Emirates and Etihad extend tie-up to cargo
They are together on maintenance, security; plan to boost cooperation
Emirates Airline and Etihad Airways have extended their cooperation into cargo – the latest sign of a strengthening partnership between the two carriers, which already work together on aviation security and aircraft maintenance.
Abdulla Mohammad Shadid, Managing Director of Etihad Cargo, said the business is looking to replicate that partnership model with other carriers as it eyes a wider network. He stressed that the work between Etihad Cargo and Emirates SkyCargo is purely at “arm’s length” as the two continue to operate as separate entities.
“That was one of the first partnership agreements we signed in July of last year to be able to do cargo back and forth,” Shadid said.
“Since then, we’ve been carrying some cargo – it’s not a lot, but about 70 or 80 tonnes a month on average, [where] some is our cargo on their aircraft and some theirs on ours on an opportunistic basis when capacity is there.”
In an interview with Gulf News, Shadid said the partnership with Emirates SkyCargo expanded this year, and that it helps extend Etihad Cargo’s network.
Turnaround strategy
Etihad Aviation Group, under which Etihad Cargo and Etihad Airways operate, has been implementing a turnaround strategy for the past few years that aims to return the loss-making carrier to profitability. That strategy has seen a change in top management as well as changes to Etihad’s network and fleet.
Etihad Cargo was not exempt from that. Shadid, who joined Etihad Cargo in the past two years, said he has been looking at opportunities to grow the business while also having a freighter fleet of just five aircraft. He said the partnership with another domestic carrier such as Emirates was a natural place to start.
“We’ve managed to agree on certain interline rates, [which is] a pricing arrangement between various carriers. And once we agreed on those, depending on the capacity, we’re able to carry [cargo] back and forth,” he said.
Interline booking is a commercial agreement between airlines to handle passengers or cargo that require more than one flight on different airlines.
An Emirates spokesperson also confirmed that SkyCargo has been working with Etihad “over the last few years,” and that they currently have “an interline partnership for cargo.”
“In addition, we also use freighter capacity from Etihad on an ad-hoc basis when there is supplementary demand from the market,” the spokesperson said.
Etihad and Emirates have been working together since January 2018 when they signed their first deal together to cooperate in aviation security. Since then, the two have also worked together in maintenance, repair, and overhaul work, as well as in managing contact centres.
Ties ‘closer than ever’
In September 2019, Tim Clark, president of Emirates Airline, said the working relationship with Etihad is the closest it has ever been, and left the
door open for further cooperation in back office operations. He said that while the two have to remain separate entities, “there’s absolutely no reason” why they shouldn’t share back house operations such as supply chain.
Speculations about a potential merger between Emirates and Etihad have been rife for years, but the two companies repeatedly denied them and continue to.
For Etihad Cargo, the partnership with Emirates opens up opportunities for that model to be replicated with other airlines.
“[Emirates is] clearly a partner, but if we take that partnership model, we will likely extend that for maybe four or five other carriers globally that will be to complement our network and give us reach beyond our natural network and our own capacity,” Shadid said.
While Etihad Cargo is not currently in talks with other airlines, Shadid said that in 2020, he expects to see new partnerships “perhaps with one or two additional carriers.”
He said such deals would allow Etihad to gain additional capacity to markets it already serves and to enter new markets.
Currently, Etihad Cargo has five freighter jets of the Boeing 777 model, having reduced its fleet early last year from 10 jets. The company sold part of its cargo fleet as part of its review of operations, and for now, does not plan to acquire any more freighters or cut down on its fleet.
The five freighter jet now bring in 30 per cent of Etihad Cargo’s revenues, with the remaining 70 per cent coming from the belly hold capacity on passenger aircraft.
Discussing that change in fleet, Shadid said, “It was a matter of looking at what’s the right capacity for us, and what’s the right aircraft type to complement our capacity. We’ve determined five is the right number and 777’s is the right one to complement our fleet, and I think the numbers speak for themselves; we’ve been able to do more with less.”
It was a matter of looking at what’s the right capacity for us, and what’s the right aircraft type to complement our capacity.” Abdulla Mohammad Shadid |
Managing Director of Etihad Cargo