Etihad sees most growth coming from more frequencies

Etihad Airways wants to double its fleet in size and grow the network in the next seven years. But two-thirds of the expansion will come from increasing/doubling frequencies to existing destinations and one-third from new routes. CEO Antonoaldo Neves shared updates with media on board on his Boeing 787-9 on static display at the Dubai Airshow. The aircraft features the new Business Class that has been on its Airbus A350-1000s for some time but is now on the Dreamliner. So new, that the aircraft hadn’t been delivered yet as Etihad waited for the final certification of the new cabin. Etihad celebrates 20 years this year. As we described in another story this week, the Abu Dhabi airliner has gone through ups and downs in its young history. During the Covid crisis, Etihad undertook a major strategy review under then-CEO Tony Douglas, who is now spearheading Riyadh Air. “We restructured ourselves and have downsized. Now, I think we have the right size and we have an opportunity to grow again. The plan is to double the fleet in the next seven years and get to 30 to 33 million passengers. That’s the plan. It can be a little bit better, it can be a little bit worse,” said Neves. This plan is directly related to the new Terminal A at Abu Dhabi International Airport, from which Etihad is operating all flights now as of today. Strengthen the network Neves says Etihad has to grow and strengthen the network at the same time. “We will increase frequencies and adjust the time schedule. About a year ago, we almost had no double-daily services to Europe, only to Heathrow. Now, we have double dailies to Milan, Rome, Madrid, and to Barcelona from next year. But also to Jakarta and to other destinations in Asia. About two-thirds of our capacity goes to strengthen the network in current markets that we serve. One-third is to add new destinations. This year, we added 12 new destinations, and next year about 10. We have to balance that, otherwise, the network I not strong enough.” Antonoaldo Neves joined Etihad from TAP Portugal some years ago. (Richard Schuurman) “It is important to understand that we have a clear mandate from the shareholder (the state of Abu Dhabi), which is to deliver extraordinary customer service and at the same time make money. So I take a very business-oriented approach towards growth. We have a seven-year plan, not a ten-year plan, just because it is better with the fleet plan that we have. We are in an amazing region, GDP is growing at least five percent per year. I don’t see any reason why we can’t grow ten percent.” Etihad is not alone in the Gulf region going for growth and more passengers. It is what Emirates, Qatar Airways, Gulf Air, Saudia, and Riyadh Air (from 2025) all do. Neves thinks the market can support this supply. “Four hours of flying, two billion people. Who has that in the world? How many mega airlines do you have in the West? Four? It’s a piece of cake, I am not concerned about that. There is demand enough for everyone. We welcome competition.” Fleet growth until 2030 In 2023, Etihad will grow back by 35 percent to, adding 16 aircraft to the fleet. In 2024, growth will be 25 percent, and expects to carry 17 million passengers. But this rate is entirely dictated by the supply chain, which is holding up the delivery of more aircraft, seats, and parts. Neves is happy that he isn’t having any of the engine issues that plague many of its competitors. That’s an interesting remark, as Etihad operates the A350-1000 with the same Rolls-Royce XWB-97 engines of which Emirates President Tim Clark was so critical of during a media round table on Tuesday. Etihad has outstanding orders for some 52 aircraft. This includes 20 Airbus A321neo’s, 15 A350-1000s, 7 A350F freighters, 11 Boeing 787-9s, and 20 787-10s. The original order for 25 Boeing 777-8s and -9s is also still listed, although Tony Douglas confirmed a couple of years ago that this order would be drastically reduced to maybe just six aircraft. Etihad showed the new Collins Business Class suites on the Boeing 787-9 in Dubai. (Richard Schuurman) aircraft. While he would like to add every aircraft he can get, Neves said that there are no immediate plans for new orders. The airline has, of course, some spare capacity in the form of six Airbus A380s that are in deep storage in Spain and France. This summer, the A380 returned to service on the Abu Dhabi-London Heathrow route, which has doubled in frequency since then. There are now three A380s operational, with a fourth undergoing checks before she returns to service. Right now, Etihad has no plans to bring back any additional A380s. But Neves isn’t ruling out that Etihad might operate the A380 to other destinations again and that more aircraft will leave storage after all. “This is the situation now, but things change. If there is an opportunity to send the A380 to other markets, we will, but there is no plan.” Investing in partnerships Except for its own growth, Etihad is seeing opportunities to grow through partnerships with other airlines. “This year, we invested in 20 partnerships. Some we reorganized, but we have stronger partnerships than we had for a long time. We will do more, we will do some big partnerships over the next six months. Etihad is open for partners,” said Neves. “Right now, we are dating. We are dating with a lot of airlines to see where we fit. But entering an alliance I not on my table.” One partnership that was announced as an MoU earlier this year is that with Air France-KLM. “We first focus on codeshare and frequent flier programs. Then we go to sales, but we aren’t there yet. Eventually, we will explore other opportunities. We can buy fuel together, we can do maintenance, repair, and overhaul together. This is something we do with all the airlines we work with.” Neves said it is too early to tell if Etihad will also join the partnership/joint venture of Air France-KLM and Airbus for component maintenance for the Airbus A350. “We have our own MRO here and our capabilities, but we have to be open for all the partnerships. But that is not the focus right now.” Under Tony Douglas, Etihad got a very green image, pushing for sustainability by reducing its carbon footprint. This will not change under Neves. “We take a very pragmatical approach. I have the view that airlines and the environment will go hand in hand. For a very simple reason: the less fuel I burn, the less I spend on fuel. My fuel bill is $2.5 billion per year. If I burn ten percent less fuel, that’s a $250 million profit I can make. So I help the environment and make a profit.” But Neves stressed that people want to fly and want to connect. Etihad would like to buy all the sustainable aviation fuel (SAF) it can get, but there isn’t enough. Neves thinks that suppliers should offer SAF at a cheaper price just to stimulate the use.

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