Airlines

Published on August 26th, 2015 | by Jim Lee

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Etihad changes fare structure and alters Dublin schedule after posting Fourth Consecutive Year of Net Profit

On 20th August Etihad Airways, the national airline of the United Arab Emirates, announced that it was implementing a new fare structure from 14th September, to provide more choice and clarity when booking flights. A total of eight new ‘Fare Choices’ will be introduced, allowing travellers to tailor their bookings to their individual needs. The ‘Fare Choices’ are transparent and differ in baggage allowance, flexibility and included benefits that otherwise need to be purchased separately. Additionally, a revised baggage policy will provide customers with a more standardised baggage allowance structure across the Etihad Airways Partner network, while also reducing the price for excess baggage charges on most routes.

All bookings ticketed from 14th September will be split into distinct fare choices. The structure for Economy Class includes Economy Breaking Deals, Economy Saver, Economy Value and Economy Freedom. Business Class includes Business Breaking Deals, Business Saver and Business Freedom, while in First Class there will only be one fare family – ‘Freedom’.

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Etihad’s new corporate colours

A new baggage policy has also been announced to more flexibly respond to individual customer needs and to better align Etihad Airways with other Etihad Airways Partner airlines. As part of the policy change, the cost of excess baggage will be dramatically cut on the majority of fares. On some routes the cost of buying an additional 23kg piece of baggage will be reduced by up to 90%. There will be a further reduction of up to 30% if pre-purchased directly with Etihad Airways, up to 24 hours before travel. On flights between Abu Dhabi and Dublin, the allowance for passengers flying in economy will be two bags weighing up to 23kg, business and first are allowed two bags up to 32kg each. The new baggage policy will also come into effect for bookings on or after 14th September.

Peter Baumgartner, Chief Commercial Officer of Etihad Airways, said the change was ultimately, about providing choice. He added, “when it comes to booking a flight, not everyone’s needs are the same. Some guests want to travel light and on a budget, whilst others want to be able to make last-minute travel decisions, carry extra baggage or earn more miles. For example, if a guest wants more flexibility, more luggage, and priority check in, they can select our Economy Freedom Fare Choice.”

Reduced Dublin frequencies confirmed

On the same day, Etihad posted a revised planned winter 2015/16 schedule, which shows service reductions on a number of destinations, including Dublin. From 1st – 31st December, the Abu Dhabi – Dublin service will reduce from 14 to 12-13 weekly, with the EY041/048 being cancelled on Tuesdays and the Sunday flight will be cancelled on certain dates. From 11th January to 26th March 2016 the service reduce from twice daily to daily, with the EY041/048 again being cancelled. However, the EY045/042 will be operated by Boeing 777-300ER, instead of the double daily A330-200. From 27th March – 14th June the EY041/048 is again closed for reservation.

The schedule for the remaining flight is as follows:-

Flight No.    Depart           Arrive                 Aircraft        Schedule

EY045        AUH 02:20 – 07:00 DUB         77W            D

EY042        DUB 08:30 – 20:05 AUH         77W            D

Aircraft availability is given as the reason for Etihad’s decision to reduce the service. However, with the use of the larger aircraft available business class seats will only reduce from 44 to 40 while economy will see a reduction of 120 seats. It is likely that Etihad’s double daily will be restored when more aircraft become available. The airline currently has a fleet of 117 Airbus and Boeing aircraft, and more than 200 aircraft are on firm order, including 66 Boeing 787s, 25 Boeing 777-X, 62 Airbus A350s and six Airbus A380s.

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Etihad A330-200 advertising the EXPO event at Milan 2015

Etihad’s fourth consecutive year of Net Profit

Etihad Airways began operations in 2003, and in 2014 carried 14.8 million passengers. During 2014, passenger demand and revenue growth, continued to outperform capacity intake, achieving its strongest financial results to date. The following is a summary of Etihad Airways performance in 2014, based on its results released earlier this year.

