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Tue 1 Nov 2005 04:00 AM

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Global goals

Etihad Airways will begin to receive its new fleet next year. The airline's CEO, Robert Strodel, is eagerly awaiting the planes' arrival in Abu Dhabi.

Global goals|~|Etihad2.jpg|~|Robert Strodel|~|Sitting in reception at Etihad’s headquarters in Abu Dhabi, it is easy to see how the airline is growing. A year ago, visitors could park their car near the front door and then walk into a building that felt empty and too big. Now, however, anyone coming to Etihad is in for a long walk across the car park, and there is no mistaking the hustle and bustle of a large and growing company.

Etihad was launched just before the Dubai 2003 air show, and in the intervening two years the company has grown substantially. It now employs 2000 people, including 200 cockpit crew and 800 cabin crew. It also has a large cargo department flying three regional freighters, and a passenger network covering 19 destinations, including the latest addition, Toronto. However, 2006 is set to be the year that the airline really makes a significant impact on the global aviation scene, as it will start to receive the huge number of aircraft that it has on order.

“The first thing that we have to do is to ensure that the airline is ready for the new aircraft,” says Robert Strodel, who was named as Etihad’s CEO in July. “We are getting quite a few new aircraft… and we have to make sure that our organisation is ready, we have to ensure that the infrastructure at Abu Dhabi Airport will be ready, and we have to make sure that this incredible expansion that we are planning goes according to plan,” he explains.

Prior to taking the top job, Strodel was Etihad’s head of cargo, a position he had held since the airline launched in 2003. His background before then included a long stint at Lufthansa, which culminated in becoming the founder and managing director of Lufthansa Cargo India in 1996. When he arrived in Abu Dhabi, Strodel implemented his experience at Etihad Crystal Cargo, which quickly established itself in the market. The cargo division carried 20,000 tonnes of freight in 2004, its first full year of operation, and it is now aiming to hit the 100,000 tonnes mark in 2005.

Now that Strodel is in the top job, he is looking to implement the factors that made Crystal Cargo a success across the entire airline. “It is extremely challenging, but we were very successful in setting up the cargo and we were very successful in keeping everything as simple as possible, flat hierarchies, and quick decisions,” he says. “What I am trying to do now… is transfer the same way of working to the complete company, and so far, it is working quite well,” he adds.

Until July, Etihad did not have a CEO, and instead the chairman, HH Sheikh Dr. Ahmed bin Saif Al Nahyan was in day-to-day charge of the airline. However, HH Sheikh Ahmed also has a number of other roles, including being a member of Abu Dhabi’s executive council, director of its civil aviation department and chairman of Gamco, the emirate’s fast-growing maintenance company. As such, the decision was made to appoint a CEO to take charge of running the airline.

“You need one person to coordinate all of the activities within the company, to make sure everything is in place and that everyone is pulling in one direction,” says Strodel. “Until July, this was mostly covered by HH Sheikh Ahmed, but if you look at the workload of His Highness, he could not possibly do it alone any more.”

The job of running Etihad is about to get significantly bigger, as the carrier’s new fleet will start arriving within the next few months. Deliveries of the airline’s $7 billion Airbus backlog kick in soon, with four A340-500s and 12 A330-200s due to arrive by the end of 2006. Four A340-600s will come in the following year, but Etihad’s four A380s will not now arrive until 2008. “We will get our first Airbus aircraft in January, then after that, it is an average of one a month for the next couple of years,” notes Strodel.

The airline was meant to receive its first new-build plane, a 777-300ER, last month, with four more –300ERs due by the end of the year. However, the carrier was one of the victims of the September strike at Boeing’s production plants, so the deliveries have been postponed until next year. “The strike has caused delays,” says Strodel. “We were expecting to get our first aircraft in October, but this has now been delayed until January. However, the second, third, fourth and fifth aircraft are now coming in a relatively short space of time [after the first one],” he adds. “What we had originally scheduled as a delivery timeframe of three months has now been reduced to practically five weeks.”

“Boeing is helping us wherever they can,” adds Strodel. “However, a strike is considered to be an act of God, which is not covered [by insurance], so, financially, we will get nothing out of it.”

Despite the delay, Etihad is pushing ahead with its network expansion as planned. Flights to Toronto via Brussels began at the end of last month, and Johannesburg will come online on 1st December. A host of new routes will begin next year, including Manila, Jakarta, Paris and Manchester. Shanghai is also under discussion as are more North American destinations.

However, this route list may now greatly expand following Abu Dhabi’s decision to pull out of Gulf Air. The emirate gave its six-month withdrawal notice in September, handing Gulf Air to the two remaining owners, Bahrain and Oman. What exactly will happen to Gulf Air’s operations in the UAE capital is unlikely to be known before the end of the year. However, GF will clearly scale back its presence to a large extent, which could create new opportunities for Etihad.

