Category Archives: Etihad Airways

TUI and Niki move one step closer to a joint venture based in Vienna

TUI Airlines (Germany) Boeing 737-86J SSWL D-ABKI (msn 37748) PMI (Ton Jochems). Image: 933944.

TUI AG‘s Supervisory Board has given the green light on November 23, 2016 for further steps with the goal to create a new European airline joint venture with Etihad Aviation Group. TUI Group’s supervisory body approved the plan to contribute its German leisure airline subsidiary TUI fly GmbH (TUIfly-TUI Airlines Germany) to a joint venture with Etihad. Etihad is in negotiations with Airberlin to acquire its touristic operations primarily in Southern Europe and North Africa, and including Airberlin’s participation in Niki, with the objective to contribute it to the joint venture.

The new airline joint venture, headquartered in Vienna, is planned to serve a broad route network with its two airlines, TUI fly and Niki, a total fleet of around 60 aircraft and a seat capacity of 15 million seats per year, operating from key departure airports in Germany, Austria and Switzerland.

TUI AG is to hold a stake of 24.8% in the joint venture, with Etihad holding 25% of the interests. The remaining 50.2% would be held by the existing private foundation Niki Privatstiftung.

The commitments made to the TUI fly employees remain in place and are currently being further negotiated and specified. This includes the commitments to the Hanover location.

The contractual negotiations between all involved stakeholders are expected to be finalized in the next few weeks. Details regarding the future joint venture will be jointly presented by Etihad and TUI after successful completion of the negotiations.

The planned joint venture is subject to approval by the relevant antitrust and aviation authorities.

In the summer of 2007, Hapag-Lloyd Express (HLX) and Hapagfly merged to form TUIfly. The airline is a wholly-owned enterprise of the TUI Group, the world’s leading tourism troup with headquarters in Hanover, Germany. TUIfly flies to the classic holiday regions all around the Mediterranean, the Canary and Cape Verde Islands, Madeira and Egypt for TUI and other tour operators. By the summer of 2014, TUIfly used 40 Boeing 737 aircraft to fly to these destinations. TUIfly headquarters are at the Hanover Airport.

Top Copyright Photo: TUI Airlines (Germany) Boeing 737-86J SSWL D-ABKI (msn 37748) PMI (Ton Jochems). Image: 933944.

TUI:

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Niki:

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Bottom Copyright Photo: Niki Luftfahrt (flyNiki.com) Airbus A320-214 OE-LEF (msn 4368) ZRH (Rolf Wallner). Image: 927323.

Niki Luftfahrt (flyNiki.com) Airbus A320-214 OE-LEF (msn 4368) ZRH (Rolf Wallner). Image: 927323.

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Etihad Aviation Group and TUI AG confirm they are in discussions to create a strong European leisure airline group, focused on point-to-point flying to connect key tourist markets

Etihad and TUI are in discussions to create a new leisure airline group

On October 5, 2016 Etihad and TUI issued this joint statement:

It is proposed to contribute the touristic operations of the Airberlin Group and the German TUIfly company, including the aircraft currently operated by TUIfly for Airberlin under a wet-lease agreement (see above), into a new airline group established by TUI AG and Etihad Aviation Group.

This new airline group would serve a broad network of destinations from Germany, Austria and Switzerland. The leisure airline group will be supported by the expertise of Etihad Aviation Group, the fastest-growing aviation group in the world, and utilize TUI’s state-of-the-art distribution capacity.

TUI AG, Etihad Aviation Group and Air Berlin PLC intend to finalize an in-principle agreement in due course. Any agreement entered into will be subject to all necessary corporate and regulatory approvals. TUIfly is part of TUI Group, the world’s number one tourism business, with around 75,000 employees serving 30 million customers a year, across the globe. TUI Group has a portfolio of more than 300 hotels, 14 cruise liners, six European airlines with around 140 aircraft and a wide-reaching distribution network, covering more than 1,800 travel agencies and online portals.

Etihad Aviation Group is a fast-growing diversified aviation and travel group, with more than 26,000 employees. It comprises four business divisions – Etihad Airways, the national airline of the United Arab Emirates, Etihad Airways Engineering, the Hala Group, its destination management company, and the Airline Equity Partners.

Etihad Aviation Group holds minority stakes in Air Berlin PLC, Air Serbia, Air Seychelles, Alitalia, Etihad Regional, Jet Airways and Virgin Australia.