Key Indicators 2014 2013* Variance
Total revenue ($ billion) 7.6 6.0 26.7%
Net profit ($ million) 73 48 52.1%
EBIT ($ million) 257 194 32.5%
EBITDAR ($ million) 1,139 980 16.2%
Total passengers (million) 14.8 12.1 22.3%
Revenue passenger kilometres (billion) 68.6 55.5 23.6%
Available seat kilometres (billion) 86.6 71.1 21.8%
Seat factor 79.2% 78.0% +1.2 percentage points
Number of aircraft 110 89 +21
Codeshare partners 49 47 +2
Partner revenue ($ million) 1,129 820 37.7%
Cargo revenue ($ million) 1,106 928 19.2%
Cargo tonnage (tonnes ‘000) 569 487 16.8%
Number of employees 24,206 17,603 37.5%

*The above results represent the standalone airline business within the newly formed Etihad Aviation Group. 2013 key indicators and financial performance has been adjusted to reflect a like for like comparison. Etihad Airways’ financial statements are audited by KPMG and are in accordance with International Financial Reporting Standards (IFRS). For comparative purposes $1 = approximately €0.87.

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Etihad partner airlines. Alitalia, Jet Airways, Air Berlin, Air Serbia and Air Seychelles

The record performance, which marked the airline’s fourth consecutive year of net profitability, also saw earnings before interest and tax (EBIT) up 32.5% to $257 million (16.2% and 32.5% respectively). Earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR) were up 16.2% to $1.1 billion, representing a 15% margin on total revenues.

Etihad Airways carried a total of 14.8 million passengers in 2014, an increase of 22.3% year-on-year. From its Abu Dhabi base, Revenue Passenger Kilometres (RPKs) – measuring passenger journeys – increased by 23.6% to 68.6 billion (55.5 billion), while Available Seat Kilometres (ASKs) – representing capacity – grew by 21.8% to 86.6 billion (71.1 billion). The growth in passenger demand and revenue over the 12-month period continued to outstrip Etihad Airways’ capacity increase, highlighting the strength of its long-term growth strategy.

Passenger numbers were strengthened by the continued enhancement of Etihad Airways’ global network last year with services to 10 new destinations in eight countries launched with an increase in capacity on 23 existing routes. Etihad Airways flies to or has announced plans to serve 111 passenger and cargo destinations in the Middle East, Africa, Europe, Asia, Australia and the Americas. By the end of 2014, the average network-wide seat load factor was 79.2%, compared to 78.0% in 2013.

A key driver of Etihad Airways’ growth in 2014 was its partnership strategy, based on wide-ranging codeshares and its unique approach of minority equity investments in strategically important airlines. Etihad Airways holds equity investments in airberlin, Air Serbia, Air Seychelles, Aer Lingus, Alitalia, Jet Airways, Virgin Australia, and Swiss-based Darwin Airline, trading as Etihad Regional. While its stake in Aer Lingus increased to 4.99% in 2014, this will be reduced to zero as part of the IAG acquisition.

This policy has accelerated network growth, giving Etihad Airways the largest route network of any Middle Eastern carrier, reaching more than 500 destinations. It has boosted sales and marketing opportunities in key markets, as well as allowing significant business synergies and cost savings. Etihad Airways, along with airberlin, Air Serbia, Air Seychelles, Alitalia, Etihad Regional, Jet Airways and NIKI, also participate in Etihad Airways Partners, a new brand that brings together like-minded airlines to offer customers more choice through improved networks and schedules and enhanced frequent flyer benefits. Etihad Airways also launched new codeshare agreements with Air Europa, jetBlue, Philippine Airlines, GOL, SAS, Hong Kong Airlines and Aerolineas Argentinas, while Etihad Airways’ existing codeshares with South African Airways, Alitalia and Jet Airways were significantly expanded.

This partnership strategy delivered revenues of $1.1 billion in 2014, an increase of 37.7% ($820 million), and represented 24% of Etihad Airways’ total passenger revenues.

