Hogan scorns traditional airline alliances, boosts Etihad network of bilateral deals

Issues & Trends – April 2013

Hogan scorns traditional airline alliances, boosts Etihad
network of bilateral deals

COINCIDING with the official start of the Emirates-Qantas alliance, Etihad’s president and chief executive James Hogan has repeated comments questioning the future of traditional airline alliances.
Speaking in Australia last year, Hogan claimed the way forward for carriers is to strike a series of bilateral arrangements such as the one his airline has formed with Virgin Australia, reinforced by an equity stake.

The deal between Qantas and Emirates also bucks the multilateral approach of traditional airline alliances. The Australian carrier has abandoned its oneworld partner, British Airways, while the Dubai-based airline, like Etihad, has always eschewed traditional airline alliances.

Thus the Qantas-Emirates link has many similarities to the Etihad-Virgin tie-up – so much so that Hogan was moved to comment that it is “always nice” when a competitor feels the need to adopt your strategy (travelBulletin, August 2012).

This month, addressing the International Aviation Club in Washington, DC, Hogan said legacy airline alliances have outlived their usefulness.

He claimed his airline’s combination of organic growth, codeshares and minority equity investments, is proving very effective in building passenger numbers, revenue and profit for all its partners.

“The traditional airline alliances have evolved into slow-to-respond, bureaucratic organisations which struggle to deliver added value to their member airlines, many of which are no longer compatible with each other,” he claimed.

“If we look at the consolidation currently occurring throughout the airline industry, we are also seeing more fragmentation within the alliances.

“This is going to continue as members seek ways to operate profit-ably … This month we will report our strongest ever first quarter results. Our codeshare and equity partners have made a major contribution to that financial success.”

Etihad has 42 codeshare relation-ships around the world and minority equity stakes in airberlin, Air Seychelles and Aer Lingus as well as Virgin Australia.

“It is easier, faster and far more cost effective to grow through one-on-one partnerships with established, respected carriers than it is to rely totally on our own resources,” Hogan said.

“We have hand-picked like-minded partners with whom we can work collaboratively to build revenue across a broader network.”


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