Etihad Airways PJSC

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Etihad Airways PJSC

P.O. Box 35566
New Airport Road
Abu Dhabi,
United Arab Emirates
Telephone:(+971 2) 505 8000
Toll Free: (888) 8 ETIHAD
Fax: (+971 2) 505 8111
Web site: http://www.etihadairways.com

State-Owned Company
Incorporated: 2003
Employees: 3,500
Sales: $1.3 billion (2007 est.)
NAIC: 481111 Scheduled Passenger Air Transportation;481112 Scheduled Freight Air Transportation; 481212 Nonscheduled Chartered Freight Air Transportation

ORIGINS

CONNECTING THE WORLD

CONSOLIDATING ITS POSITION

PRINCIPAL DIVISIONS

PRINCIPAL COMPETITORS

ORIGINS

Etihad Airways PJSC was established in July 2003 and fielded its first scheduled flight on November 12 of the same year. The original fleet was made up of a half-dozen leased aircraft.

Etihad was created under a mandate of the government of Abu Dhabi, one of the United Arab Emirates (UAE). Abu Dhabi had owned a portion of Gulf Air Co., along with Qatar, Oman, and Bahrain. However, its neighbors had abandoned Gulf Air to build their own national airlines. Eldest, largest, and best known among these was Dubai’s Emirates Airlines, launched in 1985, but Qatar Airways Company Q.C.S.C. had also grown quickly after its founding several years later. At the time of Etihad’s launch in 2003, it was suggested Gulf Air would peacefully coexist with Etihad, possibly as a feeder airline.

The emirates vied for supremacy in trade and tourism, but each had its differences. For example, Dubai was quickly establishing itself as a retail and tourism center, while Abu Dhabi boasted a stronger oil industry and manufacturing base. They were not merely destinations in themselves, however. The introduction of long-range aircraft had made connecting far-flung destinations a key part of the business model for emerging carriers based in the Gulf States. In their capability of connecting continents, these bases competed with once dominant major hubs in Europe and Asia.

In 2004 Etihad was a tiny start-up airline flying a fleet of a half-dozen planes. It made headlines during the year when it ordered a colossal $8 billion in new aircraft. The 24 new aircraft included four of the massive Airbus A380s then in development. This was an ambitious and somewhat controversial purchase, as the A380 was much larger than anything in the fleet. (While other carriers pressed Airbus for compensation after its development dragged on behind schedule, in 2007 Etihad was reportedly negotiating to defer some of the deliveries.)

A thriving cargo division was launched in January 2004. It accounted for revenues of $100 million (EUR 83 million) in 2005, hauling freight on a scheduled basis as well as through charter flights.

Etihad’s passenger count rose to 1.2 million in 2005. The airline shipped approximately one million metric tons of cargo that year; the fleet included four dedicated freighters; belly storage on the passenger jets was also used extensively.

CONNECTING THE WORLD

Etihad averaged a new destination every month during its first three years. The route network was beginning to stretch to the far corners of the earth; service to Johannesburg, South Africa, began in December 2005. Service to Paris was added the next year via six weekly flights. New York and Manila were among a dozen other destinations added in 2006.

The airline also began making the short hop across the Persian Gulf to Tehran; this was noteworthy as there were about 400,000 Iranians living in the UAE, which was an important tourist destination. It was also becoming popular with sun-starved Britons, and a service to Manchester, England, was also added in 2006. Abu Dhabi was building dozens of new hotels, and Etihad Airways planned to invest in some of them.

The route network continued to expand in 2007, stretching south to Sydney in March 2007. This allowed Etihad to connect Australia with London with just one stop.

CONSOLIDATING ITS POSITION

Etihad’s chairman, Sheikh Ahmed bin Saif al-Nahyan, was a licensed commercial pilot and had been CEO of Gulf Air. He led the airline without a chief executive officer until 2005, when Robert Strodel was promoted from within the company. Strodel’s tenure was short-lived, and Etihad named a new CEO in October 2006. This was James Hogan, who had previously led a restructuring at Gulf Air (he had been Sheikh Ahmed’s successor there).