Airberlin is the second largest airline in Germany and carried more than 30.2 million passengers in 2015. Airberlin offers a global route network through its strategic partnership with Etihad Airways, which has a 29.21 per cent shareholding in Airberlin, and through membership of the oneworld® airline alliance.

Copyright Photo: TUI Airlines (Germany) Boeing 737-86J SSWL D-ABKI (msn 37748) PMI (Ton Jochems). Image: 933944.

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Etihad Airways and partners raise $500 million in international markets

Etihad Airways (Abu Dhabi), its airport services business and five of its equity partners have successfully completed an innovative new platform financing transaction, raising $500 million on the international markets.

Etihad Airways logo (LRW)

According to the group, “Etihad Airways, Etihad Airport Services, Airberlin, Air Serbia, Air Seychelles, Alitalia and Jet Airways have together taken a new step forward in their strategic business development through this unique fund-raising initiative.”

Airberlin logo (LRW)

The group continued:

“At a series of roadshow meetings, held in Abu Dhabi, Dubai and London, the shared vision and strategies of the airlines were laid out to financial institutions. These highlighted the growing network coordination and revenue development initiatives, coupled with joint procurement and business synergy projects, across the airlines.”

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Allocation of the funds raised will be nearly 20 percent each to Etihad Airways, Etihad Airport Services, Airberlin and Alitalia; 16 percent to Jet Airways; and the remainder to Air Serbia and Air Seychelles.

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The funds raised by the transaction will be used largely for capital expenditure and investment in fleet, as well as for refinancing, depending on each individual airline’s needs.

Alitalia (2015) logo

The transaction marks the first time that Etihad Airways and its partners have raised funds together. To date, Etihad Airways has already raised in excess of $11 billion (US) from more than 80 financial institutions, to help fund its expansion strategy.

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The funds have been raised through a special purpose vehicle, EA Partners IBV. Goldman Sachs International, ADS Securities and Anoa Capital are acting as joint lead book-running managers for the offering.

Copyright Photo: SPA/AirlinersGallery.com. Etihad Airways’ Airbus A380-861 A6-APA (msn 166) departs from London (Heathrow).

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Delta: Gulf carriers concede huge subsidies

Delta Air Lines (Atlanta) is striking back with a new rebuttal in the on-going dispute over alleged government subsidies between the U.S. “Big Three” (American, Delta and United) and the Gulf “Big Three” (Emirates, Etihad and Qatar). Here is Delta’s new statement:

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Gulf carriers have effectively conceded they have received tens of billions of dollars in subsidies and other benefits from their governments. That’s just part of what the Partnership for Open & Fair Skies revealed Monday in its 400-page response to the U.S. Department of Transportation that disproves statements to the contrary by Emirates, Etihad Airways and Qatar Airways, and demonstrates real harm to U.S. carriers and jobs.

The Wall Street Journal reported Monday, “The Abu Dhabi government last year injected $2.5 billion into Etihad Airways … in violation of air treaties with the U.S. government. The previously undisclosed cash injection is detailed in state-owned Etihad’s financial statements, which were made public on Monday by the Partnership.”

The article quoted Jill Zuckman, chief spokesperson for the Partnership for Open & Fair Skies that represents Delta, American, United and several labor groups, including the Air Line Pilots Association.

“Etihad’s own financials prove that it is not a commercially viable enterprise and owes its continued existence to massive government subsidies from the United Arab Emirates,” Zuckman said.

The Street on Tuesday also cited the Partnership’s filing when it reported on harm Gulf carriers are causing U.S. airlines and their partners.

“In four U.S. gateway cities – Boston, Dallas, Seattle and Washington, D.C. – the combined decline in the year after Emirates began service to its Dubai hub ranged between 8 and 21 percent,” the article stated.

Zuckman again was quoted: “Not only have the Gulf carriers failed to meaningfully stimulate new traffic, but the data clearly show losses — that entry by a Gulf carrier into a U.S. gateway city is followed by an actual decline in U.S. carrier bookings. The subsidized Gulf carriers are distorting the global marketplace, harming the U.S. airline industry and threatening American jobs and airline service to communities across the U.S.”

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Click to view the Partnership’s complete rebuttal filing.

In a Q&A with Politico this week, Delta CEO Richard Anderson explained how long-standing U.S. trade policy is relevant to this issue:

Normally when you have a bilateral trade relationship, whether it’s for aviation or steel or agricultural products, two countries enter into a bilateral trade negotiation so that both of them can stimulate the marketplace and enjoy access and enjoy the opportunity in kind of a roughly equal way, both parties. Their economies end up improving.

