with a target for an average of $1,650/troy oz. In 2023 gold prices should recover modestly to an average over the year of $1,725/troy oz though that still leaves them down 3% year-on-year on 2022. “We expect to see a similar trend repeated across the rest of the precious metals complex though with their heavier use in industrial processes, silver, platinum and palladium prices may linger for longer at relatively lower levels,” Emirates NBD noted.

International Gas Union expects liquefied natural gas demand to grow further in 2022 as the ongoing Russia-Ukraine conflict continues to impact global gas supply, reinforcing LNG’s critical role in global energy security. Growth in Qatari LNG market and other markets including the US and Africa will help support European energy security, IGU said in its ‘World LNG Report 2022’. “In 2021, Russia contributed to 8.0% of global LNG exports, out of which, 43.9% were to Europe, while the remaining 56.1% were to Asia Pacific and Asia. With the European Union committing to eliminate Russia energy imports by 2027, growth in existing LNG exporting markets, such as the United States and Qatar, and developing new ones like growing Africa, are important avenues to diversify its energy sources and support European energy security,” IGU noted. As of April this year, 136.2mn tonnes per year (MTPY) of liquefaction capacity was under construction or approved for development, but only 7.7MTPY of that overall capacity increase is expected to come online in the second half of 2022, with the rest gradually coming in between 2023 and 2027. 2021 witnessed one of the highest volumes of capacity being approved in a single year, with 50 MTPY worth of liquefaction capacity reaching a final investment decision (FID). This was mainly contributed by the Qatargas North Field East (NFE) project, which added 32 MTPY to global approved liquefaction capacity. The remaining approved capacity was contributed by the Baltic LNG T1–T2 (13 MTPY) and Pluto T2 Expansion (5 MTPY) in the pre-FID stage, the majority of which is in the United States, Canada and Russia. In the Middle East, QatarEnergy has taken FID on the North Field East (NFE), the world’s largest LNG project, which will raise Qatar’s LNG production capacity from 77MTPY to 110MTPY by 2025. The project involves the construction of four new LNG mega-trains with a capacity of 8MTPY each. With the NFE project progressing, this will reposition Qatar as the world leader in terms of liquefaction capacity, IGU said. The current geopolitical situation has re-invigorated appetite for new liquefaction project development, with several project developers hoping to leverage strong demand and high LNG prices to progress to an FID. “However, challenges such as access to financing remain, as financial institutions are reducing their exposure to fossil fuel investments, focusing developments on clean energy instead. “As such, it is crucial for new liquefaction plants to be increasingly innovative in a decarbonising landscape, leveraging on solutions to continue driving down emissions in the liquefaction process and the rest of the LNG value chain. It is also important to have clarity and consistency in the policy environment, which impacts financial risk and liquidity provision,” IGU said.

QatarEnergy targets more than 11mn tonnes per year (mtpy) of carbon capture and storage (CCS) and the production of 5GW of solar power by 2035, HE the Minister of State for Energy Affairs Saad bin Sherida al-Kaabi said, highlighting Qatar’s commitment to CCS and renewable energy production. “QatarEnergy is moving forward to help meet the growing global demand for cleaner energy, of which LNG is the backbone for a serious and realistic energy transition,” al-Kaabi said at a media event where QatarEnergy announced its selection of TotalEnergies as the first international partner in the multi-billion dollar North Field South (NFS) expansion project. Al-Kaabi said: “We are committing big investments to lower the carbon intensity of our energy products, which constitute a key pillar of QatarEnergy’s sustainability and energy transition strategy. “Furthermore, as you reported recently, we have announced the Ammonia-7 Project, the industry’s first world-scale and largest blue ammonia project with a capacity of 1.2 mtpy." Blue ammonia is produced when the carbon dioxide generated during conventional ammonia production is captured and stored. It can be transported using conventional ships and then be used in power stations to produce low-carbon electricity. The new plant, which is estimated to cost $1.156bn, will be located in the Mesaieed Industrial City (MIC) and will be operated by Qafco as part of its integrated facilities. Last month, QatarEnergy’s affiliates, QatarEnergy Renewable Solutions (QRS) and Qatar Fertiliser Company (Qafco) signed the agreements for the construction of the Ammonia-7 project, the industry’s first world-scale as well as the largest blue ammonia train, which is expected to come into operation by the first quarter of 2026. Al-Kaabi said QatarEnergy was always talking to buyers globally, whether in Europe or Asia, and would continue to do so for commercial contracts for the expansion project as per market needs. “Uniper and RWE (German utilities) have a great relationship with us, we have been dealing with them for the last 20 years, we have contracts with some of them," al-Kaabi said. "So, we are talking with both of them and there isn’t anything that I can say that is different from what I always say on commercial contracts, which is I don’t discuss them,” he added.

