Etihad Airways, the national airline of the United Arab Emirates, will launch six new routes in the first half of 2015, offering even more choice and improved connections to travellers worldwide. The carrier will commence services to the European capitals of Madrid (Spain) and Edinburgh (Scotland), together with the historic state capital of Kolkata (India), one of the most important business and government centres in East Africa, Entebbe (Uganda) as well as the world-class tourism and economic hub, Hong Kong, and Algeria’s vibrant capital and largest city, Algiers.
In addition, Etihad’s existing daily flights to Brisbane (Australia), currently operated via Singapore, will become a direct service from June 2015 using a brand new Boeing 787-9, offering the first non-stop connection between the city and Abu Dhabi. Further service upgrades in June 2015 include the introduction of a three-class Airbus A330-300 aircraft on daily flights to Singapore, and a three-class Boeing 787-9 Dreamliner on daytime flights to Moscow, marking the debut of First Class cabins on both of the existing routes.
“Our global network development in the first half of 2015 supports a long-term vision to provide travellers with an extensive range of destinations and connections over Etihad Airways’ Abu Dhabi hub. These new destinations have been selected to expand our coverage and strengthen our customer proposition in the strategically important markets of Europe, Asia and Africa,” said James Hogan, president and chief executive officer, Etihad Airways.
The first steps off growth in 2015 will see the launch of a daily Airbus A320 link between Abu Dhabi and Kolkata from February 15, 2015. This will bring the Etihad network in Indian to eleven destinations, comprising: Ahmedabad, Bangalore, Chennai, Hyderabad, Jaipur, Kochi, Kolkata, Kozhikode, Mumbai, New Delhi and Trivandrum.
Kolkata, formerly known as Calcutta, is the capital of the Indian state of West Bengal. The city is the main commercial, financial and educational hub of East and Northeast India, and is the third largest contributor to India’s economy in terms of GDP contribution.
“We are confident that this new service, our first to Northeastern India, will boost travel and trade between the UAE and India, further strengthen our presence in India, and connect key strategic cities with Abu Dhabi,” said Hogan.
Next, and expanding its offering in Europe, Etihad will introduce a daily link between Abu Dhabi and the Spanish capital, Madrid from March 29, 2015. This will be the UAE carrier’s first scheduled passenger link into Spain and its 20th destination in the Continent. The new route will be operated to Madrid Barajas Airport using a two-class Airbus A330-200 aircraft, offering a total of 22 seats in Business Class and 240 seats in Economy Class.
More than 60.6 million international tourists visited Spain in 2013, with its capital and largest city, Madrid, placed at the heart of the country’s tourism industry, while Etihad will likely deepen an existing codeshare arrangement with Air Europa to provide additional connection opportunities around Spain and onward to the Americas, subject to regulatory approval.
“Demand is expected to be strong, boosted not only by strong tourism links, but also the UAE’s position as Spain’s largest trade partner in the GCC region, with trade between the two countries increasing by 75 per cent between 2009 and 2012,” said Hogan.
The third new route will see the introduction of a daily link from May 1, 2015 between Abu Dhabi and Entebbe, building upon the cargo flights in introduced to the East African city this year. It is believed that last year’s hosting of Routes Africa by Entebbe International Airport in Kampala played some role in securing this new air link.
Etihad Airways commenced its weekly Airbus A330-200F freighter service to Entebbe on 26 May 2014 and in less than two months, has transported over 120 tonnes of freight and mail on the route, including a high volume of electronics and textiles into Uganda, while outbound flights are mainly stocked with perishables and consumer goods for the GCC region and Europe.
The new passenger link will be flown using a two-class Airbus A320 with 16 Business Class seats and 120 Economy Class seats. “The appetite for travel to and from Africa has never been stronger, and Entebbe, one of the continent’s fastest-growing business and tourism destinations, is a great addition to Etihad Airways’ global network,” said Hogan.
“We are confident the new passenger route will replicate the positive response our cargo flights have received within their first two months of operation,” he added.
A new daily link between Abu Dhabi and Edinburgh from June 8, 2015 will see Etihad compete with its Gulf rival Qatar Airways, which launched its own five times weekly service to Scotland’s capital city earlier this summer. Interestingly, both carriers appear to be using the 027/028 flight code on this route. While Qatar Airways is offering a daytime flight to Edinburgh with an afternoon return, Etihad plans a nightime flight from the Middle East for an early morning arrival in Scotland and a morning departure back to Abu Dhabi.
Etihad plans to use a two-class A330-200 aircraft, offering a total of 22 seats in Business Class and 240 seats in Economy Class, on the route and expects a lot of onward demand boosted by Edinburgh’s strong links with the Indian subcontinent, Southeast Asia and, in particular, Australia. Edinburgh is ranked as the second most visited city in the UK for Australians, as around eight per cent of Australians are of Scottish descent.