In this case, it’s been almost all a predominant share shift away from U.S. carriers onto the United Arab Emirates and Qatar traveling over Dubai, Abu Dhabi and Qatar to the Far East, to India and the Southeast.

Do you think it would be a whole lot better if we let foreign countries dump their agricultural products in here? Grocery prices would be lower, right? And why don’t we let steel companies? Why do we take any action? … And if we let steel in, General Motors’ and Ford’s car prices will go down.

That’s not been our trade policy. What our trade policy has been is to try to find that reasonable middle ground to make sure you don’t have any outliers in terms of dumping [because of] government-subsidized capacity. That’s why I think there’s a reasonable accommodation here with our government.

In January the Partnership issued a report illustrating that the three Gulf carriers have received more than $42 billion in subsidies and other benefits over the past decade from their home governments in violation of bilateral Open Skies policies.

The departments of Transportation and Commerce opened an official docket to collect public comment on the issue in June, to which thousands of submissions were made by the Aug. 3 deadline, including those by Gulf carriers that attempted to rebut, but did not disprove, massive government subsidies and other benefits.

Over the past several months an array of stakeholders including airline employees, mayors, governors, prominent aviation economists, business leaders, and members of Congress have weighed in, calling for the U.S. government to quickly open consultations with the United Arab Emirates and Qatar to ensure Open Skies agreements are being adhered to so all airlines can compete on a level playing field.

Planely Speaking: Growing in the Gulf

Assistant Editor Aaron Newman

Assistant Editor Aaron Newman

Assistant Editor Aaron Newman

Growing the Gulf

By Aaron Newman.

A decade ago Emirates, Qatar Airways and Etihad Airways were irrelevant. But these three airlines have become increasingly dominate on the lucrative international long-haul market, causing angst for western legacy airlines and their respective governments. For example, Lufthansa claims its Frankfurt hub has lost nearly a third of its market share on routes between Europe and Asia since 2005, with more than 3 million people now flying annually from Germany to other destinations via Persian Gulf hubs (economist.com).

Growth of Gulf Airlines 1

This global turf war is only going to intensify as the gulf carriers continue expanding at breakneck speed. With hundreds of aircraft deliveries forthcoming (see graph below), Etihad, Emirates and Qatar Airways are destined to initiate new routes, utilizing a large order book of new aircraft scheduled. The major news outlets and our WorldAirlineNews.com have done a great job summarizing the discord between the gulf airlines and their global legacy counterparts. I’m going to use this opportunity to tackle a different question…where will these three airlines expand to next?

Gulf Airlines Fleet Size

In May, Doha based Qatar Airways (below) made headlines, announcing it will begin flying to Atlanta, Boston and Los Angeles in 2016. Qatar Airways also said it will increase service to New York, adding a second daily flight.

Copyright Photo: Antony J. Best/AirlinersGallery.com. Qatar Airways is the launch customer for the new Airbus A350-900. Airbus added Qatar titles to this test Airbus A350-941 F-WZNW (msn 004) pictured at Farnborough.

 

In late March, Emirates surprised the industry, announcing new daily service from Orlando (MCO) to Dubai beginning Sept. 2015.

 

Copyright Photo: Antony J. Best/AirlinersGallery.com. Etihad Airways Airbus A380-861 A6-APA (msn 166) departs from London (Heathrow).

And Etihad Airways (above), just finished a six city expansion in the beginning half of 2015 to; Algiers, Edinburgh, Entebbe, Hong Kong, Kolkata and Madrid. Looking at the charts above, it’s easy to see that additional future growth is inevitable. Adding frequencies, upgauging aircraft and expanding to new cities such as the ones listed below is bound to happen given these airlines current trajectories.

Mexico City, Mexico (MEX)

With a population of nearly 22 million people and one of the most important financial centers in Latin America, I foresee a gulf carrier announcing new service shortly before their new international airport is set to open in 2018. Given the distance from the Persian Gulf, this route may need a European stopover city to make this and other Latin America cities work in the future.

Vancouver, Canada (YVR)

A major gateway for pan-pacific trade, Vancouver offers the international diversity and business climate that the gulf carriers are attracted to. Emirates expressed interest in serving Vancouver in years past, those talks quickly diminished after Air Canada expressed concern. If discussions between the Canadian government and gulf carriers were to reignite, Vancouver would be a high priority for any gulf airline.

