Lack of long-term planning will damage British aviation as the Gulf hubs grow and passengers bypass Heathrow for long-haul trips, the boss of one of the world’s fastest-growing airlines has warned.
James Hogan, chief executive of Etihad, the Abu Dhabi flag carrier, said decisions about allocating fleets and routes for the next 30 years are being taken now and airlines were unsure about Britain’s position in their plans. The expansion of Heathrow, while officially ruled out by current government policy, has been thrown back on the agenda by industry lobbying.
Hogan said he would like greater access to Heathrow but that the airport was “maxed out” and his airline was not interested in off peak slots that would not command traffic. “London plc needs a competitive gateway â€“ and a long-term decision needs to be taken about where that is. As we plan our gateway 30 years out, London needs to do the same.”
He said a new airport meant building “infrastructure, schools, housing”, adding: “When cities make decisions about an airport the infrastructure moves towards it – but that doesn’t happen overnight.” Hogan said most people outside London would bypass Heathrow if they could use a local airport and “would rather do one [airport] scanner than two”.
He also affirmed his airline “was in Manchester for the long haul”. The European call centre for Etihad is now in Manchester. Two flights daily operate to Abu Dhabi, while its bigger, more established Gulf rival, Emirates, runs three daily flights to its hub in Dubai. Qatar Airways also runs daily services from Manchester to the third major, growing Gulf hub of Doha. Hogan said the constraints on British aviation would give the Gulf the competitive edge.
Etihad was formed in 2003 but started to expand rapidly from 2006 when Hogan was appointed to the top job with a mandate to buy aircraft and grow the business. In 2008 he placed a $43bn (Â£27.3bn) order for up to 205 aircraft and he expects to have 160 in operation by 2017. A new runway and terminal has since been constructed at Abu Dhabi airport, along with offices and accommodation for thousands of expat employees.
Etihad’s name has become familiar to millions as the name ofManchester City’s stadium. It has sponsored the Premier League champions since 2009 and Hogan claimed the deal was “on strict commercial terms, although we were very lucky to get the terms” and was struck independently of the fact that the team is bankrolled by one of the Abu Dhabi plutocrats, Sheikh Mansour. He said he “treats the City CEO exactly as I do the CEO of Harlequins”, the rugby club Etihad also sponsors, although he confessed to having no idea of the latter’s name.
He insisted that the Abu Dhabi gazillions did not give Etihad a licence to lose money. “I don’t get free fuel or sovereign guarantees when I raise debt with the banks – it’s all on the strength of our business.”
Hogan said it was premature to describe the Gulf as a world centre for aviation, although he said its position at the crossroads of global air traffic and particularly the proximity to the relatively untapped Indian market would give its airlines and hubs huge opportunity. He warned: “This is a long-term game and the challenge to the European hubs is growing.”
In the meantime the Gulf hubs are trying to assert their position at the expense of longstanding south-east Asian stops on the “kangaroo route” â€“ a development that could spell further bad news for British airlines. Reports suggest that the long-standing partnership between British Airways and Qantas may be at risk as the Australian carrier looks to switch its international focus to the Gulf, via a tie-up with Emirates. Qantas, which has been losing money rapidly on its international flights, has also faced increased competition due to Etihad’s own tie-up with Virgin Australia.