Uncertain future: This Etihad Airbus A320 received a water salute on its first arrival at Dar es Salaam, but will some of the narrow-body fleet soon be receiving farewell salutes to mark their departure from the airline as it concentrates on wide-bodies? Picture: Etihad.
Although always the youngest and smallest of the so-called ‘Middle East 3’, Etihad Airways strove to be on a par with Emirates Airline and Qatar Airways.
Its rapid expansion and attempts to out-do rivals in the luxury stakes marked it out as an airline that wanted to go places.
It has been obvious for some time that it has adopted a different path. The divestment of stakes in its partner airlines, scaling back of its fleet – even before the pandemic – and its move towards a route network focused more on point-to-point services made that apparent.
However, it was in the announcement of senior management changes in early November 2020 that the airline openly stated that it no longer saw itself as a truly major player.
“The restructuring sees the airline continuing its transformation into a mid-sized, full-service carrier concentrating on its fleet of wide-body aircraft,” part of the statement read.
“As a responsible business, we can no longer continue to incrementally adapt to a marketplace that we believe has changed for the foreseeable future,” said Etihad Aviation Group CEO, Tony Douglas. “That is why we are taking definitive and decisive action to adjust our business and position ourselves proudly as a mid-sized carrier.”
In the middle of the last decade, there was always a sense that Etihad was playing catch-up – hence the plan by the then-CEO, James Hogan, to rapidly expand its reach by taking stakes in airlines that theoretically could feed traffic into Etihad’s Abu Dhabi hub.
Analysts could see the logic behind the plan but questioned the choice of partner airlines. Jet Airways (India) and Airberlin (Germany) went bust, while Alitalia (Italy) entered administration after Etihad withdrew its support in the face of union opposition to reconstruction plans and underwent an ultimately unsuccessful recovery before being renationalised by the Italian Government.
And, in January this year, Etihad was seemingly content to allow its previous 49% shareholding in Air Serbia to be diluted to 18% after the Serbian Government recapitalised the national carrier.
Etihad has, for several years, been racking up huge annual losses; in 2019 alone they amounted to $870 million, although the airline noted this was “significantly reduced” on 2018’s figure of $1.28 billion.
Its report for the first half of 2020 said that, before the pandemic crushed demand for flights, it had been on track for its strongest financial results since 2015. It was on target to achieve an earnings before interest, taxes, depreciation, and amortization (EBITDA) figure of $900 million in 2020, compared to $453 million in 2019.
One intriguing aspect of Etihad’s new direction is the future shape of its fleet. Like most A380 operators, the Abu Dhabi company has grounded its 10-strong fleet of the double-deck aircraft in the face of a dearth of passengers, and it remains to be seen whether they will return to service, given predictions of a slow return of long-haul routes.
If, however, Etihad intends to concentrate on wide-body aircraft in future, what does this mean for its substantial fleet of 30 Airbus A320s and A321s? Might some of them be disposed of, with its new codeshare partner airline, Air Arabia Abu Dhabi (AAAD), taking over some of its short-haul routes?
AAAD begin operations in the second quarter of 2020, and will operate independently, complementing Etihad’s network of routes from Abu Dhabi. Etihad declined requests for an interview for this article.
The airline is clearly moving away from its former ‘super-connector’ role. In December 2020, it announced that it was adding a new string to its bow by launching charter and special flight services.
In an effort to find a new revenue stream, the airline said that it would be offering ‘fully customisable’ flights for business and leisure passengers, as well as for cargo flights – although how the latter would differ from its existing freight operations was not spelled out.
During the continuing pandemic, “charter flights provide a convenient alternative to travel, providing customers with the flexibility to choose the departure time, destination and routing”, the airline said. This suggests that Etihad is aiming at wealthy customers from the region.
But its days as a member of the ‘ME3’ are apparently over. Saudia is the new de facto member of the trio.
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