03 Jul 2014 15:00
The President and Chief Executive Officer of Etihad Airways, James Hogan, today urged Europe’s governments and airlines to embrace external investment to help strengthen the aviation sector.
in Vienna at a European Union conference on air transport competitiveness in
Europe, Mr Hogan said aviation was a global, not regional, industry, generating
strong economic and social benefits. He said his airline wanted to engage with
Europe for mutual gain.
of airlines is critical to sustainable air services,” Mr Hogan said. “External
investment is not a threat. It is an opportunity to strengthen airlines, and to
support employment and economic growth.”
Airways has acquired 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 Airways 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
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.”
said Etihad Airways, in particular, had become a major focus of larger
competitors who feared and opposed its investment strategy.
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.”
Hogan said 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 had continued.
cited examples of direct state aid totalling €14.2 billion, including 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.
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 Airways was established in 2003.
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.
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.
Hogan said consolidation had created three major European airline blocs – the Lufthansa
Group, which, in addition to its SWISS and Austrian subsidiaries, owns
Germanwings, holds major stakes in Brussels Airlines and SunExpress and a
minority share in the US carrier JetBlue; International Aviation Group (IAG),
which owns British Airways, Iberia and Vueling; and Air France KLM, which has
equity in Alitalia, Transavia, Martinair and foreign carriers including Kenya
Airways and the Brazilian airline GOL.
understand and respect the fact that European airlines have their own business
models, and we understand and work within the rules of Europe,” Mr Hogan said.
“We have a different business model to suit our different requirements.
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.
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.”
Hogan said the investments by Etihad Airways 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
Airways’ stakes, Mr Hogan 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. “There are strong economic and
social benefits from stable and connected airlines,”
Mr Hogan said. “Etihad
Airways wants to engage with Europe.”