“We made our original plan with Gulf Air existing in its present form,” says Strodel. “However, since the emirate of Abu Dhabi has decided to pull of Gulf Air, which is a decision of the emirate — it had absolutely nothing to do with us — it could very well be that we will be asked to take over certain routes.”

“If we are asked to do that, yes, of course, we will do it,” he says. “We will create additional aircraft capacity and operate those routes, so that the customer from Abu Dhabi, whether it is a passenger or cargo client, has the services that they want and need. What that actually means for Etihad is that an incredibly fast-growing company will grow even faster, because of necessity.”

The withdrawal of Gulf Air should also create additional capacity at Abu Dhabi airport. The emirate is already planning a second runway and new centre field terminal that will boost capacity to 20 million a year in 2010. In the meantime though, the authorities are undertaking a series of incremental expansions to the existing facility as an interim solution. Terminals 1A and 2 opened over the summer, which doubled the airport’s capacity to 5 million. Further projects are also being planned, however, including another extension to the terminal to separate arrivals and departures, as well as the construction of a dedicated pier for Etihad’s new fleet. “The airport is already a little bit too small for the number of passengers going through, and when we bring in new aeroplanes and start new routes, we will need an interim solution,” says Strodel.

It is clear that Strodel and Etihad cannot wait to receive the new aircraft. The airline presently flies a mixed bag of a fleet comprising four A330-200s, an A340-310 and a Boeing 767-300ER, which have a variety of different standards of seating and inflight entertainment. Strodel admits that, despite the best efforts of the cabin crew, this variety has had a detrimental effect on the airline’s onboard service levels. “The big advantage that we have, despite the aircraft being such a mix… is that we have the crew that is really trying to make our guests feel at home while they are in the aircraft,” says Strodel. “The seating is not the way we want it to be, the inflight entertainment system is not really state of the art in some of the aircraft, but the crew are making a difference, and we are receiving a very favourable ratio of positive to negative comments.”

“However, it is, of course, understood that, at the moment, we are not able to provide the service that someone expects from a 21st Century airline. But it will come,” he adds. “By this time next year, we will have an all-new fleet and the youngest fleet in the world. The passengers will then have as the hardware, if you want to call it that, something really exceptional.”

The highlight of the onboard service offerings on the new fleet will be live TV and internet access at every seat. The carrier boasts that the system, which combines Thales TopSeries IFE and Connexion by Boeing, will make it the first airline worldwide to offer these feature to every passenger it carries. “The aircraft interior will be state of the art,” says Strodel. “Whether the aircraft are in a two-class or three-class configuration, the seats will be wider apart and more comfortable than those of our competitors.”

“What we are doing as an airline is centring all developments and all thoughts around the customer — whether it is a passenger or cargo customer. Whatever we initiate, it will be innovative, and it will be a change to what is done in the industry at the moment,” he says.

In terms of passenger services, this will include a door-to-door experience, with airport limo services and lounges for premium passengers. The ‘guest recognition programme,’ as Etihad calls its frequent flyer programme, which will launch early next year, will also feature a range of innovations, including a multi-purpose membership card and a variety of rewards. “Some airlines just fly the passenger from one airport to another one,” says Strodel. “We are trying to change how they see the whole journey. It will become an experience, seamless travel from their home to the destination and back.”

This philosophy will also guide the airline’s plans to cooperate with other carriers around the world. Etihad has ruled out joining a global alliance for the foreseeable future, but it is keen on bilateral cooperation. On its Brussels-Toronto route, for instance, Etihad has signed a codeshare deal with SN Brussels, and it is looking to replicate this model on other routes. “Whenever we operate to a country, we want to do that in cooperation with the national carrier,” says Strodel. “The whole philosophy of us doing business abroad is not through confrontation or anything like that, but through cooperation.”

“They [national carriers] are receptive to this,” he adds. “We just have to prove to them that what we are saying to them is also what we mean.”

With its backing from Abu Dhabi, Etihad may also eventually buy stakes in other carriers. In particular, the airline has made a bid, reportedly of more than $130 million, to buy a 33.7% stake in Cargolux. If the deal comes off, then it will give Etihad a significant presence in the global cargo market, as well as its own transatlantic and European cargo hub.

“We are still interested in the shares of Cargolux,” says Strodel. “However, we believe that there are a couple of other people who are interested as well, and it will be up to the government of Luxembourg and the board of Cargolux to decide,” he continues.

Even without a Cargolux stake, Etihad is clearly set for a period of rapid expansion and development. As such, anyone waiting in the company’s reception is sure to see a lot more people coming and going in the future. They may also want to get there early, unless they do not mind a long walk across a car park in the Abu Dhabi sunshine.||**||

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