Rwanda is in talks to sell a stake in its national carrier to Qatar Airways, a deal expected to disrupt the regional aviation industry. Negotiations are reported to be at an advanced stage, The East African says, but there are no substantial details on the planned acquisition yet.
For Qatar Airways, the deal would position it for a major expansion in Africa, strengthening its presence in the market. This is even more significant for the carrier considering the longstanding dispute with neighbours in the Gulf Cooperation Council (GCC).
In June 2017, four Arab countries – Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt – cut diplomatic and trade ties with Qatar. They imposed a comprehensive blockade on Doha (sea, land, and air), claiming it supported “terrorism” and was too close to Iran.
Two years on and there has been little progress towards a resolution. Qatar and the UAE remain locked in a battle at the International Court of Justice (ICJ) after Doha filed a racial discrimination case. Qatar claims there was no legitimate justification for the severance of relations.
With Qatar Airways still restricted from flying over the neighbouring countries, which were major markets for Doha, owning a stake in RwandAir means the Gulf carrier would have access to African skies as an alternative market.
On the flip side, RwandAir is looking to transfer maintenance and other technical aspects of its operations to Qatar. The cost-intensive operations have been weighing down the African carrier. “At this stage of its growth, RwandAir needs a partner with the technical resources and experience that Qatar Airways has,” an aviation source told The East African.
Rwandan President Paul Kagame had hinted that the government was open to privatizing the state carrier and with RwandAir’s current expansion plans, a strategic partner such as Qatar makes business sense.
The airline has been expanding over the past decade but like other regional flag carriers with the exception of Ethiopian Airlines, RwandAir is still operating at a loss. A deal with the wealthy Gulf nation would help reduce the operational costs and position the carrier for profitability.
Institutions from Qatar Airways and RwandAir are reportedly fast-tracking all the necessary processes to conclude the deal. Meanwhile, the Ethiopian state carrier is said to be also interested in acquiring a stake in RwandAir. After several talks, nothing definitive has materialized, and it is not clear if negotiations are still on.
If successful, the acquisition by Qatar will improve Rwanda’s aviation relationship with the Gulf country, which has continued to develop since Qatar Airways launched daily flights to Kigali in 2012.
Back in April this year, Qatari Emir, Sheikh Tamim bin Hamad Al Thani, visited President Kagame on a three-day tour during which both leaders witnessed the signing of several bilateral agreements.
The deals span multiple sectors including aviation, where Qatar said it will become a substantial investor in Rwanda’s Bugesera Airport. The airport is still under construction and is expected to become the country’s largest.
Qatar Airways was also to cooperate with RwandAir through Rwanda’s Aviation Travel and Logistics (ATL), the government’s company for managing the national carrier as well as its investment arm.
The Emir and President Kagame also reviewed important international and regional issues of mutual interest, as well as the efforts of Qatar in supporting security and stability in the African Union (AU) countries.
Generally, the Gulf nation’s investments in Africa have been on an upward swing since Sheikh Al Thani came into office six years ago. The Emir has undertaken several tours across the region while committing not less than $800 million in investments to fund development projects in the continent.