“Scotland has been on our radar for some time and we are delighted that the first direct connection between its capital, Edinburgh, and the capital of the UAE, Abu Dhabi, will be operational from next year,” said Hogan. He had revealed at the annual dinner of the Scottish Passenger Agents’ Association in February this year that the carrier would commence flights to Scotland in 2015, adding that a second service would be introduced from Scotland to Abu Dhabi in five years’ time.
One week on from the Edinburgh inaugural on June 15, 2015, Etihad will introduce a four times weekly flight between Abu Dhabi and Hong Kong, complementing the already established three times weekly offering from its equity partner Air Seychelles, ensuring a daily frequency between the two cities, and bringing the combined number of weekly seats offered on the route to 3,620.
The UAE is Hong Kong’s largest export market in the Middle East and Hong Kong exports to the UAE rose 14 per cent to $4.96 billion in 2013. Hong Kong will become Etihad’s seventh destination in Northeast Asia and its fourth destination in Greater China joining Beijing, Chengdu and Shanghai.
"The new flights will support trade ties between the UAE and China, the UAE’s second largest trading partner. Hong Kong, the world’s largest cargo hub and Asia’s dynamic financial centre, gives us huge growth potential and a strengthened product offering for our global cargo customers,” said Hogan.
The last of the new routes will be introduced from June 17, 2015 when a three times weekly link is added between Abu Dhabi and Algiers, the carrier’s tenth destination in Africa. The link will be flown using an Airbus A330-300 and will bring 1,386 seats a week into the market with eight seats in First Class, 32 seats in Business Class and 191 seats in Economy Class on each of the six rotations.
The new services will strengthen the oil and gas links between the UAE and Algeria, and create new opportunities for both countries in the areas of government, trade, tourism and cultural exchange. It will also provide better access to Algeria for over 10,000 Algerians expatriates living in the UAE.
Alongside these announced changes, Etihad will also continue to increase frequencies on existing services in H1 2015. Network depth will be added to important markets across North America, Middle East and Indian subcontinent regions, according to the carrier.
“The expansion will also create new opportunities to enhance our codeshare agreements and align operations with key airline partners, such as Virgin Australia, Jet Airways, Air Seychelles, Air Europa and Kenya Airways. Between Abu Dhabi and Hong Kong, for instance, our four weekly flights will combine with Air Seychelles’ three weekly flights to provide a daily frequency,” added Hogan.
The network expansion was revealed just a day after the UAE carrier reported double-digit growth in passenger and cargo volumes during the first half of 2014, marking its strongest ever performance for the six-month period, with total revenues increasing to $3.2 billion.
A total of 6.7 million passengers travelled with the airline between January and June this year, almost 22 per cent higher than the 5.5 million passengers in the same period last year. Etihad Cargo also outperformed the global market, carrying 268,713 tonnes of freight and mail during the first half of 2014, up 25 per cent year-on-year, and contributing significantly to the airline’s total revenue, which leaves it firmly on track to become a billion dollar business in 2014.
The impressive performance was supported by Etihad Airways’ continued growth in the second quarter of 2014, with 3.5 million passengers and 140,892 tonnes of freight and mail carried over the three-month period, both up 25 per cent on the same period last year.
“At a time when the global airline industry has struggled with high fuel prices, intense competition and a slowdown in the cargo market, Etihad Airways has achieved record success, carrying more passengers and cargo to more destinations around the world, with our biggest fleet to date” explained Hogan.
“We have ambitious plans to build on this momentum in the second half of 2014, with five more destinations being introduced into our global network, and our ground-breaking Airbus A380 and Boeing 787 also entering service, which will reinforce our status as a global market leader,” he added.
Passenger and cargo volumes were boosted by the fast-paced growth of Etihad Airways’ global route network, with 98 destinations operational by the end of H1 2014, compared to 92 in the same period last year. Following the launch of Medina flights in the first quarter of 2014, the second quarter included the start of new services to Jaipur, Zurich and Los Angeles, while frequencies increased on five existing routes, including Moscow and Cochin.
The airline’s network will increase to 103 destinations by the end of the year, with Yerevan flights launched this month and Rome, Perth, Phuket and Dallas to follow over the remainder of 2014. Organic growth was supported by codeshare and equity alliance partnerships in the first half of 2014, delivering an estimated 1.4 million passengers onto Etihad Airways flights (+28 per cent year-on-year), according to the carrier and contributing revenue of $471 million, which represented 23 per cent of the airline’s passenger revenue.
In the second quarter alone, a new codeshare agreement was signed with GOL and existing codeshares were expanded with partners such as Jet Airways, airberlin, Air Serbia, Air France and South African Airways.
An additional six aircraft will be received in the second half of 2014, including Etihad Airways’ first Airbus A380 and Boeing 787, which commence operations in December and will feature brand new first, business and economy class products. As we reported previously (see ‘Etihad Airways Confirms Initial A380 and 787 Routes’) the A380s and 787-9s will enter service on routes to Europe and USA, respectively.