Sapporo, Japan (CTS)

Japan’s fourth largest city and the largest city on the northern island of Hokkaido; Sapporo’s airport has largely been underserved by airlines outside of the major East Asian hubs (Seoul, Tokyo, Hong Kong and Beijing). Alternatively, Fukuoka (FUK) would also be a viable option for a gulf carrier looking to add routes in Japan.

Stuttgart, Germany (STR)

Emirates has been working hard to make this route a reality, however, the German government is currently limiting the number of routes from gulf carriers into Germany in an effort to protect national carrier, Lufthansa. If the German government ever reconsiders, this will give Stuttgart a much needed long-haul route heading east. Berlin is a potential growth target as well, but I do not see this as a possibility until the completion of the delayed Brandenburg airport—currently scheduled for 2018.

Helsinki, Finland (HEL)

Finland’s largest city and capital, Helsinki offers the large population and thriving economy to make this route work. Competition from state-owned Finnair and the fast growing Norwegian Air Shuttle may be a deterrent to this route. I foresee Qatar Airways being the first airline to launch this route given the mutual Oneworld membership with Finnair.

London Stansted, UK (STN)

A stronghold for the UK’s low-cost airlines, Stansted’s owners and operators, Manchester Airports Group strongly desire to diversify by adding a full-service airline. About 6.7 million people live within a 1-hour drive of Stansted and 12 million within 2 hours. With slot restrictions at Heathrow and Gatwick, could this be a viable option to add frequencies into the London metro area?

Xi’an, China (XIY)

Xi’an’s pillar industries; equipment manufacturing, software development, aerospace technology, and high tech R&D are driving a blossoming economy in Xi’an. This route prediction may be a bit premature, however, gulf carriers will continue to tap into China’s growing middle class and flying to secondary Chinese cities. Chongqing, Wuhan, Xiamen, Kunming, and Qingdao should all be considered as future options.

Detroit, MI (DTW)

Detroit’s automotive industry supplies a large amount of lucrative business travel between Asia and the United States, Detroit also has about 400,000 residents of Middle East origin, the highest total for any U.S. city, with many from Lebanon, Iraq and Yemen. However, this route would be in direct competition with Delta and Skyteam members Air France and KLM. Has this competition kept these three airlines from stepping in?

Bamako, Mali (BKO)

Bamako’s annual growth rate is hovering around 4.5%, which makes it the sixth-fastest-growing city in the world, and the fastest on the African continent. African cities like Bamako have become important for gulf carriers because of their location between the continent and Asia, which are developing commercial links. While few Africa-Asia routes generate enough traffic for direct flights, Persian Gulf carriers can funnel small numbers of people from many places through the airlines’ hubs.

My list above is purely speculation from an industry enthusiast, but I’d also like to hear your thoughts below in the comments section. Where do you see or where do you want to see these airlines expanding to in the future and why?

Etihad Airways to operate the Boeing 787-9 to Zurich on a daily basis

Etihad Airways (Abu Dhabi) will operate the new Boeing 787-9 Dreamliner on the daily Abu Dhabi – Zurich route from July 6. The 787 will replace existing Airbus A330-300 service.

In other news, the company launched daily Abu Dhabi – Edinburgh Airbus A330-200 service on June 8.

Copyright Photo: Rolf Wallner/AirlinersGallery.com. The company has brought the new type to Zurich before. Boeing 787-9 Dreamliner A6-BLA (msn 39646) taxies at Zurich.

Etihad Airways aircraft slide show: AG Airline Slide Show

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Etihad Airways launches nonstop Boeing 787-9 flights to Brisbane, strikes back and strongly refutes the claims by the “Big Three”

Etihad Airways (Abu Dhabi) today (June 2) launched daily nonstop flights between Brisbane and Abu Dhabi.

Etihad Airways flight EY 484 departed the airline’s home base, Abu Dhabi, at 10 pm (2200) yesterday (June 1) and arrived in Brisbane at 5.50 pm (1750) today where it was met by a traditional water cannon salute. Return flight EY 485 will depart Brisbane for Abu Dhabi at 9.35 pm (2135) today and arrive in Abu Dhabi at 6 am local time.

