The National - 5 Aug 2010
Etihad in budget-flight scheme
Ivan Gale
Last Updated: August 05. 2010 10:48PM UAE / August 5. 2010 6:48PM GMT
Etihad is planning to launch an all-economy service to regional destinations in October to try to compete for space at the budget end of the market.
The airline has removed the business cabins from two Airbus A320 aircraft and plans to deploy them to destinations including Alexandria, Calicut, Colombo, Damascus, Doha and Thiruvananthapuram, it said.
Etihad’s ultimate aim is to fly 10 all-economy A320s to new and existing destinations, with seating for 162 passengers, or 42 more than its existing capacity.
James Hogan, the chief executive of Etihad, said it was “the right time to challenge the way we serve our various markets” after establishing the carrier’s credentials as a leading airline for full-service, long-haul travel.
The moves follow budget airline launches in Dubai, Sharjah, Saudi Arabia and Kuwait, although Etihad officials stressed it was not creating a new budget airline brand, and would continue to offer the same levels of service on the flights.
But analysts expected the move to lead to more competitive fares.
“Etihad launching a short-haul economy service, which will operate at a lower cost structure than its main long-haul operations, reflects the growing need for the region to have more low-cost and short-haul competition,” said Scott Darling, a transport analyst at Nomura Securities in Dubai.
The move could help Etihad defend against moves by budget airlines to eat into its market share. One of its first routes will be from Abu Dhabi to Alexandria, a service that Air Arabia Egypt, a low-cost carrier, launched last month.
And the UAE’s aviation regulators have acknowledged an Abu Dhabi budget airline, not connected to Etihad, has been in the planning stage for more than a year although no firm plans have yet surfaced.
In Doha, Qatar Airways has struggled with how to respond to the growing challenge from budget air travel.
Four years ago, the carrier predicted an early demise for budget airlines in the region. But last year it threatened to launch its own budget service if its market share declined, and admitted to registering a budget airline trademark and designating an aircraft for the service.
Mr Hogan has a track record in transforming a full-service airline and creating a lower-cost subsidiary. In 2003 as chief executive of Gulf Air, he created Gulf Traveller, an all-economy service.
The subsidiary was initially based out of Abu Dhabi, when the city was still a major shareholder of the airline.
It was later discontinued at a time when Abu Dhabi and other Gulf governments were pulling out of the airline’s ownership.
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