Etihad Airways sees rising travel demand

Korea unit chief says emerging markets will drive growth in demand


Etihad Airways, a national airline of the United Arab Emirates, is confident that the growth of the middle class in emerging markets and booming industrial projects in the Middle East will lure more travelers to the region.

As one of the fastest-growing international carriers,the airline has expanded services to 66 destinations across the globe since its establishment in 2003, carrying more than 26 million passengers to date.

“Etihad’s growth potential is bigger than any other airline’s in the world,” Kwak Ho-chul, Korea’s country manager at Etihad Airways, told The Korea Herald on Tuesday. “We’ve achieved stellar growth over the past several years, increasing the number of routes and destinations as well as their frequencies to strengthen our network.”

In December, Etihad launched daily flights between Seoul and its base Abu Dhabi, the UAE’s capital.

Kwak, an aviation industry veteran with 28 years experience, was appointed in September to oversee operations in Seoul.

Since its maiden flight on Dec. 11, he has been receiving “better-than-thought responses” from both customers and the headquarter in Abu Dhabi, Kwak, 52, said. 

“When an airline tries to penetrate a market in which its presence is weak, typically it starts by flying three or four times a week and increases the frequency later on,” he said. “Daily flights to Seoul represent our solid confidence in the Korean market.”

Last year, the company added seven new destinations ― Alexandria, Egypt; Colombo, Sri Lanka; Baghdad and Erbil, Iraq; Nagoya, Tokyo and Seoul.

It flies five times a week to China and Japan.

Etihad formed alliances last year with Australia’s Virgin Blue and Korea’s Asiana Airlines to broaden its network and integrate mileage programs, Etihad said.

Still, demand is not fully satisfied given the short time period since the commencement and a feeble recognition compared with other Middle Eastern carriers such as Dubai-based Emirates and Qatar Airways.

“We will be more aggressive in attracting Korean customers by reinforcing on- and offline marketing and maximizing the partnership with Asiana while working with some 60 travel agencies,” Kwak said.

The ripening travel industry in dynamic Asian economies led by Korea will be the future growth engine for Etihad, he noted.

“Korea has shown an unprecedented trend of overseas travel over the past decade,” he said. “People used to be ‘When would I travel abroad if not now?’ when going on a trip, but now it has changed. The market is mature and settled in the right way.”

Active industrial development in the region would also boost demand for business travel, Kwak said. There are at least 25 projects around Abu Dhabi led by major Korean companies whose construction has not yet started or where less than 5 percent of the entire procedure has been completed.

“We will target the premium market once our local operations have transitioned into a stable phase,” he added. Bouncing back from the economic downturn, the global aviation industry relished the return of travelers and rebounding incomes.

Airlines are likely to post combined net profits of $15.1 billion for last year, according to the Geneva-based International Air Transport Association, far higher than initially estimated $8.9 billion.

Of the global total, Asian carriers are expected to make up almost half with $7.7 billion, followed by North Americans with $5.1 billion.

Korea’s two major airlines ― Asiana and Korean Air ― and budget carriers also logged a record number of international flight users last year, industry officials said.

The country’s Incheon International Airport had been busier than ever last year with an all-time record number of one-day passengers, which neared 116,000 on July 31, its operator said.

Gulf-based companies are also projected to record brisk earnings with $700 million, outstripping Europe with $400 million, IATA reported.

Etihad saw its earnings hit a record high last year, up nearly 30 percent to $2.95 billion from around $2.29 billion in 2009.

More than 7.3 million passengers flew with Etihad last year, it expects, up nearly 16 percent from 6.3 million in 2009.

“It has been a tremendously exciting and productive year for Etihad,” chief executive James Hogan said last week. “In a year in which we dealt with the continuing effects of global recession, erupting volcanoes, riots in Thailand and severe weather across Europe at one of our busiest times of year, we were still able to deliver an impressive performance.”

This year again, a rapidly expanding middle class and growing demand for air connections in Asia promise a rosy outlook for the seven-year-old airline.

Going further from last year’s achievement, Etihad plans to surpass the break-even point this year and turn its books into the black from 2012.

The number of aircraft will be increased to 62, as it takes five additional fleets ― three Airbus 330-300s and two Boeing 777-300ERs ― this summer.

“There seems no problem to reach the goal at the moment,” Kwak said. “We will further develop based on quality rather than quantity.”

By Shin Hyon-hee (heeshin@heraldcorp.com)