The new nonstop flights are operated by Etihad Airways’ brand new three-class Boeing 787-9 Dreamliner which features the airline’s ground-breaking next generation First Suite, Business Studio and Economy Smart Seat.

The Dreamliner flights offer First Class on the Brisbane – Abu Dhabi route for the first time ever and will replace the daily one-stop services which the airline previously operated via Singapore with a two-class Airbus A330-200 aircraft.

Etihad Airways codeshares on Virgin Australia flights from Brisbane to Bundaberg, Cairns Cloncurry, Emerald, Gladstone, Hamilton Island, Hervey Bay, Mackay, Moranbah, Mount Isa, Proserpine, Rockhampton and Townsville.

Etihad Airways’ new Boeing 787-9 Dreamliner will carry 235 guests – eight in First Class, 28 in Business Class and 199 in Economy Class.

Etihad Airways commenced three weekly flights to Brisbane via Singapore in 2007 and increased frequency to daily on February 1, 2013.

In other news, Etihad Airways also launched its inaugural Abu Dhabi-Sydney Airbus A380 flight – EY454 – departed Abu Dhabi International Airport at 10 pm (2200) on May 31.

The A380 will now operate one of the airline’s two daily services between Sydney and Abu Dhabi. The airline’s additional four weekly Airbus A340-600 flights will be upgraded to a Boeing 777-300 ER aircraft.

Finally, according to Reuters, “Etihad Airways issued it strongest response yet to claims that it received market-distorting subsidies, saying it is required to repay loans and that its U.S. competitors have a “condescending” view of non-U.S. law.”

Read the full report: CLICK HERE

Here is the full statement by Etihad Airways:

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Etihad Airways, the national airline of the United Arab Emirates, has urged the US Government to ‘keep the skies open’, in a comprehensive formal response to the joint campaign by Delta Air Lines, United Airlines and American Airlines to block competition and roll back the benefits of Open Skies.

The Etihad Airways response, which has now been submitted to the US Department of State, the US Department of Transportation and the US Department of Commerce, emphasises the many benefits delivered by Open Skies to consumers, to American workers, to US carriers and to US trade and tourism.

It categorically refutes claims made by the Big Three carriers about Etihad Airways’ finances, giving a clear and compelling explanation that the equity funding and shareholder loans provided by the Government of Abu Dhabi, by way of investing in a successful business model, fully comply with the US-UAE Air Services Agreement and all other applicable rules.

The submission also shows that the Big Three carriers have gained more than $70 billion in benefits from US Government authorities, and through legal processes such as Chapter 11 bankruptcy reorganization, over the last 15 years.

In a letter supporting the airline’s formal submission, James Hogan, Etihad Airways President and Chief Executive Officer, said: “Etihad Airways did not seek this fight; we focus on making money by providing world class, innovative, re-imagined and value-for-money product and services to our guests.”

Etihad Airways has submitted that the Big Three carriers’ claims, allegations, and requests for relief are not supported by fact, logic, law, or treaty, and that:

(1) Etihad’s conduct, and that of the UAE Government, is fully consistent with the US–UAE Air Services Agreement, applicable United States law and the governments’ respective treaty obligations;

(2) Government ownership is not an issue under the US-UAE Air Services Agreement;

(3) Shareholder equity and loans are not subsidies;

(4) While Etihad competes vigorously for all passengers, it does not charge artificially low fares;

(5) Etihad causes no actionable harm to the Big Three carriers, and actually provides them with significant commercial benefits in terms of connecting passengers onto their networks (an estimated 300,000 in 2015);

(6 ) Etihad has been successful in markets in which the Big Three carriers affirmatively choose not to compete, and is in fact providing the Big Three carriers with an avenue (through codeshare and interline agreements) to offer their passengers routes that they choose not to fly themselves; and

(7) Etihad treats its worldwide employees, who come from over 140 countries, including the United States, fairly and with respect.

Mr Hogan said: “For these reasons, we respectfully submit that the Big Three carriers’ campaign against Etihad Airways should end immediately and that there is no basis whatsoever for government-to-government consultations under the US–UAE Air Services Agreement.”

Etihad Airways’ submission includes detailed information about the airline, its financial strategy and its business performance.

The airline was established in November 2003, decades after its major international competitors, by the Government of Abu Dhabi, the capital of the UAE.

Today, Etihad Airways is a globally-recognized, full-service international airline, which carries almost 15 million passengers per year and flies to, or is planning to serve, more than 110 destinations. The airline currently operates almost 120 aircraft and more than 260 flights per day from its hub at Abu Dhabi International Airport.

