Last updated: 02:34 PM ET, Thu March 19 2015

Etihad CEO: Feud With U.S. Airlines Is About ‘Customer Choice’

Airlines & Airports | American Airlines | Rich Thomaselli | March 17, 2015

Etihad CEO: Feud With U.S. Airlines Is About ‘Customer Choice’

Etihad Airways President and CEO James Hogan said today that his airline and his country have always been allies with the United States, but that the feud with domestic airlines over the Open Skies Agreement is about “customer choice.”

Speaking at the U.S. Chamber of Commerce Foundation’s 14th Annual Aviation Summit in Washington, D.C., Hogan made his first public comments about the charges leveled by American, Delta and United airlines against Etihad and its fellow Middle East Gulf carriers Emirates and Qatar. In a 55-page report to the Obama Administration, the three major U.S. airlines alleged that the Gulf carriers have received $42 billion in subsidies from their respective governments over the last 10 years and receive discounts on such things as fuel costs, tilting the playing field.

The U.S. carriers would like to see a revision of the Open Skies Agreement, which allows airlines to fly wherever they like without government interference.

Hogan warned against making snap judgments and rushing to conclusions. He said he regards Etihad and his country, the United Arab Emirates, as friends of the United States.

“Certainly, the bonds between the UAE and the USA are incredibly strong, and we believe Etihad Airways has always reflected that in our business operations,” he said. “We are major customers of Boeing, of GE, of Sabre, and of many other American businesses.  We work with strategic American partners – for example, with Atlas, on developing and improving global cargo operations. We work with U.S. financial institutions, with U.S. tourist boards, with U.S. airports.  Our commitment to the U.S. economy supports more than 200,000 jobs.”

Hogan said Etihad has always made clear it has received equity investment and shareholder loans, which have been supplemented by $10.5 billion in loans from international financial institutions.

“Our shareholders believe in our business plan. They have increased their commitment as we have developed – they have invested in our success,” he said. “They’ve seen the success we are delivering, both as a business in our own right and as a catalyst for other business, trade and tourism, in Abu Dhabi and the UAE. We are now not just an airline but a successful aviation group, incorporating handling, maintenance and distribution capabilities. Our shareholder, like any rational shareholder in the world, has made that commitment to us because it expects a return, and as it sees greater success from our business, it sees the opportunity for even greater returns in the future.”

He described Etihad as a "David" going up against "Goliaths" since it first entered the market in 2003, noting that the airline has had to face existing competitors with established businesses, established infrastructure, established sales and marketing, established brands, and established customer bases.

“In many cases, those established airlines were gifted amazing infrastructure – airports, terminals, slots, landing rights – over decades,” he said. “To take them on, we’ve had to work harder and we’ve had to work smarter. That’s called competition.”

Hogan finished his speech by saying Open Skies is about customer choice, suggesting that Etihad offers greater product and service at competitive prices.

But he also made a veiled reference that this is much ado about nothing given that no U.S. carriers fly into Abu Dhabi and very few operate where Etihad does in the Indian sub-continent, in Southeast Asia, or in the wider Middle East.

“We make no apologies for offering new competitive choice for air travelers,” he said. “We hope to continue to do so around the world.”


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