An equity investment model has paved the way for a new force in the aviation industry that “protects and promotes competition,” Etihad Airways president and CEO James Hogan said.
In his speech during the City Business Luncheon in Melbourne, Hogan highlighted the importance of investing in partners as he listed the challenges being faced by airlines in bringing new competition to the global market.
“In a world of mega-connectors and mega-alliances, it is impossible to go it alone when trying to compete on the global stage. The regulatory challenges, the daunting cost of entry and the might of the legacy carriers create incredibly high barriers,” Hogan said.
“At Etihad Airways, we have had to build everything from scratch, investing in all the infrastructure of a global airline. So in addition to the obvious multi-billion dollar investments in aircraft and engines, that means investment in people, investment in technology, investment in real estate and investment in our brand,” he added.
Noting that the market is “too mature” and dominated by legacy interests, Hogan said a network carrier needs a global reach to compete effectively.
“We’ve used partnership since day one, in the form of a growing codeshare network, but the equity investments took that approach to a new level,” Hogan said.
“As with any partnership, these investments only work because both partners see benefits. Etihad Airways has seen a massive impact in extending our network reach and in feeding guests onto our routes. But that feed goes both ways. Virgin Australia, for example, has traditionally received more guests from our network than they feed to us. So we both win – and so does the traveller, who has a real competitive option,” he added.
Hogan said such partnerships would offer new competitive choices to travellers.
“Our equity investment model has helped to protect and promote competition in global air travel. Some of these carriers would be very different today without our commitment; some would not exist,” he said. “Together, we are creating and developing commercially focused businesses which can compete against the legacy airlines that dominate markets around the world.” YG/JE
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