A further measure of Etihad Airways’ growth was the increased membership of the Etihad Guest loyalty program. In 2014, membership numbers increased from 2.3 million to 2.9 million, up 26.1%, representing an average increase of 50,000 new members each month. Etihad Guest has entered its next phase of growth after becoming a separate legal entity in 2014. This supports its development as a leading customer loyalty and marketing services organisation, and will improve member engagement and returns for the program partners.

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Etihad Airways’ cargo division also delivered a standout performance in 2014, becoming a billion dollar company one year ahead of schedule. It has consistently outperformed the global market. Its impressive 17% growth in freight tonne kilometres in 2014 is four times the industry average. Cargo revenues were up 19.2% to $1.1 billion, with freight and mail volumes rising from 487,000 to 569,000 tonnes.

Etihad Airways also made important investments in its long-term business infrastructure, diversifying its activities to ensure greater control over its service standards and delivery.

In 2014, the fixed wing division of Horizon International Flight Academy, based in Al Ain, was acquired from Mubadala, leading to the establishment of Etihad Flight College to provide a source of trained pilots to Etihad Airways. Etihad Airways currently employs over 2,200 pilots and the Etihad Flight College trains up to 200 cadets annually. On 23rd June, it announced that it had signed a purchase agreement for four Embraer Phenom 100E aircraft, and options for three additional aircraft of the same model. The deal is valued at about $30 million, based on current list prices, if all options are exercised, and deliveries of the aircraft to Etihad Flight College will start in Q1 2016. The delivery of the four new Embraer Phenom 100E aircraft will bring to 20 the number of aircraft in the trainer fleet, which also includes 10 Cessna 172SP Skyhawk and six Diamond DA42NG aircraft.

The Etihad Flight College is the first organisation in the world to use multi-engine aircraft in the core phase of its innovative Multi-Crew Pilot Licence (MPL) training program, ensuring students are provided with the core competencies required of an airline pilot in today’s ever-changing aviation marketplace. The MPL program focuses on relevant and airline operator-specific training, rather than the traditional model of general aviation-focused training in a generic format. It produces pilots with not only the skills to fly a modern commercial aircraft to the most exacting standards, but the competencies and attitudes required of a professional pilot as well.

The non-engine divisions of Abu Dhabi Aircraft Technologies (ADAT) were also acquired from Mubadala and rebranded as Etihad Airways Engineering. The investment includes hangars, workshops and paint facilities in Abu Dhabi, plus specialist maintenance and engineering capabilities. These investments have enhanced Etihad Airways’ capability to undertake airframe and component maintenance on its aircraft, as well as supporting equity partners and third party customers.

Etihad Airways continued to diversify its portfolio of global funding sources and expanded its range of borrowing relationships to 75 lenders, investors and lessors. During the year, Etihad Airways secured $3.5 billion of debt funding in the financial markets. Also, Etihad Airways together with its equity partners, Alitalia, airberlin, Air Serbia, Air Seychelles and Jet Airways, are structuring a global funding platform that will enable each entity to have the appropriate funds in the near future through a comprehensive financing solution.

Etihad Airways’ fleet consisted of 110 aircraft at the end of 2014 (up 23.6% year-on-year), with an average age of 5.5 years, one of the youngest in the sky. The airline took delivery of its first Airbus A380 and its first Boeing 787-9 in December, with both state-of-the-art aircraft offering new industry leading standards in cabin interiors, together with considerable fuel efficiency and environmental improvements. An additional nine Airbus aircraft (two A330-200s, three A321s, three A320s and one A330-200F) and six Boeing aircraft (one 777-300ER, five 777-200LRs) were received in 2014, while further leased capacity was also added to enhance the airline’s rapid growth.

