Etihad Airways

11Apr/10

In just six years Etihad Airways, based in Abu Dhabi has managed to fly to 60 destinations worldwide. The following articles is about the success and plans of Etihad Airways. James Hogan, the Chief Executive Officer of the Abu Dhabi-based carrier says: "No airline in the history of aviation has achieved that. The advantage we have compared to a legacy carrier is that we are just six years old." Talking to The Emirates Business Newspaper, he discussed key challenges that the airline needed to tackle in 2010, besides the steps being planned to make it break-even in 2011 and move into profitability.

Budget Carriers:

Etihad confirmed they have no plans yet to launch a budget carrier.

Etihad had recently introduced the A320 (single-aisle plane typically operated by a low-cost carrier) aircraft to give greater frequency, and that feeds well into the long-haul aircraft.

Biggest challenges for 2010:

James confirmed that the challenge for Etihad in 2010 is to manage yields. What we have seen in 2008 is that the airline industry worldwide saw yields depressed.Looking at the first six months of 2010, the airline has a seat factor target for each month. When we see the seat factor that we would expect in the first six months of this year – the economy traffic layering is strong. The business and first class traffic is not where we would like it to be yet in regards to the yields, but a part of it is a slowdown due to European cold snap. And these factors impact on yields. But the aviation industry will see yields moving back to 2008 levels this year because there was heavy discounting in 2009. Besides, we have to now continue to focus on our customer, focus very hard on our costs, our ratios, our efficiencies and our utilisation of resources.

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James added that if you look at Iata statistics, the Middle East was the only region that was positive in 2009. And Etihad outperformed those statistics in passengers. But what that meant is that European, Southeast Asian carriers put more capacity, or, diverted capacity, into the Middle East, and pushed down prices.

In 2009, the Middle East, which is our highest yielding market, was down 45 per cent over the previous year. People did not travel due to the flu concerns besides the global financial crisis. But looking into this year, we are seeing positive signs. The advanced sales are stronger compared to the same months last year. The issue is just getting that corporate traffic moving.

Premium Traffic:

Going back to the customer, the economy traffic is there, which is good. We are layering the business over the next six months. It is the premium traffic, which is key, and the cold snap in Europe has not helped at the start. But what we do see out of Europe and Australia is strong business cabin traffic. The advantage we have in Abu Dhabi and Saudi Arabia, the infrastructure projects have continued. Fifty per cent of Etihad traffic comes out of Abu Dhabi. So that is certainly a plus. What is also positive is India and China. While China has certainly come back strong on cargo volumes, and India is coming back strongly, too.

Oil Prices:

James advised that Etihad are hedged moving forward and have a three-year rolling hedging programme which is continually reviewed with the board.

New Aircraft:

Etihad announced they will introduce the Boeing 787s and Airbus A380s over the next three to five years, which provides enough aircraft to 2018-2020.

Also, Etihad took delivery of 11 aircraft in 2009, opened up new destinations, during a very tough competitive period. Etihad id due to receive their first Airbus A380 in 2013 and the first Boeing's 787 in 2014 and confirmed they have 35 firm orders for the 787s and 10 firm orders for the A380s.

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New Routes:

Etihad plan to launch two new destinations this year – Sri Lanka and Japan (Nagoya and Narita).While Narita would be a direct flight from Abu Dhabi – five times a week, Nagoya will operate via Beijing.

Another thing we have done is work with other carriers – out of America, with American Airlines, out of Australia, Qantas. And just before Christmas, Etihad signed an agreement contract with Al Italia, which gives us Rome.

Etihad Airways in 2010:

James advised that Aviation has always been a tough business but the Gulf airlines still have a fantastic opportunity to move share from the European hubs and the Asian hubs over the Gulf for the customer as one stop versus two stops. He does not believe this year will be as hard as 2009, in respect of issues such as Swine Flu and The Financial Crisis. James added that he is a huge believer in the Abu Dhabi story, and that includes the Grand Prix, Yas Islands and others. So as Etihad Airways builds its story and the other projects of Abu Dhabi come online, that gives us a very positive view for 2010.

James Hogan CEO, Etihad Airways - joined Etihad Airways in September 2006 and was instrumental in adding 13 new destinations and 21 new aircraft to the Abu Dhabi-based airline that more than doubled the number of passengers carried. With some 30 years of travel industry expertise, Hogan has overseen the rapid growth of UAE's national airline.

Under his stewardship, the airline made history in June 2008 with one of the largest orders of passenger jets – 205 aircraft worth approximately $43 billion (Dh158bn) at list prices. James was named 'Aviation CEO of the Year' by CEO Magazine in November 2008.

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