Etihad Airways has had to invest heavily to compete effectively against its more established competitors. Recognizing the enormous cost of entry to the airline industry, the Abu Dhabi Government invested in Etihad Airways by providing capital and shareholder loans.

Since 2003, the Government has invested $14.3 billion in Etihad Airways; of this amount, $9.1 billion was provided in equity funding and a further $5.2 billion was provided in shareholder loans.

These commitments were made on the basis that the airline would operate commercially, deliver a long-term return on investment, repay shareholder loans and achieve sustainable profitability.

Etihad Airways receives no Government subsidies or sovereign guarantees and, contrary to the claims of some competitors, it does not receive free or discounted fuel or airport services in Abu Dhabi, its home and global hub.

Since 2003, Etihad Airways has raised in excess of $11 billion in long-term funding through the global financial markets, including $3.7 billion debt funding raised in 2014. Approximately $5 billion of the airline’s borrowings have been repaid since 2003, including $800 million in 2014.

The airline has established strong relationships with more than 80 global financing partners and aircraft lessors, 26 of which are based or headquartered in the US.

Etihad Airways is highly focused on its commercial mandate. Although it is only 11 years old, the airline has posted consecutive net profits since 2011. Etihad Airways complies with International Financial Reporting Standards (IFRS) and is audited by KPMG.

Commenting on the submission, James Hogan said: “Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines.

“In many markets, airlines react to our new competition by improving their own offer to consumers. It is ironic that in the home of free competition, a market in which we account for only a tiny fraction of one per cent of international departures, we have instead been attacked.”

Etihad Airways’ submission includes the example of routes to the Indian sub-continent to explain the inaccuracies of the Big Three’s arguments. The submission states:

“Their only specific claim is that from 2008 to 2014, they have allegedly collectively lost five percentage points of their market share to the Indian subcontinent. However, what they neglected to mention is that during the same period their passenger numbers actually grew by 18 per cent. So while their collective market share actually went down by a relatively insignificant 4.4 percentage points (not 5 percentage points), their actual passenger volumes grew by over 18 per cent, or over 250,000 passengers, including both economy and premium classes. This passenger growth clearly demonstrates the power and effects of Open Skies and liberalized traffic rights.

“The Big Three carriers affirmatively and voluntarily choose not to directly serve Etihad’s key Middle East and Indian Subcontinent markets in a meaningful way. Instead they are routing US passengers through congested European hubs and on to their European alliance partners to serve certain destinations. Indeed, the Big Three carriers’ campaign is little more than a regulatory attempt to further cement their oligopoly, particularly on transatlantic markets.”

Mr Hogan added that facts, not myths, should define the debate, saying: “These airlines criticize us for being Government-owned – but government stakes in airlines are completely normal around the world. The majority of airlines in the global alliances, which the Big Three dominate, are owned or controlled by governments or government-owned entities. Just this month, the French Government increased its shareholding in Air France.

“The Big Three criticize us for receiving Government investment. We have never made any secret of the fact that we have received equity funding and shareholder loans, which again is not unusual for airlines, or indeed for many businesses. These investments received from our shareholder are not like the more than $70 billion the Big Three have received from US Government sources or court-approved processes since 2000 alone, a fact shown in a study by The Risk Advisory Group.

“The Big Three say our services threaten competition. Yet a report by independent analysts the Edgeworth Group shows that our services actually stimulate traffic flows, which have increased overall passenger numbers on those routes for airlines including the Big Three and their alliance partners.

“The Big Three say we threaten American jobs. Yet their campaign seeks to limit the operations of Etihad Airways, which according to Oxford Economics will support 23,400 American jobs this year, and almost double that number by 2020.

“And finally, the Big Three have spent millions of dollars trying to influence politicians on the supposed threats from the Gulf carriers, yet their report mentions consumer choice only once – even then in a cursory manner.”

In his covering letter to Etihad Airways’ submission, Mr Hogan said that the US carriers had been able to benefit from numerous Chapter 11 reorganization processes, which gave them a major advantage over their international competitors.

“Yes, we understand that bankruptcy is a court process, but unlike these US carriers, Etihad does not have an avenue by which we can periodically clean up our balance sheet by disclaiming debts and other legal obligations. We have to carry these obligations and debts on our books,” he said.

Mr Hogan’s letter also said that the United Arab Emirates had embraced the US concept of Open Skies.

