Etihad expects significant growth, financial return in coming years

Etihad Airways' owner, the government of the United Arab Emirates, expects a return on its investment by 2009, VP-Commercial Geert Boven told ATWonline.

The government invested AED500 million ($136 million) to have its own national carrier, yet "we have to run the airline as a commercial enterprise. The government expects return on investment within the four or five years after its launch in 2003," according to Boven, who admitted the government is seeking recognition as an important player on the international business stage as well as financial return.

In 2005, its second full year of operation, Etihad flew 950,000 passengers. This year it anticipates 2.5 million, down from the 3 million it forecast originally owing to late deliveries of its 777s and A330s. By 2010 it expects to operate 35 widebody aircraft to 70 destinations.

On Monday it launched a new Abu Dhabi-Manchester service, bringing its network to 27 markets. By year end it will serve 34, including Dhaka, Paris, Casablanca and New York to be added in the next few months. In the second half of 2006 it will launch flights to Doha, Kuwait and destinations in the Far East.

Etihad will pursue traffic growth by exercising third and fourth freedom rights in the region and improving its share of the long-haul traffic connecting at its Abu Dhabi base. "We believe there is room for better connections and more frequencies in the region spanning the Gulf and the Indian subcontinent," Boven said. "There are some strong carriers in the region [seeking to expand similarly], but there are also some carriers that don't have our network and our financial strength." Third and fourth freedom flights currently account for 55% of Etihad's traffic.

"We will also expand connecting traffic, as there is limited growth potential in Abu Dhabi," said Boven, who joined the airline in October. "Traditionally, European carriers have been flying to the Far East and Australia by hopping from one place to the other via the Middle East, often to the detriment of the local carriers which were not strong enough to sustain their market power. I won't say that we are taking back traffic that has been taken from us, but we strongly believe that due to the strong technology and new long-range aircraft, traffic flows will be redirected. We intend to take the opportunity of our central location."