March 18, 2015

Etihad CEO remains elusive over claims Gulf airlines have profited from billions of dollars in subsidies

In a forceful keynote speech at the US Chamber of Commerce Foundation’s 14th Annual Aviation Summit in Washington, DC, Etihad Airways president and CEO, James Hogan, declared that this was the right time and place “to clear the air” regarding accusations from three of the top American airlines that Gulf carriers had been operating unfairly through the receipt of government subsidies.
In a recent white paper, the US carriers accused Etihad of benefiting from US$6.3bn in state equity financial injections and an additional US$4.6bn in government loans on an interest-free basis. However in his speech today, Hogan rebuffed these accusations, stating that Open Skies had been “a model of success, generating enormous benefits for travellers and for airlines in the US, the UAE and around the world.” Hogan then continued: “As one of the newest national airlines anywhere in the world, we’ve had to create everything from scratch: every bit of product, every bit of our operations, every bit of our infrastructure. “Etihad is a David, a David who’s been facing Goliaths since 2003, when we started. In virtually every market we’ve entered, we’ve had to face existing competitors, with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases. “To take them on, we’ve had to work harder and we’ve had to work smarter. That’s called competition.” While Hogan did not hide the origins of Etihad as being a national airline owned by its government, he also made it abundantly clear this was the same for many airlines across the globe. Etihad has never hidden the fact it received substantial equity investment on top of shareholder loans, which in turn have both been added to with $10.5 billion in loans from international financial institutions. However, while making such strong statements regarding the airlines stance on the Open Skies agreement, Hogan failed to refute the allegations of the US$10.9bn in subsidies that the white paper has alleged, instead concentrating more on why he felt that Etihad was now such a successful airline:
“Customers choose to fly Etihad Airways because we offer a great product, with outstanding service, on the routes they want to fly, at prices that are competitive within those markets. “They choose us against many different competitors, depending upon which market we are in. But quite honestly, it is very rare that US carriers offer those alternatives. No US carrier flies into Abu Dhabi. There are very few US carriers operating to where we do in the Indian sub-continent, in Southeast Asia, or in the wider Middle East. He concluded “We make no apologies for offering new competitive choice for air travelers. We hope to continue to do so around the world.”



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