Last updated: 03:42 PM ET, Thu March 26 2015

Etihad's Hogan Attacks Move Toward 'Protectionism'

Airlines & Airports | David Cogswell | March 26, 2015

Etihad's Hogan Attacks Move Toward 'Protectionism'

Etihad CEO James Hogan lashed out at airlines of the U.S. and Europe for what he calls “The dark clouds of protectionism gathering over the air travel industry.”

Addressing the London Aviation Club, Hogan said that a drifting toward protectionism in the U.S. and Europe could lead to a dampening of growth of the international air transportation industry.

Hogan was responding to calls from three U.S. carriers for regulators to address the issue of what they call unfair competition from Etihad, which is owned by the government of Abu Dhabi.

Founded in 2003 by royal decree, Etihad claims to be the fastest growing airline in history. In 2014 it carried 14.8 million passengers. It flies to 111 passenger or cargo destinations. It holds equity investments in a number of other airlines, including airberlin, Air Serbia, Air Seychelles, Aer Lingus, Alitalia, Jet Airways and Virgin Australia.

Etihad has grown by leaps and bounds and has snatched market share from major established carriers, which are now fighting back through their respective national regulators.

“Some of the carriers attacking us claim they are losing market share,” said Hogan. “We’ve started some analysis on this issue and although the detailed study will take some time to complete, I can say that our initial studies already suggest that those claims are true. We admit it!

“But that so-called loss has resulted in thousands of new passengers for these suffering airlines, thanks to the market stimulus we provide. 

“They are getting a smaller slice, it is true.  But it is a slice of a bigger cake.  And the bigger cake is proof that more people are able to travel – more consumers are getting the benefits of competitive choice.”

The air transportation industry itself and the consumers who are benefitting from competition will be the losers if U.S. and European carriers succeed in reining in Etihad’s growth through regulation, Hogan said.  

“Five mega-carriers are trying to pull the ladder up after years of having it their own way,” said Hogan. “The people that will really lose if these giant legacy airlines are successful are the millions of travelers benefitting from new choice in the global air travel market.”

Hogan said limiting competition is the wrong way for the airline industry to proceed.

“When it comes down to it, competition is what the market wants,” he said. “It is certainly what the customer wants. People want choice when they travel. Choice means they know things will constantly improve… 

“It is certainly what the wider economy wants. Air routes stimulate trade and tourism. Trade and tourism stimulate economic growth. Every air route is worth tens or hundreds of millions of pounds of economic impact.”

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