TotalEnergies is not overexposed to Qatar, chairman and CEO Patrick Pouyanne said and noted: "If Qatar had offered more investments, then we would have invested more in Qatar.” “Qatar has the largest LNG reserves and is a low-cost producer,” Pouyanne said at a media event alongside HE the Minister of State for Energy Affairs, Saad bin Sherida al-Kaabi, where QatarEnergy announced partnership with TotalEnergies in the North Field South expansion project. "If Qatar had offered more investments then we would have invested more in Qatar," Pouyanne said at a media event, where QatarEnergy announced partnership with TotalEnergies in the North Field South expansion project TotalEnergies will invest around $1.5bn in the planned expansion of Qatar's liquefied natural gas capacity North Field South project, Pouyanne said. TotalEnergies will have an effective net participating interest of 9.375% in the NFS project (out of a total 25% interest available for international partners) while QatarEnergy will hold a 75% interest. The other investments in NFS are expected to be announced in the coming weeks. “We need new capacity for sure, and this will be coming at perfect timing," he said. "Most of the leaders of the world have discovered the words LNG," he said, adding that European countries had to be prepared to strike more long-term deals - and possibly pay a higher price to guarantee energy. "For security of supply, there is a price," Pouyanne said. Qatar's North Field expansion plan includes six LNG trains that will ramp up its liquefaction capacity from 77mn tonnes per year (mtpy) to 126mtpy by 2027. It awarded contracts for the first phase of the expansion project, North Field East (NFE), which includes four trains, earlier this year. TotalEnergies has already signed a deal for a stake in the NFE project and Saturday became the first international partner to be announced for the NFS expansion that includes two trains. In a statement Pouyanne said: "Following North Field East, we are truly honoured and proud that Qatar has once again chosen TotalEnergies to be QatarEnergy’s first partner in North Field South. The State of Qatar’s ambitious leadership in further developing its natural gas resources through this expansion project, which ranks among the world's most competitive in terms of costs and low emissions, will make a major contribution to increasing LNG supply in the years to come. “We consider Qatar as a long-term strategic country for TotalEnergies and this latest addition to our portfolio marks an important step toward our low-carbon LNG growth objectives, a key pillar of TotalEnergies’ transformation into a sustainable multi-energy company. It will also further strengthen our ability, together with Qatar, to support Europe’s energy security."

               Doha   • The NFS project, which comprises two LNG mega trains with a combined capacity of 16mn tons per year (MTPY), will raise Qatar’s total LNG export capacity to 126 MTPY QatarEnergy announced that it has selected TotalEnergies as the first international partner in the multi-billion dollar North Field South (NFS) expansion project. The NFS project, which comprises two LNG mega trains with a combined capacity of 16mn tons per year (MTPY), will raise Qatar’s total LNG export capacity to 126 MTPY. The partnership agreement was signed by HE the Minister of State for Energy Affairs, Saad Sherida al-Kaabi, also President and CEO of QatarEnergy and Patrick Pouyanné, chairman of the Board and CEO of TotalEnergies, during a ceremony held Saturday at QatarEnergy’s headquarters at West Bay and attended by senior executives from both companies. Pursuant to the agreement, TotalEnergies will have an effective net participating interest of 9.375% in the NFS project (out of a total 25% interest available for international partners) while QatarEnergy will hold a 75% interest. Minister al-Kaabi said, “QatarEnergy is moving forward, to help meet growing global demand for cleaner energy, of which LNG is the backbone for a serious and realistic energy transition. We are committing significant investments to lower the carbon intensity of our energy products, which constitutes a key pillar of QatarEnergy’s sustainability and energy transition strategy.” “We will continue our efforts to power lives in every corner of the world for a better tomorrow for all,” al-Kaabi added. Al-Kaabi welcomed TotalEnergies to this new project and said, “I am pleased to welcome TotalEnergies yet again as a partner in our flagship LNG projects. With this agreement, we see an enhanced position for TotalEnergies as a long-term strategic partner for QatarEnergy." “I would like to thank the working teams at QatarEnergy and TotalEnergies for their excellent cooperation that led to this agreement. I also would like to thank the Qatargas leadership and project teams for their efforts in implementing the North Field expansion projects on schedule, and with an outstanding safety record. Most importantly, we are forever grateful to the wise leadership of His Highness the Amir, Sheikh Tamim bin Hamad al- Thani and for his unlimited support of Qatar’s energy sector,” al-Kaabi noted. The North Field Expansion Project, comprising NFS and the North Field East (NFE) expansion projects, is the industry’s largest ever LNG project. It will start production in 2026 and will add more than 48MTPY to the world’s LNG supplies. Five partnership agreements have been signed in June and July this year covering the NFE project, which comprises four mega LNG trains with a combined capacity of 32MTPY. "Most project contracts have been awarded, while the onshore EPC contract is expected to be awarded in early 2023," al-Kaabi noted. This unique project is characterised by the highest health, safety, and environmental standards, including carbon capture and sequestration, to reduce the project’s overall carbon footprint to the lowest levels possible. Other partners in the NFS project will be announced in due course, al-Kaabi added.

