Etihad mulls premium economy, fewer new planes, revamped network

Etihad Airways is looking at introducing a premium economy cabin to offer a wider variety of fares, according to airline group CEO Tony Douglas, at the same time as it scales back its global ambitions following almost US$3.5 billion in losses.

This will likely include cancelling scores orders for Airbus and Boeing jets as Etihad puts the brakes on a long-running and costly attempt to close the gap with larger Persian Gulf rivals Emirates and Qatar Airways.

Douglas said the focus on Abu Dhabi will prioritize point-to-point flights over the 'super-hub' model that the carrier previously pursued as it sought to attract customers making flights between Asia, Europe, Africa and the Americas.

That in turn it will reduce the need to swell the fleet from about 110 planes now. Etihad currently has one of the biggest backlogs in global aviation with 98 unfilled orders at Airbus and 77 with Boeing. The tally includes Airbus A350, Boeing 777 and Boeing 787 jets usually deployed on intercontinental routes.

“We don’t believe that doubling the size is likely to be sustainable at this time, but we’ve got enduring long-term relationships with the aircraft manufacturers and therefore that process is constantly under review,” Douglas said.

“The eventual aim of this process is for Etihad to be in the best shape to ensure its long-term sustainability, enabling it to meet the challenges of an aviation industry in constant flux."

Rethinking routes

Etihad has scrapped some marginal routes including San Francisco and Edinburgh and further destinations are also likely to be abandoned, though others, such as Barcelona, will be opened, the CEO said.

“Networks need to be reanalyzed,” he said. “Years ago it would’ve been quarterly, today it needs to be almost needs to be almost minute by minute.”

Etihad has already retreated from the so-called equity alliance strategy devised by former chief James Hogan, which saw it splurge cash on a clutch of struggling carriers, among which Air Berlin and Alitalia filed for insolvency last year.

Douglas said that he’s open to closer relations with Dubai-based Emirates, while adding that it is for the owners of the two carriers to decide whether they should in any way be brought together.

“There is a proximity, we are like-minded, on a personal level we get on extremely well, and where there is opportunity in a non-competing way to get mutual advantage, frankly why wouldn’t you? For us it would probably be looking to learn, as simple as that.”

Etihad last month posted a US$1.52 billion core airline loss for 2017, narrowing from US$1.95 billion a year earlier, when demand was hurt as the low price of crude weighed on oil-producing Gulf economies. Revenue improved 3.4 percent last year though passenger numbers were virtually static at 18.6 million.