ID :
100675
Sun, 01/17/2010 - 15:47
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Shortlink :
https://oananews.org//node/100675
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Etihad mulls charging for second piece of luggage
Abu Dhabi, Jan 17, 2010 (WAM)- Etihad Airways, the UAE's national carrier, could consider charging passengers for a second piece of baggage in a bid to maximise revenue, as depressed yields continue to put pressure on airlines' bottom lines, says a top official according to a report in "Gulf News."
"A number of US and European airlines are charging passengers for the second piece of baggage. I expect to see a similar move by the Gulf carriers and we might consider such a move, why not?" James Hogan, Etihad's chief executive, said. "We haven't made any decision on this yet."
Etihad, launched in Nov-ember 2003, has a fleet of 52 aircraft serving 60 destinations. In 2004, it announced the largest ever commercial aviation start-up order of 29 Airbus and Boeing aircraft. The airline has carried more than 17 million passengers.
In 2008 it placed orders for 205 aircraft worth more than $43 billion (Dh157.81 billion) at list prices. Its fleet size is expected to touch 100 in five years.
Etihad received 11 aircraft last year, and Hogan said: "We will receive three aircraft this year, including one cargo and hope to serve more than seven million passengers this year with the addition of three destinations."
Hogan, who specialises in turning loss-making airlines around, is determined to bring Etihad Airways into the black after achieving break-even next year.
He said he expects responsible pricing by airlines to lift yields that will help the global aviation industry reduce losses.
Yield is the revenue an airline makes on each passenger for every kilometre/mile travelled.
Global aviation watchdog the International Air Transport Association (IATA) said last month that the global aviation industry is expected to make a $5.6 billion global net loss this year, larger than the previously forecast loss of $3.8 billion.
The industry was forecast to record an $11 billion net loss in 2009.
Airlines have been undercutting prices to retain market share due to intense competition amid falling air travel demand, resulting in falling yields.
Hogan hopes to see that reversed to the 2008 level."This year we expect both traffic and yields to improve, moving yields back to their 2008 levels through responsible pricing," he said.
"Despite depressed yields globally, we have been fortunate enough to see good yields last year — the highest in the world."
However, they were significantly lower than those achieved in 2008."If we have the same yield as in 2008 we'd have achieved break-even by this year.
"However, the global aviation industry has faced one of its toughest challenges including the H1N1 flu and the global financial crisis," he said. Hogan said he sees positive signs in the aviation industry with demand coming back to the comfort of some airlines.
"We see positive signs with an increase in forward bookings," he said. "The Indian market shows stronger signs of improvement."
About 50 per cent of the airline's traffic is through Abu Dhabi.
"The ongoing construction and development works in Abu Dhabi are attracting traffic to the UAE capital," he said."We build on our success with the strong economic activities, backed by a strong economy in Abu Dhabi. We expect these factors to continue to drive our growth."
He said he expects the passenger seat load factor to average 76-77 per cent this year.
Etihad is expected to receive its first A380 in 2013 and the first of 35 Dreamliner Boeing 787s is expected to join its modern fleet in 2014.
Hogan, who joined Etihad from Gulf Air in 2006 with a pledge to turn the UAE's national carrier into a profitable airline by 2010, said customers remain the core of its business.
"Its customer, customer and customer, that is the most important aspect of our business. It's about people, flying them from one destination to the other. Although all airlines do it as part of their business, we look at how we can do it differently," he said.
While other airlines are spending millions in retro-fitting flat beds in first and business class cabins, he said, "we have started our service with those necessities."I do not think any European airline has such a great product as Etihad," he said.
Hogan said his airline is developing destinations such as Minsk where traffic is low.
However, Etihad is building such destinations with single-aisle aircraft and then placing wide-bodied aircraft once traffic picks up.
"This way, we are also connecting cities and capitals with Abu Dhabi to develop networks and destinations," he said.
"A number of US and European airlines are charging passengers for the second piece of baggage. I expect to see a similar move by the Gulf carriers and we might consider such a move, why not?" James Hogan, Etihad's chief executive, said. "We haven't made any decision on this yet."
Etihad, launched in Nov-ember 2003, has a fleet of 52 aircraft serving 60 destinations. In 2004, it announced the largest ever commercial aviation start-up order of 29 Airbus and Boeing aircraft. The airline has carried more than 17 million passengers.
In 2008 it placed orders for 205 aircraft worth more than $43 billion (Dh157.81 billion) at list prices. Its fleet size is expected to touch 100 in five years.
Etihad received 11 aircraft last year, and Hogan said: "We will receive three aircraft this year, including one cargo and hope to serve more than seven million passengers this year with the addition of three destinations."
Hogan, who specialises in turning loss-making airlines around, is determined to bring Etihad Airways into the black after achieving break-even next year.
He said he expects responsible pricing by airlines to lift yields that will help the global aviation industry reduce losses.
Yield is the revenue an airline makes on each passenger for every kilometre/mile travelled.
Global aviation watchdog the International Air Transport Association (IATA) said last month that the global aviation industry is expected to make a $5.6 billion global net loss this year, larger than the previously forecast loss of $3.8 billion.
The industry was forecast to record an $11 billion net loss in 2009.
Airlines have been undercutting prices to retain market share due to intense competition amid falling air travel demand, resulting in falling yields.
Hogan hopes to see that reversed to the 2008 level."This year we expect both traffic and yields to improve, moving yields back to their 2008 levels through responsible pricing," he said.
"Despite depressed yields globally, we have been fortunate enough to see good yields last year — the highest in the world."
However, they were significantly lower than those achieved in 2008."If we have the same yield as in 2008 we'd have achieved break-even by this year.
"However, the global aviation industry has faced one of its toughest challenges including the H1N1 flu and the global financial crisis," he said. Hogan said he sees positive signs in the aviation industry with demand coming back to the comfort of some airlines.
"We see positive signs with an increase in forward bookings," he said. "The Indian market shows stronger signs of improvement."
About 50 per cent of the airline's traffic is through Abu Dhabi.
"The ongoing construction and development works in Abu Dhabi are attracting traffic to the UAE capital," he said."We build on our success with the strong economic activities, backed by a strong economy in Abu Dhabi. We expect these factors to continue to drive our growth."
He said he expects the passenger seat load factor to average 76-77 per cent this year.
Etihad is expected to receive its first A380 in 2013 and the first of 35 Dreamliner Boeing 787s is expected to join its modern fleet in 2014.
Hogan, who joined Etihad from Gulf Air in 2006 with a pledge to turn the UAE's national carrier into a profitable airline by 2010, said customers remain the core of its business.
"Its customer, customer and customer, that is the most important aspect of our business. It's about people, flying them from one destination to the other. Although all airlines do it as part of their business, we look at how we can do it differently," he said.
While other airlines are spending millions in retro-fitting flat beds in first and business class cabins, he said, "we have started our service with those necessities."I do not think any European airline has such a great product as Etihad," he said.
Hogan said his airline is developing destinations such as Minsk where traffic is low.
However, Etihad is building such destinations with single-aisle aircraft and then placing wide-bodied aircraft once traffic picks up.
"This way, we are also connecting cities and capitals with Abu Dhabi to develop networks and destinations," he said.