Qatar Airways Group Chief Executive HE Akbar al-Baker has urged the oil industry to invest more in alternative fuel that will protect the environment. Participating in a panel session at the World Financial Symposium in Doha, al-Baker said, “What we are asking from the industry (oil and gas) is that they should invest more in alternate fuel that will protect our environment, although we are not the biggest polluter. “We are the minute polluter – just over 2.6% of the (total) emissions is not a big figure. But we are targeted…the aviation industry is unfairly blamed for global warming. So we now depend on oil companies and we are ready to buy sustainable aviation fuel (SAF), provided it is reasonably priced. “As I stated, I have no issue in paying a bit more, but I cannot pay four of five times the price of the normal Avgas (aviation gasoline), because it will not be affordable to us. And if we are pushed to do that… you as a passenger are going to pay for it. “This is because airlines’ operate with very low margin. I don’t think there is any other industry in the world that operates with 4% or 5% margin. In 2021, Qatar Airways committed to using sustainable aviation fuel for at least 10% of combined fuel volumes by 2030, provided that a few suppliers produce more SAF. He said, “Because of oil price volatility, we cannot hedge anymore as banks are not ready to hedge. This is because they don’t know where the price is going – north or south.” “That said, oil price is not in the hands of anyone – it is based on demand and supply and the political climate around the world.” Speaking on the challenges facing the industry, post-pandemic, he said, “We were coming out of the pandemic when the conflict started… we are still profitable by the grace of god. But no one can predict what will happen in future. “For me the biggest worry is the conflict spreading, which will then add to inflation and put pressure on airlines. And the net result will be fewer passengers in my airline.” “Despite optimism and rebound in travel, post-pandemic, we are still in dangerous times due to conflicts around the world. Unfortunately, as soon as we start seeing a recovery, something else happens… and put pressure on our bottom line. As CEO of an airline I am concerned about that.” Highlighting Qatar Airways commitment to invest in a low-carbon future and safeguard the environment, al-Baker said, “In 2021, Qatar Airways committed to using sustainable aviation fuel for at least 10% of combined fuel volumes by 2030, provided that a few suppliers produce more SAF. IATA director general Willie Walsh also participated in the panel session moderated by Hadley Gamble, CNBC Anchor and senior international correspondent. The 2022 World Financial Symposium (WFS) is focusing on reshaping airline resilience. Following the greatest shock to aviation in history, the industry is emerging rapidly from the pandemic and government-mandated travel restrictions of the past two years. Industry losses are expected to reduce to $9.7bn this year from nearly $180bn in red ink in 2020-21. As travel barriers fall in most regions, very strong demand is supporting expectations for a recovery to pre-Covid-19 traffic levels by 2024, with profitability a possibility in 2023. At the same time airline debt levels have soared as carriers borrowed to stay aloft during the crisis. And finance departments across the industry will face challenges as the industry achieves its 2050 fly net zero commitment.    

Qatar Airways Group Chief Executive HE Akbar al-Baker said the aviation industry will continue to face challenges emanating from Covid-19, oil prices, shortage of manpower, political upheaval, lack of investments in infrastructure development and unnecessary restrictions on aviation on environment grounds. He was participating in a panel session following the formal opening of the IATA World Financial Symposium (WFS) in Doha yesterday. He urged the aviation industry to work towards an optimised management of its financial resources, including applying best practices in the areas of cost recovery and effective cash management. The industry, he said, should have a clearly defined measuring, reporting and verification system in place to ensure it drives progress to deliver sustainability commitments. “In order to achieve our ambitious climate targets, the carbon markets need to respond in accordance to the airline's commitments,” he said. He said airline ticket prices will remain high due to lack of capacity as airline manufacturers face challenges delivering aircraft on time. The tourism industry will be hardly hit if disposable income of people shrink due to inflation. “Despite optimism and rebound in travel, post-pandemic, we are still in dangerous times due to conflicts around the world. Unfortunately, as soon as we start seeing a recovery, something else happens… and put pressure on our bottom line. As CEO of an airline, I am concerned about that.” IATA director general Willie Walsh also participated in the panel session moderated by Hadley Gamble, CNBC anchor and senior international correspondent. The 2022 World Financial Symposium (WFS) is focusing on reshaping airline resilience. Following the greatest shock to aviation in history, the industry is emerging rapidly from the pandemic and government-mandated travel restrictions of the past two years. Industry losses are expected to reduce to $9.7bn this year from nearly $180bn in red ink in 2020-21. As travel barriers fall in most regions, very strong demand is supporting expectations for a recovery to pre-Covid-19 traffic levels by 2024, with profitability a possibility in 2023. At the same time airline debt levels have soared as carriers borrowed to stay aloft during the crisis. And finance departments across the industry will face challenges as the industry achieves its 2050 fly net zero commitment. Walsh said, “Airlines are resilient. Now is the time to build on the hard work and difficult restructurings of the past two years to seize opportunities coming out of the crisis. Finance will play a vital role in supporting the ongoing recovery while creating a sustainable capital structure to support our ambitious environment agenda.”

