Travel Q&A: Etihad Airways CEO James Hogan

Etihad Airways, the national carrier of United Arab Emirates, recently announced plans to expand in the USA by launching an Abu Dhabi-Chicago route later this year.

Etihad began flying commercially in late 2003 following a royal decree that called for developing an international carrier based in Abu Dhabi, the capital of UAE and one of seven emirates that make up the oil-rich country.

Etihad — whose name means "United" in Arabic — has since become one of the fastest growing airlines in the world. Under the leadership of James Hogan, who joined the company as CEO in 2006, its global network has grown to 50 destinations and the carrier flew more than 6 million passengers in 2008, a 34% increase over the previous year. Etihad placed one of the largest orders in industry history when it signed orders with Boeing and Airbus at the Farnborough Air Show in 2007 for $43 billion worth of planes.

Meanwhile, the carrier has earned top ratings from Skytrax for its service and other industry awards for its cutting edge in-flight entertainment system.

Hogan was in the USA earlier this month to promote Etihad's new Chicago service, scheduled to start on Sept. 2. Chicago O'Hare will be its third North American destination, following Toronto and New York John F. Kennedy.

In an interview with USA Today, Hogan said the global economic crisis has dampened demand for first class seats, but its business class is "holding strong." And despite an industry-wide downturn in premium passenger traffic, Etihad, which has never been profitable, hopes to break even by 2010, he said.

•Etihad has been adding seats aggressively, but is it filling enough of them to make a profit?

In 2008, we increased our load factors by seven percentage points to 75.5%, a level which would be welcomed by many more mature carriers. In 2009 and 2010, we expect to see further improvements in these figures, helping us reach our goal of break-even by 2010.

•The Gulf carriers have been growing pretty dramatically. What's behind it?

Over recent years, Abu Dhabi, Dubai and Qatar have each realized the critical importance that a successful aviation sector can deliver to an economy. Each has invested in its airline.

Abu Dhabi sits perfectly between East and West. And within a few hours of flying time (from Abu Dhabi), we're reaching hundreds of millions of new air travelers in the growing economies. So even if no passengers ever chose to stop in Abu Dhabi, we could run a strong and globally competitive airline. But increasing numbers of passengers do choose to stop in Abu Dhabi.

Etihad's focus is very much can-do. The average age of our cabin crew is 23 or 24. They made a decision to leave their home and come to Abu Dhabi and work for us. It's a different mindset. When you live around the corner and go to work every day, you go home after 8 hours. Here, they're part of the Abu Dhabi story.

We want customers to say 'what a great airline. They're one step ahead.' We've seen it in the hotel sector and in Asian carriers.

•How worried are you about the global economic slowdown?

No airline can be immune to the current global financial situation and that includes Etihad. However, we are very well inoculated and I believe we can look forward with cautious optimism. We are a growing business, still on the upward curve. (We have) an ambitious expansion plan which will see us add more than 100 aircraft to the fleet over the coming 12 years.

Our business class is holding strong. With a corporate travel downturn, (passengers) used to flying first class (will see that) we're one of the few airlines with beds in business class (of our wide-body aircraft).

A major reason for that growth is the diversity of our customer base — premium business travelers, leisure travelers, labor traffic from Asia and the Indian sub-continent, and the regular religious pilgrimage traffic into Saudi Arabia.

Abu Dhabi has had strong GDP growth rates over the last five years. And even in the current global environment, (it) is expected to see continued growth.

•Some say you have an unfair advantage as a government-backed company. How do you respond?

We are a government-owned carrier. But we have been established and have to run as a commercial business. We get no state-funded handouts — no help with oil subsidies or deeply discounted landing charges at our home airport. We hedge fuel. We go to the markets in Europe, as well as to our local banks, to raise money.

•Etihad is a relatively unknown name in the USA. What do you plan to do to change that?

A: If you were to ask that question in a London newsroom, you'd have (asked) me a different (question). You don't develop a global brand overnight. We've been involved in sports sponsorships to help us project the brand. We're a sponsor of Ferrari Formula One racing team. We sponsored a premier sports stadium in Melbourne. It's called Etihad Stadium. In Ireland, we sponsored a game called hurling. We do have a track record of using sports. In America (we may) move in to some sort of sponsorship.

The U.S. presents a very important market for us. This market is largely untapped.