Etihad says leisure flyers are filling business class

Etihad Airways said a surge in premium seat sales is being overwhelmingly led by huge pent-up demand for long-haul holidays and journeys to see friends and family following two years of coronavirus curbs.

Around 90% of business class bookings with the Gulf carrier are coming from people making leisure trips, up from about 45% before the pandemic struck, Chief Executive Officer Tony Douglas said in an interview with Bloomberg Television on Friday. He referred to the phenomenon as “revenge tourism.”

“It’s an indication of the amount of latent demand for people to be able to get back to that sense of normality, to be able to travel, see family, loved ones and amazing places around the world.” Douglas said. “People are prepared to trade up now for space and get a better experience.”

Etihad boss Tony Douglas says demand for business class has surged on the back of premium tourism.

The easing of Covid restrictions has been accompanied by sales increases of 800% in 72 hours in some markets, according to the CEO, who said that 12 of Etihad’s routes are currently operating full.

Douglas told Bloomberg on April 7 that Etihad had turned profitable in the first quarter, making it possible the Abu Dhabi-based company will post positive earnings for all of 2022, a year ahead of target.

Demand is currently sufficient to absorb higher oil prices and the carrier has coped better with the pandemic than many others after a major downsizing that began in 2017.

The CEO, who has focused Etihad on just two plane types – the Boeing 787 and Airbus A350 – said it could almost use more aircraft right now, and needs to have the flexibility in its fleet as demand fluctuates.

The carrier has 11 more 787s on order plus 12 A350-1000s, of which the first five are arriving this year.

Two of eight A350 options are also being converted to orders, while the next wave of Boeing 787 jets will come with an all-new business class which further evolves the A350 Business Studio suite.

Etihad's new Airbus A350 business class.

While airlines are reaping a revenue boost from the strengthening of premium demand, it’s not clear whether the leisure-led surge will be sustainable once people have completed the most pressing journeys.

Corporate sales are also improving, though in some markets that’s been limited largely to small and medium-sized firms, with the biggest businesses not yet traveling as widely.

Douglas said that “China may well be closed for the rest of this year,” continuing to deny airlines access to a market that’s been an engine for growth over previous years. He said freight demand, which became a major revenue driver in the pandemic, should remain strong through the rest of 2022.

For Douglas, 2022 is undoubtedly the year of recovery, but even he seems taken aback – albeit happily – by the speed ot that pickup.

“This time last year we would’ve probably been about 25% load factor, and yesterday we’re at 84%", Douglas told Executive Traveller in late March 2022 on the sidelines of the launch of Etihad’s first Airbus A350.

“We were actually at a higher load factor yesterday than we were at the same time in 2019 pre-pandemic... so I think we’ll have the best first quarter in the history of Etihad.

That’s well ahead of previous expectations that travel wouldn’t return to pre-2019 levels in 2023-2024.

“If we were having this conversation a year ago, the consensus (on recovery) then was back into 23, into 24 even,” Douglas reflects.

"I guess the first informed group that we saw a different view from was actually the big credit card companies, who took a view based upon seeing your transaction history – because they of course know what we’re all spending better than anybody - that they believe that we probably see going into the back end of this year, the early part of next year, a return to 2019."

Additional reporting by Bloomberg