Exclusive Interview: Etihad Airways CEO, James Hogan

Etihad Airways is avoiding legacy alliances to build its own one-on-one partnerships and is reaping the results, says Hogan.



Just as Abu Dhabi will always be compared to Dubai, so Etihad will always be measured against Emirates. But there ends their similarities.

While the latter is focussed on instant world domination-partnerships, Etihad Airways has stamped its trademark with multiple, minority shares spanning three continents.

Such has its long-game method become synonymous with its growth, news of the Abu Dhabi carrier snapping up a stake in a second-tier airline regularly instils a sense of déjà vu, the most recent being the long-awaited 24 per cent share in India’s Jet Airways.

Add to that the airline’s other minority holdings – 40 per cent in Air Seychelles, around 30 per cent in airberlin, nine per cent in Virgin Australia and around three per cent in Aer Lingus – as well as 43 codeshare partners, Etihad can be considered a dark horse hell-bent on its own global domination.

James Hogan, the airline’s president and CEO, believes Etihad’s approach outweighs the traditional alliances, providing a pre-existing foundation in new markets.

“This strategy has enabled Etihad Airways to create its own alliance and therefore it doesn’t intend to join one of the traditional, legacy alliances,” said Hogan, speaking exclusively to Gulf Business. “The legacy alliances have evolved into slow-to-respond, bureaucratic organisations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other.

“It is easier, faster, and far more cost effective for Etihad Airways to grow through one-on-one partnerships with established, respected, carriers than to rely on its own resources and to start from scratch in every market,” he said.

Judging by the group’s financial results, Etihad’s method is working. Codeshare and equity partner revenue for Q1 this year was up 34 per cent to $182 million, with partner contributions representing 20 per cent of the quarter’s total revenue.

The almost compulsive habit of buying minority shares in prominent regional and semi-global airlines may have been the logic behind Hogan’s words in April this year, when he told delegates at the World Travel and Tourism Summit that it is “very clear” Etihad cannot catch Emirates.

“It’s not about being the biggest but the smartest,” Hogan said, after his admission that the “competitor” could not be caught.

Assuming Hogan’s comment can be attributed to a philosophy that minority shares will out-weigh singular large partnerships, Etihad’s chief supported his words with action two weeks later when the $379 million deal with Jet Airways was confirmed.

Summing up the aviation industry’s future, Hogan was bullish about the Gulf’s prospects: “The major shift, occurring in the global economy, is impacting significantly upon the air transport industry and will require airlines to reshape their networks and enter new partnerships in order to remain competitive,” he said.

“Traditional air transport hubs will also continue to decline in prominence, with growth constrained by inadequate infrastructure and ingrained political resistance to change.

“This will allow the Arabian Gulf – the geographic centre of the world – to further evolve as the global centre of the air transport industry, with the number of passengers passing through Gulf hubs outstripping industry growth rates.”

Etihad Airways At A Glance

✑ Launched: 2003
✑ Headquarters: Abu Dhabi, UAE
✑ Ownership: 100 per cent Government-owned.
✑ Fleet: 73 aircrafts
✑ Destinations: 89
✑ Order book: 90 aircraft including 41 Boeing 787-9 Dreamliners and 10 Airbus A380s.
✑ Staff: 14,500 employees