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Etihad Boeing 777-300

The launch of the airline’s first Airbus A380 and first Boeing 787, along with its new cabin crew uniform, received an overwhelming response from the public and led to a major increase in online brand awareness. On social media alone, the Etihad Airways brand garnered more than 145 million impressions throughout the world in a two-week period after the launch.

Other product and service developments in 2014 included the opening of premium class lounges in Sydney and Abu Dhabi, as well as Etihad Airways’ first arrivals lounge, also located in Abu Dhabi. The airline launched a major program to improve the sleep experience of guests during flight, introduced limited edition Emirati designed amenity kits in collaboration with Sougha, welcomed its 1,000th ‘flying nanny’ to provide onboard support for children, completed the installation of inflight Wi-Fi on all of its liveried aircraft, and progressed the introduction of live TV and mobile phone connectivity on wide-body jets.

One of the most important goals of Etihad Airways is to help develop a sustainable and commercially-viable biofuels industry in Abu Dhabi, in collaboration with international partners such as the Masdar Institute, Boeing, GE, Total, Takreer and others. In January 2014, the airline conducted a milestone demonstration flight with a Boeing 777-300ER aircraft, powered in part by the first UAE-produced aviation biofuel.

Striking a note of caution, James Hogan, President and Chief Executive Officer of Etihad Airways, said: “Although our growth continued strictly to plan in 2014, we are currently faced with unprecedented external challenges. Of particular concern has been the rise in aggressive protectionist sentiment in Europe and the US, where both Etihad Airways and its partner airlines are being targeted. These attempts to limit competition are detrimental to consumer choice. They threaten to damage the significant progress that our airline has made in offering improved travel connections, product and service standards, and value for money.

“Despite these hurdles, Etihad Airways will continue to grow as planned in 2015, working with our equity and codeshare partners around the world to serve the destinations that our guests want to visit and at the times they want to travel.”

Etihad Airways won more than 55 awards in 2014, including being named World’s Leading Airline for the sixth straight year at the World Travel Awards (WTA).

Etihad Airways employed 24,206 people from 144 nationalities by the end of 2014, an increase of 37.5% compared to the previous year.

Emiratis remain the number one nationality group amongst total employees based in the UAE, as well as amongst employees at manager level, executive level and within Etihad Airways’ pilot community. The number of Emirati employees increased by more than 37% to 2,017 by the end of 2014, following a record year for hiring UAE nationals.

Etihad Airways has received widespread praise for its UAE national development strategy, aimed at building airline specific capability for the future with more than 20 specialised programs across the business for graduate managers, including sales and airport operations managers, cadet pilots, technical engineers, and guest services and contact centre agents. The airline has announced its long-term commitment to employ an additional 6,000 Emiratis by 2020.

“Etihad Airways is one of the world’s most popular new employers of the 21st century, ranked by LinkedIn as one of the 100 most in-demand places to work. We strive to attract the top talent in the industry and it is working. We create jobs in every market in which we operate and our workforce today includes more than 140 nationalities,” said Mr Hogan. “Last year, we had 57 times more applications than we had total job openings‎, which included 1,700 crew positions and approximately 500 pilot openings” he concluded.

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This A330-200 of Etihad is painted in the colours of Manchester City Football Club to support the sponsorship of the club.

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About the Author

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Jim has had a life-long interest in military matters and aviation. Initially, he fused both of these interests together with a passion for military aviation, initially as a photographer. He has travelled extensively over the years and has been the guest of many European air forces, plus the air forces of the United States, Russia and others throughout the world. His first introduction to journalism coincided with an interest in the civil aviation industry was when he initially wrote for and later edited, ‘Aviation Ireland’, the club magazine of the Aviation Society of Ireland. Jim was a contributor to Flying in Ireland since its inception over 10 years ago and is now a key contributor to this site. He has also contributed items for a number of other aviation magazines and has produced a number of detailed contributions to Government policy documents, most recently the Irish Government’s White Paper on Defence. He is also deeply involved in the local community and voluntary sector and has worked both in local government and central government.



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