The official inauguration of the current expansion of Hamad International Airport (HIA) will be held next month, Qatar Airways Group Chief Executive HE Akbar al-Baker said Wednesday. With this expansion, HIA capacity will increase to 58mn passengers a year, al-Baker said at the IATA World Financial Symposium, now being held in Doha. “This expansion will is a vital part of future success of Qatar Airways group and the country's preparation to hold the FIFA World Cup and beyond. “The final phase expansion will begin in early January 2023 and is expected to be completed within the next two and a half years, again increasing our capacity to more than 70mn passengers a year.” Highlighting Qatar Airways commitment to invest in a low-carbon future and safeguard the environment, al-Baker said, “In 2021, Qatar Airways committed to use sustainable aviation fuel for at least 10% of combined fuel volumes by 2030, provided that a few suppliers produce more SAF. “This will help us get economies of scale to bring down the price in order to sustain our industry. At Qatar Airways we are at the forefront of environmental protection, taking our responsibility seriously and remaining steadfast to protect the planet for our future generations.” Al-Baker called for collective efforts to achieve the aviation industry’s planned carbon-neutral growth as part of its long-term target to reach net-zero carbon emissions by 2050. “As we recover, our collective goal to achieve net zero carbon emissions by 2050 will require an industry-wide and collaborative effort. The aviation industry is fully committed to making the net zero carbon emissions a goal, a reality. “And airlines around the globe are already undertaking an extensive range of measures to reduce aviation emissions. But we need to keep one thing in mind.” Al-Baker said, “Aviation has been very weak and taking the back seat when we have been targeted as if we are the biggest emitters of carbon dioxide (CO2). Actually, the fact is quite the opposite. “Aviation industry is unfairly blamed for global warming; the industry contributes less than 3% of the emissions while oil companies are not producing SAF in enough quantities. Despite that, we are still the biggest target. We really need to educate people on the importance that aviation plays in various sectors such as tourism, job creation, people to people connectivity and the wider global economy. Also, we have to put the onus on aircraft and engine manufacturers as well as fuel suppliers. They have to work together to enable the industry to meet the target of net zero emissions by 2050. Al-Baker said Qatar Airways became the first carrier to make a transaction on the IATA Aviation Carbon Exchange (ACE) using IATA Clearing House (ICH). The ACE is a centralised marketplace where airlines and other aviation stakeholders can trade CO2 emission reduction units for compliance or voluntary offsetting purposes. With a secure and easy to use trading environment, the ACE offers the highest transparency in terms of price and availability of emission reduction units while simplifying the process for air carriers to access carbon markets to achieve their decarbonisation targets.

