Qatar Airways announced that they will still pursue in the plans of buying a stake in American Airlines Inc even though their code share agreement is set to end. On Wednesday, American Airlines declared that they will be cancelling code share agreements with Qatar Airways and Etihad Airways hoping to end the illegal subsidies that they receive from their governments. The agreement was a way for airlines to book passengers on each other’s flights. Ending this would arise many disputes between U.S. carriers and Gulf competitors over competitive advantages.
However, this decision wouldn’t really impact Qatar Airways’ plan to buy up to a 10 percent in American Airlines. Their stock purchase request and filing is still going on as planned and acquiring this stake would add to Qatar Airways’ investment portfolio which already includes a 20 percent stake in International Airlines Group.
American Airline’s decision is based off of the notion that state subsidies allow Qatar Airways, Etihad and Emirates to offer lower fares and more amenities to long haul international travelers. They pressed the U.S. government to curb the Middle Eastern carriers’ access to U.S. airports but this would require advance approval from its board. Despite all of this, cancelling code share agreements with Qatar Airways wouldn’t even make a financial impact for American regardless. Etihad accused American for being anti competitive and anti consumer and was very disappointed with this decision. Following this agreement, an interline relationship between Etihad and American would remain in place to connect passengers to secondary markets allowing customers from two airlines to buy connecting flights on one ticket.