Etihad Airways Targets Corporates with 'Boutique' Strategy

Etihad's Kamark and Frascogna talk:

• Corporate demand growth
• Distribution and partnership strategy
• Abu Dhabi's value to corporate travel as a connection point

Etihad Airways chief commercial officer Robin Kamark and Americas VP Vincent Frascogna spoke with BTN assistant editor and staff writer Dawit Habtemariam about Etihad's growth strategies.

BTN: Are you seeing growth in corporate business?

Kamark: We have a steady, good position on the corporate side, but when it comes to the growth side, we have slight growth in total revenue in the group. We are sort of cautious when it comes to certain geopolitical issues, but so far we haven't seen any influence on the revenue turnover from corporates yet.

Frascogna: The U.S. market has been strong for us. Abu Dhabi [is] one stop to really anywhere. As a result, [corporate business] from the U.S. into the UAE and into the Indian subcontinent and the rest of the Gulf Cooperation Council market is strong. We're also seeing good growth across multiple segments: Defense is big for the GCC and Middle East, but also a lot of new fintech startups coming into the UAE. That's been pretty strong for us so far. We also have good relationships with the global TMCs as well as some local and national U.S. TMCs.

BTN: What is your demand outlook for 2020?

Kamark: We've seen very steady demand in the last of couple of years. The trade war is difficult between the U.S. and other countries; the geopolitical stage is uncertain, so there is a bit of caution in the estimates. [The International Monetary Fund] and [the International Airline Transport Association] both have lowered their [global economic growth] predictions. We have performed well in 2019, and we have taken our share, so we are within our ability to compete.

BTN: What's new with route growth?

Kamark: We have four gateways in the U.S. market—New York [JFK], LAX, Chicago [O'Hare] and Washington [Dulles]—and we want to secure our position into those. For New York, we fly the Airbus A380, and we are phasing other aircraft into the system. We also want to increase the frequency we have with those four gateways. Europe has been a good market for us, so that is the first expansion we want to have on a structural basis, then we are going to utilize seasonality more than we have historically. This needs to be paired with the influx of new aircraft, which is ongoing but will peak around 2022-23, so we have a five-year plan. When all the aircraft have come in, then you have the possibility for expansion, but we don't want to go back to the good old days where you expand 10, 15, 20 percent. We want it to be sustainable and controllable.

BTN: What's your distribution strategy?

Kamark: Very simple, actually. We want to be available in as many channels as possible, but we want to be present in the most efficient channels. If a customer comes to us and says, "I want to buy in that channel and not that online channel," we will be available in that indirect channel. If you ask me, do we want to exclude certain distribution channels? Not necessarily, but we will incentivize our customers to go through the most efficient channels, if they want to do so. If they have other views, we will be present there, but we will not fund that distribution channel.

BTN: You've avoided airline alliances and pursued your own partnership strategy. Has your strategy been validated?

Kamark: The question of alliances and partners is becoming stronger. We are open to different ways of joining partnerships and/or joining alliances. Etihad tried to establish its own alliance by investing in a number of airlines. We have significant ownership still in some, but that strategy for a number of reasons didn't work out. You can go into partnerships bilaterally, trilaterally, joint ventures. But [they] need [to] be on the right terms for Etihad.

BTN: What are the advantages and disadvantages of being the smallest Gulf carrier?

Kamark: I don't see many disadvantages. We want to be the boutique hotel of airlines. We are investing a lot in the product portfolio on ground and flights. We are investing a lot in distribution, in the terminals in Abu Dhabi in order to have a state-of-the-art hub and in fleet and new aircraft. We will be the third-largest [Boeing] 787 operator in the world. We will have one of the youngest fleets in the world when the transition is finished. That is, for us, quality. If you judge us on size, we will always be number three, but we will fight for number one when it comes to quality of the carrier. Take the A380. We have a four-class concept, and the Residence [luxury class] beats even private flying. We have the first class, which has been voted the world's best first-class product. We have a very good business-class product and a very good economy [class], and on that basis we can compete with whomever.

BTN: What are your expectations for Air Arabia Abu Dhabi, the low-cost carrier you recently launched with Air Arabia?

Kamark: That's too early. In a five- to 10-year perspective, there is probably no surprise that we think the LCC segment in the Middle East will grow. We want to be part of that, but it will be a good arm's length from the new LCC to Etihad. If there are some synergies down the road, then we will explore them, but this for us is a proactive way to take part in further growth in the region.

BTN: What are the advantages of Abu Dhabi as a connection point for corporate travel?

Kamark: First of all, it's a beautiful place. For even a stopover for leisure or the corporate side, you will experience the best holiday of your life. Our network is actually very efficient. We have a good network to those places that we fly, and we fly to most continents, even Africa, Australia, the U.S., Asia and Europe. We have fairly big [flows] into India.

Frascogna: It's also an increasing destination in its own right for meetings, conferences and events. The facilities are second to none. It has tons of exhibition spaces, conference spaces and events. Abu Dhabi International Airport offers U.S. [Customs and Border Protection pre-clearance], which means that passengers, similar to traveling out to Canada through the Bahamas, would actually clear U.S. customs and immigration in Abu Dhabi. After a 14- to 15-hour flight to the U.S., you come straight off the aircraft, collect your bags and you're out of the airport. There are no queues.