The FINANCIAL — The partnership strategy of Etihad Airways is delivering significant new choice for air travellers around the world, the President and Chief Executive Officer of Etihad Airways, and Vice Chairman of Alitalia, James Hogan, said on October 14.
Speaking in Milan at the 45th World Congress of the International Association of Financial Executives Institutions, Mr Hogan said the combined strength of Etihad Airways, its seven equity partners and its codeshare partners created a network of almost 600 destinations – five times the core network operated by Etihad Airways.
But he said the equity strategy also delivered benefits to the partner airlines and their combined customers which otherwise would only be available through a merger or takeover, according to Etihad Airways.
“Aviation is global, not local,” Mr Hogan said. “Etihad Airways is only 12 years old. Our main competitors have flown for decades, even generations. They have mature networks, large fleets, global presence and market access. And some legacy competitors are aggressively seeking to block our growth. To compete effectively, we need scale and differentiation.”
Mr Hogan said Etihad Airways had differentiated its offering through innovative growth, introducing not only next-generation aircraft but also industry-leading inflight product and service including The Residence, a three-room space exclusive to the airline’s Airbus A380 aircraft, First Class Apartments and Suites, Business Class Studios, in-flight chefs, food and beverage managers and flying nannies for family assistance.
He said that in addition to cost and revenue synergies, minority investments in other airlines also enabled Etihad Airways and its partners to connect their networks and schedules, closely align inflight product and service standards, and integrate and expand loyalty programs across partner airlines.
Mr Hogan said: “Our strategy delivers benefits well beyond what is offered by standard commercial alliances. By aligning our networks, schedules, product, service and rewards, we are increasingly moving towards a seamless guest experience across our member airlines. We are also offering an effective and increasingly attractive alternative to global mega carriers. In 2014, our partner revenues reached US$1.1 billion, up 24 per cent. Clearly, customers are choosing Etihad Airways and partners.”
Last year, Etihad Airways expanded its portfolio of equity partners by investing 560 million euros to acquire 49 per cent of Italy’s national airline, Alitalia, and a majority stake in its loyalty program, MilleMiglia.
“Alitalia was on the verge of collapse. We saw a great brand, a great network, but a poor business in need of a new direction,” Mr Hogan said. “Alitalia has now been reinvented. It is an important and growing member of our global partnership.
“Alitalia’s plan is on track. This year it will meet its targets. Next year it will break even, and in 2017 it will achieve profit.”
Yesterday in Rome, Mr Hogan, as Vice Chairman of Alitalia, announced an accelerated growth plan for Italy’s national airline, including new routes to South America, additional domestic routes in Italy, new VIP lounges in airports, chauffeur services, new aircraft cabin interiors, in-flight Wi-Fi connectivity on all aircraft, new customer service initiatives at Rome Fiumicino Airport, a new website and greater focus on employee training and development – a total investment of 280 million euros in expanding and improving Alitalia.
“Through our partnership strategy, we have transformed Etihad Airways into a global travel and aviation business, together with our partners,” Mr Hogan said. “Our customers are the winners, globally.”
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