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Mon 13 Dec 2010 01:19 PM

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Etihad's Hogan hits back in airline financing row

European carriers using export financing feud to distract from their failings, says Etihad CEO

Etihad's Hogan hits back in airline financing row
Etihad has joined with carriers including Emirates and Ryanair to lobby against a proposed cap on export financing
Etihad's Hogan hits back in airline financing row
Some 15 percent of Etihad’s funding is sourced from export credit, CEO James Hogan said

European
airlines are trying to distract attention from their failings by furthering a
row over the funding advantages of Middle Eastern carriers, the CEO of Etihad
Airways has told the FT.

James
Hogan, CEO of the Abu Dhabi carrier, hit back at remarks by Western carriers that claim carriers such as
Etihad and Emirates use unfair subsidies from European export credit agencies to finance aircraft
deals and to take market share from existing airlines.

A
number of US and European airlines are impacted by a 'home market
rule,' which states that countries where Boeing and Airbus build aircraft cannot
use export credit agencies to help their carriers buy passenger airliners.

The
rule, which impacts carriers in the US, UK and France, among others, is seen as
offering an unfair advantage to Gulf carriers unaffected by the law.

A
number of western airlines have lobbied their governments to scrap the rule in
favour of a 20 percent cap on export financing for aircraft and increasing the
cost of the funding.

“What European legacy carriers are doing here
is muddying the water,” Hogan told the Financial Times.

“Why do people such as
ourselves have a competitive advantage? We are seven years old; we are not a
legacy carrier. I am not bound by union agreements that may be 25 or 30 years
old. I am not bound by infrastructure that may have been right for 30 years
ago.

“There’s an economic shift,” Hogan said. “Whereas
the European hubs were at the centre of the aviation world, today they are at
the end of it. Their networks rely on feeding into London, Frankfurt or Paris.
That’s a competitive issue, a structural address. So address it. It is not to
do with us getting a form of credit.”

Some 15 percent of
Etihad’s funding is sourced from export credit, Hogan told the paper.

The airline has joined
with carriers including Emirates and Ryanair to lobby against the proposed cap on export
financing.

 

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Robert 9 years ago

None of the middle eastern carriers are transparent - all being opaquely part of some larger state concern. Noone knows if they actually pay for fuel in their home airports and certainly noone knows if they actually make any money. US/European airlines caught out in this export financing nonsense have a right to complain - in fact they are duty bound to do so on behalf of their shareholders.

Steve 9 years ago

Etihad and Qatar have stated publicly that they don't make money so we can only assume they are subsidised. However Emirates do publish their accounts and its audited and publicly available (not a requirement of privately owned company) so they do have transparency. Keep in mind that all carriers flying into the Gulf pay the same as the Gulf carriers for fuel so where is the advantage to the Gulf carriers?

Now think about this - Airbus and Boeing employ many thousands of people both in Europe and USA - if the Gulf Airlines did not order aeroplanes they would have very limited order books and many of their staff would be out of work, so lets not be brainwashed by some of these legacy carriers - its not just about losing market share it's also about employment for many many thousands of people in their respective countries - if those airlines improved their products and their service then they would get more business - instead they bring out this old chesnut of unfair competition!

Anwar 9 years ago

Dear Robert, no fool would start an airline to lose money. In fact airlines such as Etihad and Emirates have contributed greatly to Europeans and Asians economies as well as their own. Affordable travel from Europe to the Far East and Asia pacific has benefited more people than few shareholders that US/European airlines claim to have. Easyjet, Ryanair, and others are making money because they adopt to changing world.

CSS 9 years ago

Dear Robert,

Are you trying to tell us that organisations in the West are "transparent"?
There are legal proceedings against Haliburtun and Cheeny for bribery and corruption by the Nigerian Government. The investigation for "WMD's" in Iraq by the West and the case for war was "very transparent"

These are very recent issues. This has been going on for centuries

Robert 9 years ago

Thank you all for these comments. All very valid. However legacy carriers have just as much of a right to maintain their commercial positions as the new wave ME carriers. If they see commercial advantages accruing to other carriers in a non-level playing field they are obliged to correct the situation - or sink. Oh and don't forget we have our own legacy carrier here in the ME - Gulf Air.

Jason 9 years ago

Just another view point, service standards on Western carriers has been on the decline for nearly 20 years.

Middle Eastern carriers are very service oriented which is why increasingly a growing number of the travelling public would opt to fly on these carriers as opposed to their home grown airlines.

If the service standards were maintained, despite the other factors raised in the article, Western carriers would still retain a loyal following.

David 9 years ago


I don't know where Steve gets his information about the Boeing and Airbus order books being almost empty with ME orders. Airbus just booked its largest order ever - from an Indian carrier. Delta Airlines announced it is in the market for 200 new aircraft. Most of the 787s Boeing has backordered are from non-ME carriers. It seems as if some ME readers believe no one else is flying except ME carriers. In fact, some of the current tension between ME and non-ME carriers may derive from Boeing's three year delay in getting the 787 into service, since many airlines have had to defer expansion plans that would allow them to target some of the same traffic flows Qatar, Emirates and Etihad are trying to capture. I'd go as far as to put Air Canada in that group, as it should have begun receiving its 787s, but won't now until 2013 because of Boeing many delays.


Telcoguy 9 years ago

Steve, the demand for airplanes is not linked to the number of airlines but to the demand for airtravel.
If those airlines did not exist we can only assume that other airlines would increase their fleets to meet that demand. That would translate into airplanes orders that only Airbus/Boeing are in a position to satisfy currently.
I really do not see your point.

Telcoguy 9 years ago

It may be my bad luck, but I fly emirates every month to Pakistan and service (both ground and aircrew) could be described as best as mediocre.
They fly me, it is safe (or so I hope) and is reasonably priced... but is far from the stellar service everybody seems to be gloating about.
I got great service from SwissAir (pity they could not make money out of it) and i have found Qatar Airways and Singapore much better service.
Lufthansa I have always found efficient, they may not be the most smiling people in the world but they are really efficient; that I appreciate.