The Abu Dhabi-based airline’s first A380 will operate commercially to London Heathrow from December 2014. A second A380 will operate on the same route from the first quarter of 2015 and by the end of 2015, Etihad will have five of the type in operation, with plans to also introduce them on routes to both Sydney and New York JFK.
Etihad also has major plans for the B787 which enters the fleet in the final quarter of 2014. Etihad’s first B787-9 will enter commercial service in December 2014, with a second aircraft entering service in January 2015. As with the A380, by the end of 2015, Etihad will have five of the type in operation. The first B787s will initially be deployed on its route between Abu Dhabi and Düsseldorf from December this year and then to Washington DC and Mumbai from January 2015. Services to other cities will be confirmed in 2015 as more B787s enter the airline’s aircraft fleet, says the carrier. Alongside the Brisbane deployment, we can also reveal Moscow Domodedovo will be served on a five times weekly basis by the 787-9 from June 1, 2015.
A key market for Etihad is Europe and in a recent speech in Vienna at a European Union conference on air transport competitiveness in Europe, Hogan called on Europe’s governments and airlines to embrace external investment to help strengthen the aviation sector. Equity investments have become a clear part of Etihad’s own global growth strategy over recent years.
Hogan said aviation was a global, not regional, industry, generating strong economic and social benefits and that Etihad wanted to engage with Europe for mutual gain. “Consolidation of airlines is critical to sustainable air services. External investment is not a threat. It is an opportunity to strengthen airlines, and to support employment and economic growth,” he said.
Etihad currently has minority stakes in three European airlines – airberlin (29.2 per cent), Aer Lingus (4.99 per cent) and Air Serbia (49 per cent), and is finalising the acquisition of a 33.3 per cent stake in the Swiss regional carrier Darwin Airline, which operates as Etihad Regional. Etihad has also announced its intention to acquire a 49 per cent stake in Italy’s Alitalia, subject to regulatory approval.
Hogan said Middle Eastern airlines were coming under increasing scrutiny in Europe, as opponents cited the expansion of Gulf carriers as a major competitive threat. “All Gulf carriers are not the same,” said Mr Hogan. “We are different sizes, have different hubs and follow different strategies. We are actually vigorous competitors with each other.”
He said Etihad, in particular, had become a major focus of larger competitors who feared and opposed its investment strategy. “Etihad Airways is wholly-owned by the Government of Abu Dhabi. We received start-up capital, like every airline does, but we receive no state subsidies, no free fuel and no reduced airport charges in the United Arab Emirates.”
The European airline industry was built upon decades of government ownership and support, and that even after privatisation or part-privatisation, government bailouts, debt waivers and various forms of subsidies have continued.
According to Hogan, examples of direct state aid totalling €14.2 billion, include an €800 million payment by the German Government to Lufthansa to support a pension fund gap, state aid of €1.1 billion for SWISS following the collapse of its predecessor, Swissair, and the Austrian Government’s absorption of €500 million of debt accrued by Austrian Airlines. Both airlines are now subsidiaries of Lufthansa.
“Gulf carriers are not the cause of Europe’s aviation challenges,” Mr Hogan said, adding that the industry was already facing serious problems decades before Etihad was established in 2003. He said the biggest problems facing the European industry were long-standing issues including congestion from under-investment in airports and airspace management, high operating costs at traditional hub airports, high labour costs and inconsistent and inequitable taxes levied on airlines and passengers.
The rapid and broad growth of low cost airlines has also impacted heavily on legacy airlines, causing a major shift of intra-Europe traffic to budget operators and losses by legacy carriers on short and medium-haul routes. In 2013, the 10 member carriers of the European Low Fares Airline Association operated 915 aircraft and carried 216 million passengers, or 43 per cent of all scheduled intra-Europe air traffic.
“We understand and respect the fact that European airlines have their own business models, and we understand and work within the rules of Europe,” said Hogan. “We have a different business model to suit our different requirements. To grow, we need scale. We cannot match the size of long-established competitors, including other Gulf carriers, so we have developed a strategy of growth through partnership,” he said.
“Our strategy is pro-competitive. We work with all partners for mutual gain, and within competition and ownership rules. Collaborative growth delivers sustainable businesses, and more choice, convenience, consistency, reliability and stability for our customers” he added.
Hogan said the investments by Etihad strengthened partner airlines, preserved and created jobs, and maintained air services, delivering benefits to consumers, local and national economies, as well as major suppliers such as Airbus. Without Etihad’s stakes, he said there would be a loss of financial investment and synergy benefits for airberlin, Aer Lingus, Air Serbia and Darwin Airline, and loss of a ‘rescue investor’ for Alitalia, costing thousands of jobs and leading to air route closures, flight reductions, higher fares and lost tax revenue for European governments.
Some carriers could even fail, causing much greater social problems, he warned. “There are strong economic and social benefits from stable and connected airlines,” he said. “Etihad wants to engage with Europe.”