A Model Strategy With Mutual Benefits

If you’re looking for a recipe for success in the airline business these days, then consider a strategy that involves partnership and collaboration. That was the message delivered by James Hogan, president and CEO of Etihad Airways during this week’s IATA Aviation Day in Abu Dhabi.

Hogan told his audience that collaboration within the aviation industry drives change and provides consumers with the “benefits they deserve,” observing that Etihad’s successful partnership strategy could become a model for other players in the industry.

He explained that partnerships and collaboration were the most tangible way to grow in today’s highly competitive business environment, providing consumers with greater choice and connectivity.

“Ways of doing business globally have changed over the years and aviation, like many other industries, must adapt and change,”

Hogan noted that, “Industry observers originally questioned our equity investment strategy. Three years on, we have proved the skeptics wrong. Our organic growth has been supported by successful code-share partnerships, minority investments in selected airlines around the world and deep commercial agreements with competitors and non-competitors — all to provide an enhanced global offering to the travelling public.”

Today Etihad Airways operates a fleet of 119 aircraft flying almost 15 million passengers annually to 113 passenger and cargo destinations around the world. And with its seven equity partners, Etihad has a combined strength of over 330 unduplicated destinations, more than 700 aircraft and 110 million passengers; and with its 49 code-share partners, the combined strength is 600 cities globally.

“No airline can ever achieve scale of such proportions by going out alone,” Hogan stated, before continuing, “Working together brings alignment across our partners which has to be good for the consumer. Business and leisure travellers are demanding. They want, and rightly so, choices in product, service, loyalty rewards, network, schedules, convenience and consistency.”

He pointed out that, “Through co-operation we also enjoy significant cost reduction opportunities such as joint procurement of assets, services and supplies. We recently concluded an innovative financing transaction involving some of our equity partners which raised US$700 million across international markets to fuel growth collectively, a clear endorsement of our business model.”

Yet despite all the positive measures taken by the airline to compete and grow its business, Hogan also spoke of the challenges of operating in the Middle East and Africa, commenting, “The ongoing instability and conflicts in parts of the region continue to affect the performance of the business. So too do security concerns deterring leisure travellers, as well as rising infrastructure costs, increasingly crowded skies and austerity measures impacting consumer spending.”

He continued, “Like rest of the industry we are not immune to these challenges, but collectively, as an industry, not in isolation, we can work towards finding solutions and come up with a framework that is both workable and competitively feasible. It is here that industry cooperation can be mutually beneficial and provide a win-win situation for all.
Seen in photo: James Hogan, Etihad Airways’ president and CEO, speaks on competition and cooperation for mutual benefit during his opening day keynote address at the IATA Aviation Day Middle East & Africa conference being held in Abu Dhabi this week.

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