Beyond the Tarmac Asia-Pacific is likely to lose its position as top civil aviation market this year due to China's tougher border measures and Japan's cautious approach towards relaxation of inbound travel restrictions. Asia-Pacific, which has dominated the civil aviation market for several years prior to the pandemic, is estimated to finish second, behind Europe in terms of passenger share, and at a comparable level with North America, latest forecast by Airports Council International (ACI) has shown. By end-2022 passenger traffic will only recover by about 55% as compared to pre-pandemic levels, ACI says. This, it said, is in stark contrast to other regions where recovery is substantially higher, and indeed estimated to be approximately between 70% and 80%, respectively. In 2019, 3.38bn passengers travelled by air in Asia-Pacific, representing 37% of the global volume of 9.16bn. Following a phenomenal growth, 2020 was a watershed year for aviation as the Covid-19 pandemic crippled the industry. In 2020, the region witnessed only 1.57bn passengers, an unprecedented 53% crash in traffic owing to pandemic-induced restrictions across the globe. However, Asia-Pacific dominated the traffic share by contributing 1.57bn passengers or 44% to the global traffic of 3.6bn. Home to several large domestic markets, the region demonstrated sensible resilience in air traffic, ACI Asia-Pacific noted. In 2021, 1.5bn people travelled by air in Asia-Pacific, experiencing a slight decline by -4% versus 2020, but was still the leading region accounting for 33% of 4.6bn global passengers. Although the latest ACI forecast predicts 22% growth for the year 2022 over 2021, the share of passenger traffic in Asia-Pacific is likely to drop to second globally, with an estimated traffic of 1.84bn passengers — a decline of -45% compared to 2019. Stefano Baronci, Director General of ACI Asia-Pacific said, “The traffic in the region will not be able to fully recover to 2019 levels unless all countries keep their borders open to facilitate freedom of movement. China and Japan — one of the largest contributors to the regions overall traffic — have been slow in lifting travel and Covid restrictions. We are urging states to take a measured approach to facilitate the recovery in a more sustainable manner and without causing significant impact on their healthcare system. Accelerating the recovery will need a whole of industry and government support, especially in view of an increasingly challenging macroeconomic scenario.” ACI Asia-Pacific has written a letter, co-signed by ACI World and World Travel & Tourism Council (WTTC), to the Prime Minister of Japan, urging the government to remove all restrictions and restore the travel privileges to enable smooth recovery of the industry in the region. Appreciating the Government of Japan's efforts for providing safe environment for its citizens amid the pandemic and easing of restrictions on international air travel in a phased manner, the three organisations urged the Government to take necessary actions to bolster the recovery of the industry, including resumption of visa exemptions to countries that had such an agreement with Japan. This reform is considered particularly urgent in view of economies still battling strong headwinds, including geopolitical instability in eastern Europe and its subsequent impact on global macroeconomics, including high inflation and rising energy prices. All these external factors too are causing disruptions in supply chains, negatively hampering the recovery of the industry. “There are positive signs emerging from Japan where the Government is considering on lifting of daily arrival caps to spur tourism to revive their economy, and it will benefit the industry to a greater extent. We hope to see positive outcome in the very near future,” Baronci said.

* Hotel room supply in the country expanded at 'quickest' rate in the GCC, expanding at a CAGR of 10.1% between 2016 and 2021, Alpen Capital noted   Qatar’s hotel pipeline for 2022 has been estimated at 13,300 keys with 80% of expected supply designated under a four or five-star hotel category, according to researcher Alpen Capital. Hotel room supply in the country expanded at the “quickest” rate in the GCC, expanding at a CAGR of 10.1% between 2016 and 2021, Alpen Capital said in its ‘GCC Hospitality Report 2022’. The total number of rooms in the country is estimated to have reached 37,085 in 2021, recording an addition of 11,918 rooms since 2016. Qatar demonstrated resilience despite the challenging economic conditions and added around 10,243 hotel rooms in 2020 and 2021 alone. As of 2021, the country accounted for 4.5% of the total hotel rooms in the GCC. Several mega projects are currently in the pipeline as the country prepares to host the FIFA World Cup 2022, which is expected to draw 1.2mn tourists from around the world. In a bid to accommodate the anticipated 1.2mn tourists for the FIFA World Cup 2022, Qatar has developed several innovative temporary accommodations such as exclusive fan villages, camping by the desert, as well as private home stays and rooms in cruise liners. To accommodate the surge of visitors, Qatar has been aggressively ramping up the hotel industry by adding 105 new hotels to its portfolio of properties and several innovative temporary accommodations, including 16 floating hotels with a total capacity of nearly 1,600 rooms and another 50 new hotels are set to open by the end of 2022. “Following the World Cup, the sharp increase in supply is expected to put downward pressure on occupancy rates; however, the elevated profile provided by hosting the tournament, development of significant tourism infrastructure, lifting of the blockade, and global travel recovery are all expected to support the growth prospects of the tourism sector in Qatar. “Apart from hosting the FIFA World Cup 2022, Qatar is also vying to host a variety of business forums and conferences as it seeks to establish itself as a business hub in the GCC,” Alpen Capital noted. Qatar, the researcher noted, witnessed significant growth in tourism activity, especially since the removal of the embargo. It recorded a 17.5% Y-o-Y growth in international tourist arrivals in 2019 amid an increase in business and leisure events. Moreover, it has been hosting several events in the run up to the FIFA World Cup 2022, helping the industry revive from the lows of 2020. The occupancy rates, thus, increased from 62.0% in 2016 to an estimated 71.0% in 2021 – highest amongst the GCC nations.

