Airlines Need To Make “Radical” Changes, Says Hogan

“There is ample evidence to show that the traditional airline model and legacy airline alliances are no longer relevant to today’s operating environment and that progress for the industry is unlikely without radical change.”

Strong words from Etihad Airways’ president and CEO, James Hogan, who says his own Abu Dhabi-based airline has “rewritten the rulebook” with its “unique strategy” of building scale through organic growth, codeshare partnerships and minority equity investments in other carriers.

In his keynote address at the 2013 CAPA Australia Pacific Aviation Summit, held in Sydney this week, Hogan mused on future strategy for airlines. “A sustainable future for global aviation relies on a bold vision and a willingness to break with tradition and past practices,” he commented. He also noted that global reach was beyond the capability of any single airline and that progress would come only through partnerships.

Of course, some will be envious of the investment that has facilitated Etihad’s successful rise, but few can deny that Hogan has proved the merits of his strategy.

The airline recently made a deal with the Government of Serbia to buy 49 per cent of Air Serbia, the country’s rebranded national airline, and a five-year management contract to run it. It soon expects to have 46 codeshare and six equity partners, once final approval is received from regulators in India for its investment in Jet Airways.

On the theme of co-operation, Hogan said this typically includes joint procurement of assets, services and supplies such as aircraft, engines, fuel and insurance, as well as working together on issues such as maintenance, crew training and sales activities. The aim is to reduce costs for all parties and provide “real value-add for our equity alliance and I am confident it is the way forward”.

One man not so enamoured with Etihad is Qantas chief Alan Joyce, who has said that the Abu Dhabi airline made an offer of alliance a decade ago, which was rejected. Also speaking at the CAPA summit, Joyce explained that compared to Qantas’ current partnership with Emirates, the Etihad proposal was like “being offered the bike before the BMW”. Ouch.

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