The global air travel map is being redrawn as new markets evolve, traditional markets decline and the airline industry reshapes itself to house changing conditions, in line with Etihad Airways’ president James Hogan.
Speaking in Abu Dhabi today on the World Travel & Tourism Council Global Summit, Hogan told greater than 800 senior travel executives that legacy airlines were unlikely to progress unless they radically changed the best way they did business.
In addition to the continuing challenges of commercial instability and uncertainty surrounding fuel prices and provide, Hogan said the rapid growth of air travel in markets along with India, Africa and the center East meant airlines would have to reshape their networks to house changing traffic flows.
He explained among the many fastest-growing regions was the center East, where major new hubs including Abu Dhabi were developing to support rapid economic growth within the Gulf region and to attach both new and standard markets.
In order to take part inside the new world of air travel, Hogan said the subsequent generation of airlines would wish “the vision and willingness to be different”, to be able to cut costs, improve productivity and find affordable ways of accessing new markets.
“Airlines the world over have to adapt to ‘the new world’ and identify and faucet into growth markets. The industry must source and train staff for this new growth, in addition to explore cost-effective growth opportunities,” Hogan continued.
He said Etihad Airways’ had created a brand new three-pillared business model, in keeping with organic growth, codeshare partnerships and minority equity investments in other carriers.
This strategy was underpinned by development of Abu Dhabi as a brand new global air transport hub, connecting the networks of partner airlines,
Currently, Etihad Airways has 42 codeshare agreements in place, in addition to equity investments in four airlines: airberlin, Air Seychelles, Virgin Australia and Aer Lingus.
These partnerships have brought considerable benefits to Etihad Airways’ financial results, with codeshare and equity partner revenue in quarter one in every of 2013 up 34 per cent to US$182 million and partner contributions representing 20 per cent of the entire.
Hogan said: “Our equity investment proposition ensures commitment and obligation from both airlines and streamlines our entry into new markets, affordably and within foreign investment limits.
“This strategy helps us avoid the drawn-out process which applies for mergers and bigger investments, and enables our continued expansion via established and revered global brands, while delivering reciprocal benefits to our partners, including access to our growing network and critical savings through activities including resource sharing and joint purchasing.”
Hogan said the Etihad Airways strategy was to concentrate on growth markets and continue to construct “a new ‘Silk Road’ that connects markets via the Abu Dhabi hub”.