Middle East airlines will require 2,980 new airplanes valued at $765bn to serve passengers and trade over the next 20 years, according to Randy Heisey, Boeing managing director of Commercial Marketing for the Middle East, Africa, and Russia and Central Asia Regions. More than two-thirds of these deliveries will enable growth, while one-third will replace older airplanes with more fuel-efficient models such as the Boeing 737 MAX, 787 Dreamliner and 777X, Heisey told a Middle East media event yesterday. In the widebody segment, Boeing forecasts a regional demand for 1,290 new passenger airplanes by 2041.   Single-aisle airplanes will continue to be the largest market segment with operators projected to need 1,580 new airplanes in the next 20 years. The growth of single-aisle fleet is largely due to the rapid growth of low-cost carriers across the region, he noted. Air cargo demand is expected to grow 8% by 2041. The Middle East freighter fleet is expected to reach 170 aircraft of which 70 will be new deliveries. Over the next 20 years, airline traffic growth in the Middle East is projected to increase by an average of 4% per year (in comparison to the global growth of 3.8% per year).  Qatar Airways tops global air cargo in tonnage in 2021 Qatar Airways topped global carriers in the cargo segment in terms of tonnage or freight ton kilometres (FTKs) last year, Boeing’s 2022 Commercial Market Outlook (CMO) has shown. In 2011, Qatar Airways stood at 15th position globally in terms of tonnage, noted Randy Heisey, Boeing managing director of Commercial Marketing for the Middle East and Africa, and Russia and Central Asia Regions. Dubai’s Emirates was in second position by cargo tonnage in 2021. In 2011, the UAE carrier stood at fifth position globally. Notably, air cargo traffic flown by Middle East carriers has continued its substantial growth of recent years. Air cargo demand is expected to grow 8% by 2041. The Middle East freighter fleet is expected to reach 170 aircraft; more than doubling the pre-pandemic fleet, of which 70 will be new deliveries, Heisey told a media event yesterday. In February this year, Qatar Airways ordered up to 50 777-8 Freighters, expanding its commitment to the Boeing 777X family. Qatar Airways will be the 777-8 Freighter launch customer with a firm order for 34 jets and options for 16 more. First delivery of the new freighter is anticipated in 2027, Qatar Airways said. Boeing 777-8 Freighter will be world’s largest twin-engine cargo jet with the most payload capacity and a 25% improvement in fuel efficiency, emissions and operating costs.

Elevated international oil and gas prices, widening current-account surplus, and rebounding financing and liquidity metrics are favourable to Qatari riyal, the Economist Intelligence Unit (EIU) said in its latest update. EIU noted the riyal's peg to the US dollar will continue to be backed by “healthy” foreign reserves and QIA assets. The researcher assigned currency risk rating at ‘BBB.' Qatar’s ample foreign reserves and sovereign wealth fund assets have helped the country service its ‘high” debt obligations, EIU said. The country’s macroeconomic indicators continue to improve in 2022. The fiscal account surplus will widen this year, owing to high global hydrocarbons prices, easing public debt pressures, it said. According to EIU, the net negative foreign asset position of Qatar’s banks (banking sector risk is BB-rated) is large but fell in the first quarter (Q1) of 2022. The sector is well regulated, and although net external liabilities pose risks, strong prudential indicators insulate banks from a deterioration in asset quality arising from the longer-term impact of the 2020 recession. The non performing loan ratio is low, and profitability levels are moderate. Economic structure risk is also BB-rated, EIU said. Qatar's over-reliance on hydrocarbons exports remains a vulnerability, exposing the country to global energy price movements, EIU said. The Qatar National Vision 2030 diversification programme will shape policy. Qatar's large stock of public debt “weighs” on the outlook, but a sound financial system is “supportive”. In an earlier update, EIU had noted Qatar's overall business environment score has improved from 6.56 for the historical period (2016-2020) to 7.35 for the forecast period (2021-2025). This has helped Qatar's global ranking to improve by eight places from 36th to 28th, although its regional ranking remains steady at third. The largest improvements, in terms of scores, are in the categories of infrastructure and market opportunities, it said. “Qatar's fairly open foreign investment regime, open trading relationships with regional partners and sophisticated capital markets will remain strong aspects of its business environment. The main shortcomings are in policy towards private enterprise and competition and in access to financing for small and medium-sized enterprises,” EIU noted.

