By Staff writer
James Hogan hits out in speech the week after European, US carriers attack rapid growth of Gulf airlines
Etihad Airways chief James Hogan has warned that the "dark clouds of protectionism” gathering over the air travel industry in Europe and the United States pose a significant threat to passenger choice.
The president and CEO of the Abu Dhabi airline, in a keynote speech in London on Thursday, said international regulators should recognise that “investing in success is not a crime; blocking competition would be".
Addressing the Aviation Club, Hogan was speaking the week after European and US carriers again attacked Etihad Airways’ rapid growth of the last decade.
“The dark clouds of protectionism are gathering over Europe and the United States,” he said. “Five mega-carriers are trying to pull the ladder up after years of having it their own way. The people that will really lose if these giant legacy airlines are successful are the millions of travellers benefitting from new choice in the global air travel market.”
Hogan said Etihad Airways’ shareholder, the Government of Abu Dhabi, had chosen to invest in a new airline at a time when many factors combined to offer major opportunities.
“It saw the opportunities from a new world order in terms of international commerce, from its geographical position and from modern aircraft technology which meant that for the first time, it was one flight away from almost anywhere in the world,” he said.
The result, he said, was an airline that had grown to serve 14.8 million guests in 2014, over a network that now reaches 111 destinations.
“Etihad Airways has received investment from its shareholder, the Government of Abu Dhabi, in the form of equity capital and shareholder loans. We have always been clear about that.
“The shareholder knew those amounts would need to be significant. It was, after all, setting up a national airline in 2003, decades after most governments. It was investing in an incredibly capital-intensive industry.
“To have any chance of success, Etihad Airways had to get to a size and scale that could compete against the networks of airlines that had not only been operating for years, but had benefited from decades of government investment and infrastructure support themselves.
“To become a serious competitor in long haul hub-and-spoke air travel, there is a very, very high cost of entry.
“Our shareholder set clear parameters for that investment. The airline had to get to profitability within a decade. And in the long term, we have to deliver a return.
“Because we have satisfied those conditions, because we have grown more quickly and more successfully than our initial targets, our shareholder has invested further. It has invested in success. Just like any other rational investor."
Hogan also questioned the claims of the airlines campaigning against Etihad Airways.
“Some of the carriers attacking us claim they are losing market share. We’ve started some analysis on this issue and although the detailed study will take some time to complete, I can say that our initial studies already suggest that those claims are true. We admit it!
“But that so-called loss has resulted in thousands of new passengers for these suffering airlines, thanks to the market stimulus we provide.
“They are getting a smaller slice, it is true. But it is a slice of a bigger cake. And the bigger cake is proof that more people are able to travel – more consumers are getting the benefits of competitive choice.”
Hogan added that it was telling that British Airways had not joined the other legacy carriers in attacking Etihad Airways.
“There’s one global airline that hasn’t complained about the new competition from the Gulf carriers – and that’s your home airline here, British Airways,” he said.
“BA is a business whose steel has been forged in decades of fierce competition – domestically, across Europe and globally. Willie Walsh doesn’t complain when he sees new competition come into the market – he just gets on and competes!”For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.