Etihad’s Hogan says “Learn from the British”

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By admin November 5, 2015 17:52

Etihad’s Hogan says “Learn from the British”

New competition in global air travel must not be stamped out by the entrenched interests of the legacy carriers, said James Hogan, President and Chief Executive Officer of Etihad Airways, who delivered the 2015 Brabazon Lecture at the Royal Aeronautical Society in London yesterday. Hogan said the global industry should learn from the British, one of the first markets to embrace true competition and one in which innovation and new approaches could still be seen.

Hogan said that air travel, which contributes so much to global trade, was stuck with a regulatory system which limits consolidation, competition and consumer choice.

“Air travel is the lifeblood of the modern economy.  But while the modern globalised economy has seen trade and tourism jump forward in leaps and bounds, the structure of our industry has shuffled forward only a few tiny steps.

“This is an industry which cries out for new competition, across many different markets; but it is one in which smaller operators can only operate in niche environments.”

To become a competitive global network carrier today is incredibly challenging, said Hogan: “More than ever before, scale is the single defining factor behind success for a network carrier.

“Scale means a network which can compete against the networks of legacy carriers, built up over decades.

“Scale means the ability to reach consumers with a brand promise across many different markets – profile and visibility that will deliver customers.

“And scale means the ability to strip down costs to competitive levels, through economies of scale throughout operations.

“That means this is an industry which requires a massive cost of entry to compete.”

Hogan outlined Etihad Airways’ innovative model for growth, which has supplemented investment in organic growth with strategic equity partnerships.  As a result, Etihad Airways has been able to compete against its much larger competitors, which have received decades of investment and government support.

He warned, however, that legacy carriers such as the ‘Big Three’ US airlines and Lufthansa, were doing their best to stifle new competition.

admin
By admin November 5, 2015 17:52