Qatar’s travel and tourism spending revenues stood at $16.5bn in 2021, Alpen Capital has said in a report. The hotel room supply in Qatar has expanded at the quickest rate in the GCC, expanding at a CAGR of 10.1% between 2016 and 2021, Alpen Capital said in its ‘GCC Hospitality Report’. The total number of rooms in the country is estimated to have reached 37,085 in 2021, recording an addition of 11,918 rooms since 2016. Qatar “demonstrated resilience” despite the challenging economic conditions and added around 10,243 hotel rooms in 2020 and 2021 alone. As of 2021, the country accounted for 4.5% of the total hotel rooms in the Gulf Co-operation Council region. Several mega projects are currently in the pipeline as the country prepares to host the FIFA World Cup 2022, which is expected to draw 1.2mn tourists from around the world. Qatar’s hotel pipeline for 2022 has been estimated at 13,300 keys with 80% of expected supply designated under a four or five-star hotel category. Following the World Cup, the sharp increase in supply is expected to put downward pressure on occupancy rates; however, the elevated profile provided by hosting the tournament, development of significant tourism infrastructure, lifting of the blockade, and global travel recovery are all expected to support the growth prospects of the tourism sector in Qatar. Apart from hosting the FIFA World Cup 2022, Qatar is also vying to host a variety of business forums and conferences as it seeks to establish itself as a business hub in the GCC. Occupancy rates in Qatar are estimated to have reached 71% in 2021, the highest amongst the GCC nations, Alpen Capital said. Also, Qatar is the only GCC country to have reported a growth in the revenue per available room (RevPAR) from $67.8 in 2019 to $78.4 in 2021, even though it dropped to $53.3 in 2020 owing to the pandemic. An Alpen Capital forecast has shown that Qatar’s hospitality industry is estimated to reach $1.6bn in 2022, recording a year-on-year (y-o-y) growth of 59.8%. This can be primarily attributed to an estimated 325.5% y-o-y growth in tourist arrivals as the country gears up to host the FIFA World Cup 2022, one of the biggest sporting events globally. In the run up to the mega event, more than 1mn visitors are expected to visit the country, which is likely to significantly boost the revenues for the hospitality sector. To accommodate the surge of visitors, Qatar has been aggressively ramping up the hotel industry by adding 105 new hotels to its portfolio of properties and several innovative temporary accommodations (fan villages and camping by the desert) including 16 floating hotels with a total capacity of nearly 1,600 rooms and another 50 new hotels are set to open by the end of 2022, the report said. The occupancy rates are anticipated to rise to record highs of approximately 86% in 2022. Consequently, ADR is expected to witness a 25.7% y-o-y growth in 2022 to reach $139, while the RevPAR is expected to surge by 51.5% y-o-y to $119. Alpen Capital also noted Qatar is positioning itself as the global sporting hub. Its government has launched a promotional campaign targeting 17 visitor source markets as part of the country's tourism strategy to increase tourism’s contribution to GDP to 10% by 2030 and to attract 6mn visitors annually. Qatar also plans to invest $45bn in tourism beyond the FIFA World Cup 2022 and aims to almost double tourism's share of GDP over the next 16 years through investments from government and business, Alpen Capital said.

Most common LNG trade voyage to Europe last year was from Qatar to Italy with 76 shipments, according to International Gas Union. More than 70% of LNG volumes imported by Europe during 2021 were supplied by Qatar, US and Russia, IGU said in its ‘World LNG Report 2022’. With additional liquefaction capacity, 2021 was characterised by a resumption of growth in the number of voyages and vessel utilisation, after Covid-19 demand reduction in 2020, IGU noted. A total of 6,708 LNG trade voyages departed in 2021, up 12% from 2020, which in contrast saw little growth from the previous year. Global growth in LNG trade voyages is in line with growth in liquefaction capacity, alongside growing competition between Asia and Europe as LNG demand centres. The number of LNG trade voyages both to Europe and Asia has trended upwards since 2015, with growing year-on-year liquefaction and vessel deliveries. The Panama Canal was widened and deepened in 2016, allowing for more transits, IGU said. The resulting voyage distance and time from the United States’ Sabine Pass terminal to Japan’s Kawasaki LNG site was reduced to 9,400 nautical miles (nm) and 29 days through the Panama Canal, compared to 14,500nm and 45 days through the Suez Canal and close to 16,000nm and 49 days around the Cape of Good Hope. However, due to the popularity of the route, the Panama Canal has become a bottleneck for this voyage. “LNG carriers reduce speed and increase the amount of LNG afloat in a quasi-floating storage as a short-term bridge before winter to meet larger end-of-year demand. High charter rates and boil-off usually lead to storing LNG earlier in the year or for longer periods being uneconomical. “Covid-19 led to low LNG shipping charter rates, port closures and excess liquefaction, an environment that allowed for use of LNG carriers at reduced speed or eventually for storage as early as February 2020. This dampened the effect that demand destruction otherwise would have had on vessel utilisation in 2020,” IGU said. There were 4,598 voyages to Asia in 2021, a 10% increase from 2020 driven by stronger Chinese demand amidst a colder winter at the beginning of the year, coupled with a coal shortage and stronger industrial demand towards year-end. European trade voyages grew 11% to 1,435, competing head-to-head with Asia for LNG supply. The most common voyage globally in 2021 was from Australia to Japan, with 452 voyages. This was closely matched with the voyage count from Australia to China, at 447 journeys. Japan, China and South Korea took the highest number of cargoes globally, receiving 1,523, 1,192 and 715 cargoes, respectively. The average number of voyages completed per vessel was 10.6 in 2021, a similar level to the year before, IGU noted.    

