Etihad Airways, the Middle East’s fourth-largest carrier, plans to rein in network expansion to concentrate on adding frequencies as it seeks to strip corporate customers from European carriers and differentiate itself from Gulf rival Emirates, Chief Executive Officer James Hogan said.
The Abu Dhabi-based company will add no more than six new destinations in coming years, allowing it to deploy the bulk of seats from its 100 aircraft orders to satisfy the needs of the business-travel market, Hogan said in an interview.
“Over the next two or three years it’ll be very much about frequency,” the CEO said. “For the business segment they expect to have a minimum of at least one daily flight, or better still two, morning and afternoon. Once people try us, we get them.”
Etihad, which has built a network of 66 cities in 44 countries in less than six years, also aims to offer a more luxurious cabin product than Dubai-based Emirates, the No. 1 Gulf carrier, while not seeking to compete for size, Hogan said. Etihad was awarded sixth place in the Skytrax Research Airline of the Year rankings for 2010, two places ahead of Emirates.
The only additional route this year is likely to be a 10th destination in western Europe, according to the CEO.
Etihad spokeswoman Holly Williams declined to comment on a report in the London-based Sunday Times that it may bid for Richard Branson’s Virgin Atlantic Airways Ltd., adding that the Gulf carrier speaks regularly with its peers about business opportunities. Branson told Bloomberg News on Jan. 17 that Virgin’s main priority is to join a global alliance -- something that as an independent operator Etihad couldn’t help deliver.
Hogan placed one of the largest-ever aircraft orders at the Farnborough International Air Show in 2008, when Etihad signed a contract for 55 Airbus SAS A320s, A350s and A380 superjumbos, together with 35 Boeing Co. 787 Dreamliners and 10 777s.
While the 787s are slated for delivery from late 2014, the Dreamliner project was delayed for a seventh time on Jan. 18 and Hogan said he has entered precautionary talks with Boeing on accelerating delivery of 777 wide-bodies to bridge the gap.
Etihad initially planned to be an inaugural customer for the 525-seat A380, which also suffered delays before entering traffic in 2007, but chose to push back service entry to 2014.
“The A380 is a good aircraft and the right size to supplement those airports where we need the extra lift or aren’t able to get the extra slots,” the CEO said in the Jan. 20 interview in Brussels. “But we’d rather see others pull through the snags and take the proven product.”
Etihad has no plans to add more superjumbos, Hogan said. Emirates, the biggest A380 operator, has 90 of the planes on order as it seeks to transform Dubai into a global transfer hub.
“We have a different game plan, a different structure proposed and a different network size,” the CEO said, though like Emirates he says he’s pursuing a strategy of targeting secondary European cities such as Dublin, Brussels and Geneva in a bid to lure passengers to change planes in the Middle East, displacing hubs such as Amsterdam, Frankfurt, London and Paris.
Europe’s governments should be wary of opposition to the expansion of Gulf airlines from carriers such as Air France-KLM Group and the British Airways unit of International Consolidated Airlines Group SA, Hogan said, adding that new entrants bring “massive benefits” to local economies.
“Some of the arguments put forward are very muddy in what they’re implying,” he said. “We have a very sound business model and we have a platform to move into profitability.”
European carriers largely retreated from direct long-haul flights from secondary hubs in the 1970s and ‘80s and are unable to go back to them because of their segmentation, he said.
Qatar Airways Ltd. is the second-biggest carrier in the Middle East and Saudi Arabian Airlines ranks third, based on IATA traffic figures for 2009.
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