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Thu 5 Nov 2015 01:59 PM

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Etihad chief fires new competition warning amid US subsidy spat

James Hogan warns in speech that legacy carriers such as the Big Three US airlines and Lufthansa are stifling new competition

Etihad chief fires new competition warning amid US subsidy spat
James Hogan, president and CEO of Etihad Airways.

New competition in global air travel must not be stamped out by the entrenched interests of the legacy carriers, Etihad Airways chief James Hogan has said in a speech in London.

Delivering the 2015 Brabazon Lecture at the Royal Aeronautical Society in London, Hogan, president and CEO of the Abu Dhabi-based carrier, said the global industry should learn from the British, one of the first markets to embrace true competition.

Hogan stressed that air travel, which is a major contributor to global trade, was stuck with a regulatory system which limits consolidation, competition and consumer choice.

His comments come as Etihad and fellow Gulf carriers Emirates and Qatar Airways are embroiled in an ongoing row with US airlines who claim that their Gulf rivals have violated Open Skies policies by receiving more than $42 billion of subsidies from their respective governments. The claims have been strongly denied by all three Gulf airlines.

He warned that legacy carriers such as the ‘Big Three’ US airlines and Lufthansa, were doing their best to stifle new competition.

“Currently, the US carriers are investing tens of millions of dollars to attempt to stifle competition, and we have seen similar moves by some the larger European legacy carriers. The victim here is the customer. The cost is innovation," said Hogan.

He added: “Air travel is the lifeblood of the modern economy. But while the modern globalised economy has seen trade and tourism jump forward in leaps and bounds, the structure of our industry has shuffled forward only a few tiny steps.

“This is an industry which cries out for new competition, across many different markets; but it is one in which smaller operators can only operate in niche environments.”

He outlined Etihad's model for growth, which has supplemented investment in organic growth with strategic equity partnerships.  As a result, Etihad Airways has been able to compete against its much larger competitors, which he said have received decades of investment and government support.

“New approaches will help this industry flourish into the future. We should not allow those new approaches to be stamped out by the entrenched interests of the legacy carriers,” Hogan added.

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