The aviation industry in the Middle East has benefited significantly from the region’s strategic location – at the cross roads of major economies in Asia, Africa and Europe. Due to its geographical location, Middle East carriers can easily connect to any continent in the world: From the well-established international hubs of Doha, Dubai, Abu Dhabi, aircraft can reach almost all of Asia, Africa, Europe within a flying range of eight hours. According to the Airports Council International (ACI-Asia Pacific) the Middle East region has more than 110 airports. Aviation industry in the region is one of the fastest growing in the world, accounting for 4% (170mn) of the global traffic (4.6bn) in 2021. In 2019, Middle Eastern airports handled 404mn passengers. In 2020, it handled 135mn and 169mn passengers in 2021. Middle Eastern airports, in the last two decades, have become popular transit hubs for travellers. With a stopover, passengers can relax, stretch and get some refreshments before continuing their journey. During pre-Covid, the industry in the Middle East generated $213bn in revenues, accounting for 6% global economic activity. The sector generated over 3mn jobs until 2019 in the Middle East. Middle East Airports remained the most impacted in 2021, reached only 42% of its 2019 level by year end. This was mainly due to its dependence on international traffic, ACI Asia-Pacific noted. This year, the region is expected to reach 67% of 2019 levels and fully recover only in late 2024. There has been an improvement in traffic in the first four months of 2022 (from January to April) with the region recording 66% traffic compared to the same period in 2019. Cargo throughput too remains positive in the first four months of the 2022, achieving 86% as compared to same period in 2019, ACI Asia-Pacific noted. ACI forecasts indicate that close to 19.7bn passengers are expected to travel by air globally by 2040 – more than double of the 9bn passengers travelled in 2019. Middle Eastern Airports are expected to handle 1.1bn passengers by 2040 – a significant increase of nearly 300% of the combined traffic they handled in 2019 (405mn). ACI noted that to handle the surge, Middle Eastern airports have to develop their infrastructure. According to ACI forecast, world’s airports are expected to invest nearly $2.4tn to develop their infrastructure by the year 2040. The Middle East's projected capital expenditure (CAPEX) needs amount to about $151bn between 2021 and 2040. Near-term (2021-2025) greenfield airport projects are expected to comprise 56% ($17bn) of total near-term regional airport CAPEX, though that share will gradually decrease over the long-run (2026-2040), as the region meets long-run air passenger capacity needs. To bring to life the ambition of becoming a local gateway for global travel, the Middle East countries are investing billions of dollars into new-build airports to create iconic transport hubs. At the same time, any failure to address capacity needs to realise projected 2040 passenger demand will have real socio-economic consequences, ACI points out. Based on the relationship between passenger travel and socio-economic outcomes, for every 1,000,000 foregone passengers due to airport capacity constraints in 2040, it is estimated that the Middle East would lose about 9,600 jobs and $645mn in GDP. In a statement to Gulf Times, Stefano Baronci, director general, ACI Asia-Pacific said, “With over 110 airports, the Middle East is already one of the globe’s main transport capitals and is one among the fastest growing in the world, accounting for 4% (170mn) of the global traffic (4.6bn) in 2021. During pre-Covid, the aviation industry in the Middle East generated $213bn in revenues, representing 6% of the global economic activity. “Our forecasts estimate that close to 19.7bn passengers are expected to traverse the world’s airports by 2040 – more than double of the 9bn passengers travelled in 2019. Middle East Airports are expected to handle 1.1bn passengers by 2040 – a significant increase of nearly 300% of the combined traffic they handled in 2019 (405 million). This requires significant investment on infrastructure upgrade. “Airports in the Middle East will need to spend around $151bn to complete the expansion and modernisation projects for their airports over the next two decades. Many airports in the region have already placed significant emphasis on infrastructure investment as well, with digital innovation and technology driving change. “A number of Middle Eastern airports have invested billions of dollars into new airports to strengthen its position as global transport hubs. This is a clear indication that the airports have shown the intent towards capacity expansion to meet the future growth.” Amid the challenges and capacity needs, future indeed looks bright for the region’s aviation industry. Despite the Covid-induced slowdown, the aviation industry in the region is expected to grow further in the coming years. Clearly, this will mandate facility enhancement and airport infrastructure development. Pratap John is Business Editor at Gulf Times. Twitter handle: @PratapJohn