Hamburg: Etihad Airways’ president and chief executive officer James Hogan said he is confident luxury cabins on the airlines’ new Airbus A380s will sell.
The Residence suite, located on the aircraft’s upper deck, features a living room, separate double bedroom and en suite shower, complete with butler, for up to two people, making it the first three room luxury suite in commercial aviation history.
However, it remains to be seen how strong the market is for such an extravagant product, and while Etihad claim it will undercut the cost of a private jet, it can’t — as a fixed schedule commercial airline — boast the same flexibility.
Speaking on the sidelines of the first A380 roll-out from an initial order of ten aircraft at the Airbus’ Finkenwerder facility in Hamburg, Germany, on Thursday, Hogan said the inaugural flight from Abu Dhabi to London on December 27 had sold out and interest in forward sales was strong.
The Residence
“Yes, there is a market for The Residence otherwise we wouldn’t have invested,” said Hogan. “Those who know the region will know there’s a lot of high net worth individuals, so when we calculated the cost of a private jet to London at US$60,000 to US$80,000, and we’re selling it for US$20,000, we think we’ve got a better product. There’s no fuel stop, there’s a butler, great service and convenience in regard to the crews.
“We’re very bullish and we are already seeing it in the sales, we’re not expecting every flight to go full. But we felt creating a product that people who travel in the private jet market will aspire to, and in fact get a better deal and better service, was a great opportunity.”
Hogan added that the service would be preferable over private jet in the region despite the fixed scheduling.
“Elsewhere, people use private jets because they have a certain need,” he said. “But from the GCC there is a strong traffic flow to London and New York, so we believe there is a segment.
“You would be surprised the amount of Australian VIPs that fly through Abu Dhabi to clear US Customs clearance and fly onto New York and Washington, so when you’ve got a specific routing it works.”
Asked if the first class market was in decline, Hogan replied that certain sectors could still flourish.
Classes
“Obviously, we believe in a first class product,” he added. “We have a split fleet, 50 per cent of our long haul have three classes the other 50 per cent have two classes, so you deploy the asset where you believe you get the best return. New York and London are strong three class markets and Madrid is going to be a two class market. We’ll continue to offer a three and two class product.”
Hogan also said that people’s reaction to The Residence carried with a certain kudos for the fledgling brand.
“There’s a halo effect, Etihad are the new guys on the block, we’re 11 years old, so it’s certainly helped us push our brand in the market.”
Meanwhile, Fabrice Bregier, the president and chief executive officer of Airbus, said he was confident of meeting Etihad’s A380 interior deadlines in time for December’s inaugural flight of the first of ten orders.
“It’s not just a level of confidence, this is a commitment,” said Bregier. “Clearly when you innovate you take risks and with The Residence there are some risks that are progressively behind us. We are extremely confident we will deliver. It’s not an option for us, we have to make it and we will make it.”