“One country that shared the vision of the United States is our home, the United Arab Emirates, which also embraced the idea of open and less regulated traffic flows despite being a small and, at the time, relatively unknown country working toward financial stability and success. This is why we find it so ironic that in 2015 Etihad Airways finds both itself and its home country under attack. We have helped fully realize the best in international aviation policy: safe travel provided by the highest quality airlines at fair prices that allow millions of passengers to travel conveniently and easily to and from the United States to markets in the Middle East, the ISC and beyond, enjoying the many benefits the aviation industry offers.”

In addition to a detailed rebuttal of the Big Three US carriers’ report, Etihad Airways’ submission to the US Government also includes three reports commissioned from independent and respected global expert consultancies.

EXAMINATION OF BENEFITS ACCRUING TO US CARRIERS

On 15 May, 2015 Etihad Airways released a report authored by UK-based The Risk Advisory Group that documented in detail benefits valued at more than $70 billion which Delta, United and American have received from the US Government and judicial processes and mechanisms available only in the United States.

These benefits included massive debt write-offs in multiple bankruptcy proceedings, government assumption of airline employee pension plans and bespoke tax benefits.
Etihad Airways does not question the US Government’s right to make these benefits available to US carriers, and nor does it criticize the US carriers for taking advantage of these substantial and valuable benefits.

Instead, Etihad Airways commissioned this report to highlight the environment in which it has to compete and the hazards of unilaterally labelling different funding strategies as subsidies, and otherwise mischaracterizing the way a competitor conducts its business.

REVIEW OF US CARRIERS’ ASSERTIONS

On 22 May, 2015, Etihad Airways released a report drafted by Washington, D.C.-based Edgeworth Economics. Etihad Airways’ instructions to Edgeworth were simple: review the economic claims made by Delta, United and American and provide an independent critique of their assertions.

Edgeworth conducted a detailed review and concluded, among other things, that air routes between the United States and the Indian Subcontinent (ISC), on which over 65 per cent of Etihad Airways’ US passengers fly, are highly competitive.

They found that Etihad Airways’ US competitors largely choose not to serve these routes directly. They instead fly passengers to Europe and connect them onto non-US partner airlines, a practice that often requires passengers to make additional stops.

Edgeworth also determined that Etihad’s published fares on these routes were consistent with those of competitors, even though the revenue per kilometer generated on these ISC routes was considerably less than the immunized US and European carriers receive on their protected North Atlantic routes.

Most significantly, Edgeworth found that even though there is more capacity on these ISC routes in 2014 than there was in 2009 (the result of increased competition), there continues to be considerable demand for that capacity.

Between 2009 and 2014, US airlines and their immunized joint venture partners actually carried over 250,000 more passengers between the US and the ISC – that is a gain of over 18 per cent.
In 2014, Etihad Airways delivered 182,000 connecting passengers to US airlines including American, United, Delta and Jet Blue. This is forecast to grow to approximately 300,000 in 2015, an increase of 65 per cent, following the introduction last year of new routes to Los Angeles, San Francisco and Dallas Fort Worth.

Etihad Airways is proud to contribute to the success of Open Skies, while maintaining a load factor at approximately 80 per cent on average.

ECONOMIC CONTRIBUTION STUDY

Issued on 27 May 2015, and drafted by Oxford Economics, this detailed Etihad Airways’ contribution to the US economy.

Oxford valued at $2.9 billion the contribution Etihad Airways will make to the US economy in 2015 through capital expenditure, passenger and cargo services, direct and indirect employment and contribution to tourism.

This research also calculated that Etihad Airways would employ, or contribute to the employment of over 23,000 Americans in 2015.

Additionally, Oxford projected that the value of our contribution would grow to $6.2 billion by 2020, supporting more than 46,000 American jobs.

While Delta, United and American expend considerable money on advertising and other tactics that claim Etihad Airways threatens American jobs, Oxford conclusively demonstrates, on the contrary, we have a very positive impact on the US economy and workforce.

Mr Hogan said the Etihad Airways had clearly demonstrated that it was contributing not only to competition in the skies, but also to the US economy.

“We believe in competition and consumer choice,” he said. “It is now time to get back to the business of providing high quality air services and enhancing consumer choice, just as Open Skies intended. Let’s keep the skies open.”

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 787-9 Dreamliner A6-BLA (msn 39646) departs from Zurich.

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