Hogan’s appointment coincided with a new phase in the three-year-old airline’s development: putting the optimum systems and procedures in place to run a $1 billion airline. Although it continued to add new routes, maintaining a breakneck pace of route development was no longer a priority.

As might be expected from a carrier attempting to stand out among rivals known for pampering passengers, the first-class section, called Diamond Zone, boasted a level of luxury unimaginable on any U.S. airline. Each guest was issued a personal pair of pajamas to wear while sleeping on seats that reclined into fully flat beds. At mealtime, some seats could be swiveled to face each other across a table, adding to the ambience of a fine restaurant. Personal minibars were concealed within the consoles, ready to supply libations at the push of a button. Passengers could call each other’s seats using the onboard telephones. The in-flight entertainment, such as movies and Internet access, came via rather large, 23-inch LCD monitors.

Etihad’s use of the latest technology extended beyond the first-class section into the flight deck. In 2006 pilots were equipped with SkyBook laptops produced by T&A Systeme of Germany. These provided for Internet access while storing thousands of airport charts and other aviation-related information.

COMPANY PERSPECTIVES

As the National Airline of the United Arab Emirates, we seek to reflect the best of Arabian hospitality—cultured, considerate, warm and generous—as well as enhance the prestige of Abu Dhabi as a centre of hospitality between East and West.

Our goal is to be a truly 21st century, global airline, challenging and changing the established conventions of airline hospitality.

We welcome everyone who flies with us as a distinguished Guest, as reflected in the unique hospitality we offer in our Guest Zones. With our fresh new approach to service in the air and on the ground, we seek to return a sense of freedom to flight.

Etihad had 325 flight crew members by mid-2006. There were about 3,500 employees in all, an increase of more than 60 percent in one year. Compensation was competitive and enhanced (for those from certain countries) by Abu Dhabi’s lack of income tax. Even so, finding enough qualified pilots was a challenge as new planes kept arriving. Etihad strived to fill positions with UAE citizens, and sent its first batch of one dozen Emirati pilot cadets to a local flight school in 2007.

Revenues were on their way to exceeding $1 billion in 2007 as the passenger count rose to more than four million. Etihad continued to buy new aircraft, ordering a dozen wide-body planes from Airbus in 2007. The fleet at year-end would number roughly 30 aircraft, making it larger than a slimmed down Gulf Air and half the size of nearby rival Qatar Airways. Emirates was by far the largest in the region, with more than 100 planes.

While high oil prices had made it possible for Abu Dhabi to spend heavily in supporting the airline, Etihad aimed to become profitable by 2010. Etihad was aiming to connect 70 destinations by this time.

A question on the minds of many was whether there would be enough business to sustain three hubs— Abu Dhabi, Doha, and Dubai—located within such a short distance of each other. Etihad CEO James Hogan said it could, likening the situation to that in Europe, where a handful of closely spaced state capitals had developed leading international airports.

Frederick C. Ingram

KEY DATES

2003:: Etihad Airways is established.
2004:: Cargo division is launched.
2005:: Passenger count exceeds one million.
2006:: Roughly three million passengers are carried; service to Paris and New York is added.
2007:: Route network extends to Sydney.

PRINCIPAL DIVISIONS

Etihad Crystal Cargo; Etihad Holidays.

PRINCIPAL COMPETITORS

Emirates Group; Gulf Air Co.; Qatar Airways Company Q.C.S.C.

Tomlinson, Hugh, “Busy Skies: Big-Spending Emirates and Qatar Airways Grabbed the Headlines at the Recent Paris Air Show but Abu Dhabi’s Etihad Airways Was Not Far Behind. Can the Region’s Newest Flag Carrier Catch Up with Its Regional Rivals?” MEED Middle East Economic Digest, June 29, 2007, pp. 4+.

Turney, Roger, “Steep Takeoff: Etihad Airways Is on a Steep Growth Path with Freighters Coming in Quickly to the Airline’s Abu Dhabi Base,” Air Cargo World, January 2005, pp. 12+.