Apologies if posted elsewhere. Interesting read.
Quite why Middle Eastern airlines have become the whipping boys in the latest Qantas dispute is a mystery to me – as an Australian who is not afraid of a little competition, and as a global airline chief executive who understands that every airline juggles with a grab bag of advantages and disadvantages.
The stream of wrong assertions about the amazing benefits Middle Eastern airlines have that somehow make Qantas unable to compete badly needs some balance.
For example – the claims that Gulf carriers are funded by generous and unlimited government subsidies. Etihad doesn’t receive a cent in subsidies.
Or that it doesn’t matter if we make a profit. Nothing could be further from the truth. We are very clearly focused on profitability.
Then there is the furphy that we get our fuel for free. In 2010 we fixed the price of 75 per cent of our jet fuel needs in a hedging portfolio with 17 global financial institutions. The fact is we pay more to refuel our jets in Abu Dhabi than we do in Singapore or Chicago.
We also pay for airport and landing charges at our hub in Abu Dhabi. The airport has the same profitability mandate as Etihad – why would they waive fees and charges for us? We pay market rates – the same rates as the other 34 airlines that fly to our home base.
And the no-tax refrain. Etihad operates in the same tax-free regime as all companies in the United Arab Emirates – including our airline competitors. But, we have tax obligations in the 43 other countries to which we fly.
And then of course, the claim about slave labour. Not only do we pay well, but we pay you the same for the job you do whether you are Australian or Thai or Congolese or any one of the other 120 nationalities we employ. On top of that we provide a host of other benefits such as housing, schooling for your children, health care, and even fitness centres.
It is not sovereign guarantees, government protection and cheap labour that underpin the success of airlines from the Middle East – and, as falsely claimed, are helping to nobble the Flying Kangaroo.
What is driving the increasing number of Australian travellers seeking a better alternative for their overseas travel?
There is one basic factor: choice. That is what we have offered following the exit of a raft of European airlines over an extended period – before Etihad was even born, I should point out.
And informing that choice are four things: network, product, service and dedicated staff.
Customers want access to modern and dynamic networks, with as few stops along the way as they can get. Middle Eastern airlines offer this.
Customers want new aircraft, with fresh products and innovative service. Middle Eastern airlines offer this.
Middle Eastern airlines have the right to take people to and from – and through – the Middle East. Certainly Qantas isn’t willing to fly through the Middle East, although it could it if chose.
It has chosen instead to focus on a different part of the world. Quite rightly, they are taking advantage of their own geography, and their other multiple benefits, which include consistent profitability, a strong brand and a long history.
It may be uncomfortable for established national carriers to face new competition. But that has been shown time and time again to be good for the consumer and – over the long term – good for the market.
So please don’t blame Middle Eastern airlines for doing what they have a right to do: compete.
Link
A perverse airline blame game | James Hogan, Etihad Airlines CEO | Commentary | Business Spectator