Airlines - Stepping up to Excellence

In seven years, Etihad has flown over 26 million passengers on more than 1,80,000 flights to destinations across the Middle East, Africa, Australia, Europe, North America and Asia

If there is one region in the world where the airline industry is on a roll, that is surely the Middle East (West Asia). In December, aviation expert William Swelbar said, “The Middle East is clearly the coolest, sexiest story in aviation today, and just as the LCCs transformed the US domestic market, the competitive actions of the Middle East (airlines) are bound to disrupt the traffic flows for any number of European, North American and Southeast Asian carriers and their respective alliances.” Indeed, if traffic trends are sustained, this decade should see the centre of gravity of the world airline industry shifting discernibly towards the Middle East. The current political turmoil across the region will certainly extract a high economic toll and take some sheen off the success story, but once the dust settles the factors responsible for the phenomenal growth of the region’s carriers should once again come into full play.

The strategic location of the Middle East, which straddles the crossroads of the world, is probably the most important factor driving the growth of many major airlines, led by those of the United Arab Emirates (UAE). And the huge oil revenues of the Gulf countries have helped spur investment in important sectors of the economy, especially commercial aviation and tourism. The UAE with an area of 83,600 sq km (about the size of Arunachal Pradesh) has eight international airports. The new $33billion ( Rs. 1,48,500 crore) Dubai World Central aerotropolis centres itself on what is touted as the world’s largest airport – Al Maktoum International Airport – and is the only project that smoothly integrates sea, land and air logistics. It gives us an idea of the soaring vision and massive scale of many infrastructure projects in the region. Although the recent global financial crisis did have an adverse impact, especially on Dubai, it left the Middle East travel market relatively unscathed. In fact, the Dubai International Airport, a regular beehive of activity, is likely to become the world’s third busiest airport this year.

The region’s ‘big three’ carriers are Emirates Airline, Etihad Airways and Qatar Airways and it is a measure of their consequence that the business fortunes of giant aircraft manufacturers Airbus and Boeing are heavily dependent on them. Together, Airbus and Boeing have outstanding orders for 175 wide-body aircraft from Emirates Airline, 102 from Qatar Airways and 59 from Etihad Airways – a pointer to the aggressive growth plans of these airlines as well. Taken together, the three carriers have investments amounting to more than $100 billion ( Rs. 4,50,000 crore) in new airliners. Contrast their planned acquisitions with that of their long-haul competitors, Lufthansa that has 85 new aircraft on order while British Airways has just 39. Reverberations of the ambitious moves of the Gulf ’s leading airlines are beginning to be felt in more distant parts of the globe. Star Alliance Chief Executive, Jaan Albrecht, speaking at the recent Latin American Air Carriers Leaders Forum in Panama City warned his audience that the huge expansion plans of the Gulf airlines would have an impact on them sooner rather than later. And India’s carriers are already on the defensive vis-à-vis their Middle Eastern competitors.

Etihad Emerges

Perhaps no other airline exemplifies rapid growth as Etihad Airways does. A fairly recent entrant on the world stage, the airline celebrated only its seventh anniversary last November. It is the Abu Dhabi Government’s national airline, after the Dubai Government’s Emirates Airlines, and the Sharjah government’s budget carrier, Air Arabia. Set up by Royal (Amiri) Decree in July 2003, it launched its first flight to Beirut in November 2003. Positioning itself as a luxury airline, it went on to become the fastest growing airline in the history of commercial aviation. Abu Dhabi, the capital of the UAE, is the airline’s hub and its slogan “From Abu Dhabi to the World” gives a clear signal that its ambitions are not modest.

In 2009, the airline carried 6.3 million passengers; the numbers surged to 7.3 million in 2010. By way of comparison, Qatar Airways achieved this passenger level in 13 years and Emirates in 18 years of operation. The load factor averaged 77 per cent in 2010. Etihad’s cargo division, Crystal Cargo, also expanded rapidly during 2010. Its dedicated freighter fleet increased to six, after two Airbus A330-200F aircraft were taken into service during the year.

In seven years, Etihad has flown over 26 million passengers on more than 1,80,000 flights to destinations across the Middle East, Africa, Australia, Europe, North America and Asia. As of February, its fleet of 57 aircraft (average fleet age 4.4 years) operated close to 1,000 flights per week touching 66 destinations in 44 countries. Terminal 3 at Abu Dhabi International Airport, a facility designed exclusively for Etihad, was commissioned in February 2009 and is already undergoing expansion. Etihad accounts for around 60 per cent of traffic passing through Abu Dhabi International. The airline has an impressive safety record.

Etihad employs around 8,000 staff including 2,800 cabin crew and over 900 pilots, representing 120 nationalities from around the world. The carrier currently receives more than 60 new entrants each month. It intends to add 150 to 200 pilots a year to its 900-strong flight crew contingent, so as to reach 1,700 pilots by 2015. It will need to increase its total workforce to 27,000 by 2020 when all its planes currently on order have been inducted. It has established a new headquarters and training centre next to Abu Dhabi airport to facilitate the process.

Growth in the near future, however, is likely to be more calibrated, as Etihad plans to take delivery of only 11 new aircraft this year. The carrier states that it is now in its “maturing” phase, with a push for more growth to come next year. When Etihad Airways was set up in 2003, some aviation experts believed it was an ill-conceived attempt to emulate the highly-successful Emirates Airline, its nearest neighbour. In 2008, Etihad made the world sit up and take notice by placing the largest single order in commercial aviation history at the Farnborough International Air Show. It signed up for 205 aircraft – 100 firm orders, 55 options and 50 purchase rights. Over the next 10 years, the carrier plans to take delivery of:

• 3 Airbus A330 by the end of 2011.
• 20 Airbus A320 between 2011 and 2015.
• 10 Airbus A380 from 2014.
• 25 Airbus A350 between 2017 and 2020.
• 31 Boeing B787 between 2014 and 2020.
• 10 Boeing B777 between 2011 and 2013.