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Tue 17 Mar 2015 08:12 PM

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Hogan: Why Etihad is a David fighting Goliaths

Etihad CEO hits back against US carriers' claims that Gulf airlines hold unfair advantage in aviation battle

Hogan: Why Etihad is a David fighting Goliaths

Etihad Airways CEO James Hogan said at a Washington aviation summit on Tuesday that the company is government-owned and has received equity investment and loans from its shareholder.

The remarks come as US airlines allege that Etihad and peer airlines from the Gulf have received unfair state subsidies.

Hogan said few young companies have operated as transparently as Etihad, which is little more than a decade old.

"We shouldn't attack what we don't understand," he said.

In his first public comments since three US airlines launched a campaign calling for a level playing field, Hogan called for reasoned debate based upon facts.

He also warned against action which would restrict competitive choice for millions of US and international air travellers in markets which the US airlines have chosen not to serve.

Hogan described Etihad as "a David, a David who’s been facing Goliaths since 2003".

“As one of the newest national airlines anywhere in the world, we’ve had to create everything from scratch: every bit of product, every bit of our operations, every bit of our infrastructure,” he said.

“Etihad is a David, a David who’s been facing Goliaths since 2003, when we started. In virtually every market we’ve entered, we’ve had to face existing competitors, with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases.

“In many cases, those established airlines were gifted amazing infrastructure – airports, terminals, slots, landing rights – over decades.

“To take them on, we’ve had to work harder and we’ve had to work smarter. That’s called competition.

“We’ve been helped by our geographic position. The Gulf is at the centre of today’s trade and travel routes. Today’s aircraft technology and the changing patterns of world trade mean we are positioned strongly for many new and emerging markets.

“We’ve been helped by our blank sheet of paper – no legacy systems, no legacy aircraft, no legacy mindsets.

“And we’ve been pushed hard by the vision and ambition of our shareholder to create a globally competitive airline.”

Hogan said the ‘secret’ behind Etihad Airways’ rapid growth was nothing more than incredible customer service, delivered on modern new aircraft, with world-leading product, at competitive prices, on routes people want to fly.

As a national airline owned by its government, said Hogan, Etihad Airways is no different than scores of airlines around the world. The airline has always made clear it has received equity investment and shareholder loans, which have been supplemented by $10.5 billion in loans from international financial institutions.

“Our shareholder believes in our business plan. They have increased their commitment as we have developed – they have invested in our success.

“They’ve seen the success we are delivering, both as a business in our own right and as a catalyst for other business, trade and tourism, in Abu Dhabi and the UAE. We are now not just an airline but a successful aviation group, incorporating handling, maintenance and distribution capabilities.

“Our shareholder, like any rational shareholder in the world, has made that commitment to us because it expects a return, and as it sees greater success from our business, it sees the opportunity for even greater returns in the future. The key word is return.”

Hogan also outlined the economic contribution that Etihad Airways delivers to the United States.

“We regard ourselves as a friend of the United States,” he said. “Certainly, the bonds between the UAE and the US are incredibly strong, and we believe Etihad Airways has always reflected that in our business operations.

“We are major customers of Boeing, of GE, of Sabre, and of many other American businesses. We work with strategic American partners – for example, with Atlas, on developing and improving global cargo operations. We work with US financial institutions, with US tourist boards, with US airports. Our commitment to the US economy supports more than 200,000 jobs.”

Hogan finished his speech by saying Open Skies is about customer choice.

“We make no apologies for offering new competitive choice for air travellers. We hope to continue to do so around the world.”

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