airlines cost us the equivalent of three Airbus A380s, so we felt it was smarter.”

New standards

Along the way, Etihad set new standards with its premium cabins, most spectacularly with its apartment, The Residence, on its fleet of 10 A380s. It was the order for the A380s

and 71 Boeing 787s in 2008 that put Etihad on the map. Hogan says: “When I signed the deal, not too many people knew of Etihad, but we had a roadmap. We held focus groups in London, New York, Sydney, Abu Dhabi and Bombay, and put together a design consortium.

“We were focused on the fact we could do things with the product but we had to get the seat count right, the costs right and the weight right to get the range of the aircraft. We did a huge amount of work on the design. “The A380s fly flagship routes: London-Sydney, Abu Dhabi-New York. We wanted people to have space on these long flights, so we looked at studios and spent time understanding our competitors. In a workshop, I asked: ‘What about a penthouse?’ That evolved into The Residence. Then we said: ‘Why not a butler?’ We have the same number of cabin crew on that aircraft as any other airline, but we differentiated with a chef, a food and beverage manager, and then with a butler. It’s all about brand.”

Unfair competition

The Gulf carriers have come under fire in the US, where airlines have alleged they have received state support and complained of unfair competition. Hogan is unimpressed, saying: “Three carriers raised a complaint with the department of transportation and the three Gulf carriers independently responded. We’ve been able to demonstrate that under the [US-Gulf] open-skies agreement, we’ve not damaged the US carriers. “In every market,

you have entrenched interests. We’ve seen US carriers go through Chapter 11 and become stronger. That is fine. The US carriers have received a range of subsidies. That is fine. “We fly to only six

US cities, but we provide outstanding access for a huge community from the US to the Indian subcontinent and we put considerable business on US carriers. We’ve submitted our documents and it’s

62 21 July 2016

business as usual.” He is more concerned about

Europe and the balance of supply and demand. Hogan says: “Europe is the toughest market at the moment. There has been a shift in traffic. There are different drivers – what is happening in Turkey and North Africa. In Germany, there has been a slowdown. You have the uncertainty in the UK. “But the one thing the consumer

doesn’t do is surrender their holiday. They may book later, and we’re seeing that. Corporates also tighten their belts in times of uncertainty and we’ve seen that. There is a lot of capacity, and for the consumer, that is good.”

Expansion plans

Etihad operates three A380 flights a day from Heathrow, with two daily services from Manchester and one from Edinburgh. Hogan would increase frequencies from Heathrow if he could obtain the slots, saying: “It’s all about access.” What if there was an additional runway? “That is going to take a long time,” he says. Etihad has no plans to expand

to other UK airports, he says. But adds: “We’re keen to see Alitalia improve its footprint.” Hogan also insists he has no

plans to invest in other carriers, explaining: “We have Alitalia, Air Serbia and Air Seychelles where the governments approached Abu Dhabi and said: ‘These airlines are broke. Would you be willing to invest?’ We set the conditions. Air Serbia has been profitable for two years. Air Seychelles is in its fourth year of profitability. “Then we have Virgin Australia,

which gave us access to 45 cities in Australia and New Zealand. Jet Airways gave us access overnight to the Indian market. Air Berlin gave us access to Germany, Austria and Switzerland. Alitalia is going to be a good business for us.” However, Etihad’s core is its Abu Dhabi hub. Hogan says: “There are over a billion people within three

60 seconds with Hogan

On Etihad’s European rivals “They were once government owned, and when privatised, were gifted fantastic airports, fantastic slots and infrastructure they didn’t build. I’ve had to build everything from scratch.”

On a Gulf airline’s advantages “I don’t have the constraints of a legacy carrier. I pay pilots the same as in Europe, but I can get better productivity. In a unionised airline, you can’t take direct-entry captains, but I can.

On the challenges of the aviation industry “You have to navigate factors outside your control, whether that is a pandemic, war or economic crisis. You need flexibility in your cost base and in your operation.”

On competing “I’ve worked in car rental, in hotels, in airlines. At the end of the day, you have to work with the tools you have and compete. If people challenge, you’ve got to fight your corner.”

On the implications of Brexit “In the UK, what will happen will happen. People will still travel.”

On Etihad’s owner, the ruling family in Abu Dhabi “The shareholders have been outstanding. It has been their vision. We’ve faced challenges, but they see the value in how we support the destination.”

hours’ flying time of the Gulf. It’s a crossroads, a major population base and a great destination – and Abta is coming for its

convention, which is fantastic.” › James Hogan is due to address The Travel Convention in Abu Dhabi, October 10-12.

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