HOW ETIHAD ROSE TO BE A PREMIUM GLOBAL AIRLINE
UAE airline’s business strategy has helped it navigate pandemic turbulence in aviation
The arrival of Etihad, the UAE’s second largest national carrier marked a new chapter in the aviation history of the nation and the birth of a new premium international airline. Etihad, established by a royal decree as UAE’s national airline in 2003, started its services in November with a ceremonial flight to Al Ain.
A year later, after placing a $8 billion order for new aircraft, the first direct flight to Geneva took place, followed by Brussels and Toronto in 2005. That same year, as Abu Dhabi began to focus more on Etihad, it pulled out of Gulf Air — a multinational airline owned by Bahrain, UAE (Abu Dhabi), Oman and Qatar — after several loss-making years.
The Etihad investment started paying off instantly. In November, 2009, Etihad won the “World’s Leading Airline” award at the World Travel Awards in London, making this a first for any Middle East airline. Abu Dhabi’s flagship carrier received this award for five consecutive years, until 2013.
Over the next few years, Etihad went about picking up stakes in different airlines around the world like Virgin Australia, Air Berlin, Air Seychelles and Air Serbia, among others.
In 2017, Etihad achieved its best operational on-time performance (OTP) results since 2009, recording network punctuality of 82 per cent for flight departures and 86 per cent for arrivals.
At one point, Etihad was flying to 116 passenger and cargo destinations and had a fleet of 108 Airbus and Boeing aircraft. However, it quickly became evident that the airline was bleeding cash thanks to its rapid expansion and investments in other loss-making airlines.
In 2019, Etihad was just a quarter away from completing a decisive turnaround — but that was when Covid-19 struck and upended all the progress made up to that point.
“We’ve been involved in a transformation programme in excess of two-and-a-half years,” said Tony Douglas, CEO of Etihad last year. “By the end of last year (2019), we were about 10 months ahead of schedule of what we committed to our board and our shareholders.”
Now, Etihad is looking to resize itself into a ‘mid-size’ carrier and recently took a step in that direction by selling its stake in Air Seychelles. The airline’s only remaining airline investment is in Air Serbia, though that stake has been reduced from 49 per cent down to 18.
Making history
On October 19, 2020, Etihad became the first Gulf carrier to operate a commercial passenger flight to and from Israel.
The airline was operating frequent flights between Abu Dhabi and Tel Aviv to the county up until the recent clashes.
Road to recovery
Etihad Airways recorded revenues of $300 million for the first six months of 2021, down from the $1 billion recorded at the same time last year as Covid-19 related issues kept burdening airlines. But there was compensation in the form of a 44 per cent increase in freight carried — 365,500 tonnes — and a 56 per cent revenue to $800 million.
“Every day, Etihad Airways is making up for lost ground — despite the curveball of the Delta variant disrupting global recovery in air travel, we have continued to ramp up operations and are today in a much better place than this time in 2020,” said Tony Douglas, Group CEO, in a statement.
Big changes
Etihad Airways, which is accelerating with its plans of becoming a mid-sized carrier, will bring its Airbus A350-1000s into service next year.
“We took a decision to park our Airbus A380s. We got out of Boeing 777s as one of our aircraft types, as well as the Airbus A330,” said Douglas during a webinar hosted by Simple Flying. “We elected to consolidate, around a very efficient and sustainable fleet of Boeing 787s [along with] the A350-1000s.”
The opening up of travel around the globe seems to be suiting Etihad well.
During a CAPA (Centre for Aviation) event, Douglas said that July had been Etihad’s best month in the last year and a half with average load factor at over 40 per cent, compared to 25 per cent in the early part of 2021.
This was helped by “vaccination curves increasing in many countries (along with) the slight easing in travel restrictions that follows,” said the airline head.
“Abu Dhabi has been one of the best led places in the world, in dealing with this pandemic. It’s been holistic and all-encompassing and public health, wellbeing has been priority number one, by some distance,” said Douglas.