Etihad CEO: we're no "fourth alliance"

By David Flynn , May 29 2014
Etihad CEO: we're no

Etihad Airways President and CEO James Hogan sees no reason to join Star Alliance, SkyTeam or Oneworld, but at the same time shies from describing his own airline's growing web of partnerships as an independent "fourth alliance".

"I wouldn't say that" Hogan suggests, showing a trademark precision of language. "I just think we're in a different business model (to alliances)".

Speaking on the sidelines of this month's opening of the new Etihad lounge at Sydney Airport, Hogan told Australian Business Traveller that his interests are about "how we stretch our network globally and build the 'traffic' flights."

"The reason we haven't joined the alliances is that when you join an alliance you’re stuck, that's why we are happy to be non- aligned."

Instead, Hogan's modus operandi is strategic partnerships and equity investments.

The later includes a cornerstone 21.24 percent holding in Virgin Australia, 29.2 percent in Germany's Airberlin, 24 percent in India's Jet Airways, 49 percent in Air Serbia and 40 percent in Air Seychelles.

Etihad is also firming up a 33 percent stake in Swiss carrier Darwin Airline, subject to regulatory approval, with the airline rebranded as Etihad Regional.

Hogan's latest play sees Etihad closing in on a major investment in Italy's Alitalia, suggested to be more than €500 million (A$736 million) in exchange for a 49 percent stake.

Etihad Regional: think QantasLink with a triple-serve of luxe
Etihad Regional: think QantasLink with a triple-serve of luxe

"It's been a long negotiation" Hogan says of the Alitalia proposal. "We've got certain demands on the table, they are responding to those demands, so all I can say to you is that we are still in discussions."

Etihad has also inked partnerships with South African Airways, Philippine Airlines and Fiji Airways.

Building up Etihad's bespoke airline partnerships, expanding its lounge network and bringing on both the Airbus A380 and Boeing 787 from the end of this year is part of what Hogan describes as "giving us the mass to compete with Emirates and Qatar, and that is a petty tough fight."

Hogan's strategy to succeed in that fight is best described as 'investment in innovation'.

"Innovation is important in any business – you change or you die" he says.

"When it comes to our core business, that is the majority of our focus" Hogan continues, singling out the new upscale Residence and Apartments in Etihad's forthcoming Airbus A380.

Etihad's Airbus A380 Residence is the world's first penthouse in the sky, boasts airline president James Hogan
Etihad's Airbus A380 Residence is the world's first penthouse in the sky, boasts airline president James Hogan

"The Residence is the first penthouse on an aircraft anywhere in the world" he says. "We've had some members of the (Abu Dhabi) royal family through and in their words, this is better than their private jet."

Priced at $20,000 for the seven hour flight between Abu Dhabi and London, Hogan says that the first wave of Residence bookings have come from "mainly Middle Eastern customers but once it rolls out (to Australia) by the mid-point of next year I have no doubt others will buy it."

"There is a segment here in Australia here which is already travelling overseas on private jets" Hogan explains, but says the Airbus A380's advantages will trump any VIP jet.

"This is 15 hour flight with no tech stops and you've got the facilities of a private jet at less cost."

As to the A380's new Apartments, which have clearly raised the bar from competing first class suites, Hogan says he expects "the Singapore Airlines and Emirates product teams will probably be first on board when we start operating to London in December!"

Also read: Etihad's amazing new Airbus A380 first class suites

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David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2223

Has anyone asked if his strategy, which I understand to be the buying bits of other airlines and getting into them to explain EY's reach, is comparable to the disastrous Hunter Strategy of Swissair?

It's a debate I'd be keen to read (though I admit it might not be suitable for a full AusBT article).

undertheradar Banned
undertheradar Banned

28 Oct 2011

Total posts 662

other airlines successfully belong to a big 'alliance', and at the same time have 'agreements'/'partnerships' with other airlines outside of the main 'alliance group'...airlines do whatever they can do to survive/generate profit

Qantas - Qantas Frequent Flyer

02 Jul 2011

Total posts 1390

Be interested to know his thoughts on Air Berlin's oneworld membership, or Alitalia's (if it succeeds) SkyTeam membership.

Think the remainder, including Jet Airways, are unaligned


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