Partnerships offer airlines around the world a new model for growth, according to the president and chief executive of Etihad Airways.
In an industry dominated by legacy airlines, and with such high barriers to entry, no new network carrier could hope to compete effectively in its own, James Hogan said in an address at The Wings Club in New York.
“The highest barrier is network. You can’t build a global network overnight – in fact, you’d need decades, and billions of dollars, to build networks that could compete against the major airline groups,” he said.
“That’s where partnership comes in. From day one, we’ve taken an open partnership approach, working with scores of airlines on codeshare agreements. Then we took that a step further with minority equity investments in strategically important airlines.”
Etihad’s equity alliance, which includes Alitalia, airberlin and India’s Jet, is the seventh largest airline group in the world.
“Each partner then has its own business plan, which is the responsibility of their own management and Boards of Directors. Many of these, such as Air Serbia, Air Seychelles, Jet Airways and Virgin Australia, are now delivering on this level too. We are supporting the restructuring of businesses that require it, such as Alitalia and airberlin.”
Mr Hogan said Etihad Airways’ entry into the United States market had also brought major benefits to the country.
“We are a tiny player in the US air travel market, with less than 0.01 per cent of daily international departures. However, we have been able to offer major benefits to the United States. Our total impact on the US economy is more than US$440 million a year.”
Follow The National’s Business section on Twitter