Subscribe Free
in Air Transport

Etihad Airways CEO said legacy airline alliances have outlived their usefulness

Posted 4 April 2013 · Add Comment

Legacy airline alliances have outlived their usefulness, according to Abu Dhabi-based Etihad Airways' president and chief executive officer, James Hogan.

Hogan yesterday delivered a keynote speech at the International Aviation Club in Washington, D.C.

Hogan said Etihad Airways’ unique business model, which is a combination of organic growth, codeshares and minority equity investments, was proving very effective in building passenger numbers, revenue and profit for all its partners.

“The traditional airline alliances have evolved into slow-to-respond, bureaucratic organisations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other.

“If we look at the consolidation currently occurring throughout the airline industry, we are also seeing more fragmentation within the alliances. This is going to continue as members seek ways to operate profitably in a very competitive environment with high fuel costs and generally slower global economic growth.

“This month we will report our strongest ever first quarter results. Our codeshare and equity partners have made a major contribution to that financial success,” said Hogan.

Etihad Airways owns 29 per cent of airberlin, 40 per cent of Air Seychelles, 9 per cent of Virgin Australia and just under three per cent of Aer Lingus. It has 42 code share relationships around the world. 

The airline posted a profit of US$42 million in 2012 and saw two of its equity partners – airberlin and Air Seychelles – return to profitability, meaning that all five airlines are now in the black.

Hogan said that Etihad Airways’ equity alliance of minority shareholdings, enabled the airline to enter markets within local foreign investment limits and, therefore, without the complexities, approvals or expense attached to mergers or larger investments.

“It is easier, faster and far more cost effective to grow through one-on-one partnerships with established, respected carriers than it is to rely totally on our own resources, and to start from scratch in every market we serve.

“We have hand-picked like-minded partners with whom we can work collaboratively to build revenue across a broader network and reduce operating costs.

“We focus on our partners’ profitability as much as our own, because we are not dealing with competing interests.  When the five CEOs sit down to make decisions, we have a shared commitment to make things happen,” he said.

Hogan said that because Etihad Airways had skin in the game it could go so much further than legacy alliances in thinking innovatively and building relationships that delivered ongoing value.

“An example of innovation is the way we are now working with our equity alliance partners to develop ‘centres of excellence’ in which operational and commercial expertise is pooled to deliver best practice across the group. 

“Cooperation includes fleet and engine acquisition, maintenance, recruitment and training. This is real value-add for our equity alliance and I am confident it is the way forward,” said Hogan.



 

Other Stories
Advertisement
Latest News

Flights to Tel Aviv to be diverted

Flights to Tel Aviv will be diverted over fear of rocket strikes as the country continues tensions with Hamas.

Collins Aerospace unveils new look for its Venue Cabin Management System

Collins Aerospace has updated its VenueTM Cabin Management System (CMS). A new and improved Venue graphical user interface (GUI) is now available for aftermarket installations of the system.

Gulf Air to resume flights to Larnaca and Malaga

Gulf Air will resume its direct operations to Larnaca International Airport in Cyprus with 2 weekly flights starting from 15 June, and Malaga in Spain with 2 weekly flights starting from 30 June until 29 August.

Dubai Airports welcomes a Serene Air flight from Lahore

Dubai Airports has welcomed a Serene Air flight from Lahore to Dubai.

Gulf Air flights operated by vaccinated crew starting from Eid

Gulf Air has said starting from 13 today, the first day of Eid Al Fitr, all its flights will be operated by 100% vaccinated crew including pilots and flight attendants.

P7 Aviation adds Boeing B747 Full Flight Simulator

The wide-body aircraft simulator will expand P7 Aviation’s training offering from the current Airbus A320 and Boeing 737 Classic training capability and seeks to support Boeing 747 operators throughout the Middle East, Asia and

WDS SK2601090322
See us at
Aviation Africa 2021 BTOCAviation MENA 2022F.OPEX21 BT270521World Defence Show 2022DAS21_BT