10 Apr 2013 12:00
The global air travel map is being redrawn as new markets evolve, traditional markets decline and the airline industry reshapes itself to accommodate changing conditions, according to Etihad Airways’ President and Chief Executive Officer, James Hogan.
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Abu Dhabi today at the World Travel and Tourism Council Global Summit, Mr Hogan
told more than 800 senior travel executives that legacy airlines were unlikely
to progress unless they radically changed the way in which they did business.
to the ongoing challenges of economic instability and uncertainty surrounding
fuel prices and supply, Mr Hogan said the rapid growth of air travel in markets
such as India, Africa and the Middle East meant airlines would need to reshape
their networks to accommodate changing traffic flows.
He said one
of the fastest-growing regions was the Middle East, where major new hubs including
Abu Dhabi were developing to support rapid economic growth in the Gulf region
and to connect both new and traditional markets.
In order to
participate in the new world of air travel, Mr Hogan said the next generation
of airlines would need “the vision and willingness to be different”, in order
to cut costs, improve productivity and find affordable ways of accessing new
“Airlines across the world need
to adapt to ‘the new world’ and identify and tap into growth markets. The
industry must source and train staff for this new growth, as well as explore
cost-effective growth opportunities,” Mr Hogan said.
He said Etihad Airways’ had
created a new three-pillared business model, based on organic growth, codeshare
partnerships and minority equity investments in other carriers. This strategy
was underpinned by development of Abu Dhabi as a new global air transport hub,
connecting the networks of partner airlines,
Currently, Etihad Airways
has 42 codeshare agreements in place, as well as equity investments in four
airlines: airberlin, Air Seychelles, Virgin Australia and Aer Lingus.
have brought considerable benefits to Etihad Airways’ financial results, with codeshare
and equity partner revenue in Q1 of 2013 up 34 per cent to US$182 million and
partner contributions representing 20 per cent of the total.
Mr Hogan said: “Our equity investment
proposition ensures commitment and obligation from both airlines and streamlines
our entry into new markets, affordably and within foreign investment limits. This
strategy helps us avoid the drawn-out process which applies for mergers and larger
investments, and enables our continued expansion via established and respected
global brands, while delivering reciprocal benefits to our partners, including
access to our growing network and significant savings through activities
including resource sharing and joint purchasing.”
Mr Hogan said the Etihad Airways strategy was to focus
on growth markets and continue to build “a new ‘Silk Road’ that connects markets
via the Abu Dhabi hub".