Dubai: Want to book a private jet? Or need to get cargo delivered on a priority basis? Check with Etihad…
The Abu Dhabi airline has offered a first glimpse on how it plans to reshape operations in a post-pandemic world, with global demand for regular commercial flights likely to take some more time to get anywhere near full recovery. The carrier announced it was getting into chartered and ‘special flights’ services, bidding to create new revenue generating opportunities… and with the prospect of higher returns.
Now, Etihad had been operating charter flights for some time, but the possibility is that now this will be upgraded to the status of a full-fledged business unit. The intent is to target high networth and business clients, as well as those who need to send cargo on an urgent basis.
Got the capacity
“Unlike specialist operators, Etihad has at its disposal a specialised fleet of Boeing 777 Freighters, as well as 787-9s, 787-10s and 777-300ERs – all of which have the best cargo uplift capability of any airplanes out there,” said Saj Ahmad, chief analyst, StrategicAero Research.
This will “benefit the airline with additional revenue and provide additional cargo capability for end-users who have ad-hoc or short-notice requirements.”
In fact, in the weeks and months when commercial flights were suspended, the cargo operations provided the support for Etihad as well as Emirates airline.
Will this catch on?
By “formally” launching chartered services, Etihad is thus competing against private jet operators, who did have a good run during the lockdown months when commercial flights were suspended. And even when normal services resumed, these operators reckoned that a certain category of traveller – corporate and business - would still prefer private jets.
Will Etihad follow up its latest announcement with buying/leasing smaller jets? And just as important, will other commercial airlines push ahead with similar chartered plans?
“It’s difficult to know because business for charter operations ebb and flow and aren’t always consistent,” said Ahmad. “Any new entrants to this would need to have a plethora of long-term customers and contracts in place first.
“Etihad has the benefit of its cargo operations to reach out to clients and tailor this sort of service whereas other airlines without a sizable cargo presence may not yield the same success.”
A spin to Economy
Meanwhile, the UAE’s other leading airline Emirates also used the last week of the year to unveil its strategy to lift future yields. The carrier unveiled the look of its ‘Premium Economy’ cabin on its latest Airbus A380 aircraft, and with more to come. Chances are some of the existing aircraft could also be fitted out with this concept.
A top official made a telling statement on Emirates’ thinking. "While others cut back, Emirates is working hard to restore the products and services that we’ve had to suspend or adjust due to pandemic precautions, and introduce new offerings and enhancements," said Tim Clark, President, in a statement.
The move may have come at the right time. “We’ve seen the kick-off of an early recovery of the VFR segment (visiting friends and relatives) these days - with the new Economy class product, Emirates could be in a better position to pick up that demand,” said Linus Benjmain Bauer, Managing Director of Bauer Aviation Advisory.
Premium Economy has become a value-added product and a strategic mechanism to improve yields on ultra-long-haul services
Squeeze better returns
The cost of a Premium Economy seat is 1.6 times higher than that of a regular Economy - and yet it generates 2.3 times higher revenues than its production cost, said Bauer.
Bauer added that the concept could be a way for airlines to sustain higher yields during pandemics and recessions when business travel becomes “increasingly price-sensitive” and companies look to downgrade their employees from Business class. (Currently, the likes of Singapore Airlines, British Airways and Cathay Pacific have Premium Economy options.)
“The Premium Economy has become a value-added product, an important revenue stream and a strategic mechanism to improve yields on ultra-long-haul services,” Bauer added. “Airlines need to start focusing on the positioning of the company for a stronger recovery that will allow the airline to emerge stronger from the crisis.”