Former Etihad Airways boss James Hogan has dismissed criticism by European carriers of the Gulf aviation model amid war-related disruption, saying regional airlines will bounce back soon.
European airline executives, including of Air France-KLM and Lufthansa as well as the Airlines for Europe (A4E) association, in March said the Iran war highlighted how dependent Europe was on Gulf carriers and called for change.
However, Mr Hogan stressed that Gulf airlines offer not only connectivity across the world, but also superior levels of service.
“I was very disappointed to see the European carriers use this crisis to question the Gulf model again, but that's because they haven't got a proposition that is as strong as the Gulf carriers in regard to product and service,” Mr Hogan, who is now chairman of advisory and investment services company Knighthood Global, told The National in an interview.
“Buyer behaviour is changing and we all want respect, and the key part of the DNA of the UAE is respect,” he said.
The aviation sector, especially in the Gulf, was severely disrupted after the Iran war began on February 28, forcing the closure of airports and airspace. Operations were gradually reintroduced and have now been largely restored, but some restrictions remain. This week, Dubai International Airport, the world’s busiest, reported a 66 per cent drop in passenger numbers for March.
But with the UAE civil aviation authorities this month completely reopening the airspace and lifting restrictions on capacity, Dubai Airports chief executive Paul Griffiths told The National a rapid return to full capacity is expected.
“Aviation is always impacted by crisis … so quite frankly, it's how resilient you are as a business to be able to weather the shocks,” Mr Hogan said. “So, this is another shock, and what you're seeing is obviously airlines in the Gulf have to make decisions on their fleet, on their operating schedule, and how they look at their internal structure to re-emerge, because you do re-emerge from a crisis.”
He expects air traffic to return to the region soon, with different segments rebounding at diverse paces.
“I would expect the transiting traffic over the hubs to come back fairly quickly. That's a reflection of the network, of the product and service, price will determine that in certain segments, and that will build,” he said.
Incentive conference traffic will also come back, “because no airline will operate into an environment that isn't safe, and as we see here, it's very calm”, he said.
Leisure traffic, meanwhile, will “come back over time”, as tourists reassess the situation.
For the UAE, in particular, “the reality is that it's business as usual; it's always been a very safe country”, he said, adding Covid showed that people have short memories.
“I'm very positive that all the carriers in the Gulf specifically will work through the crisis and over the next six, 12 months, rebuild and in 24 months, be back to where they were.”
No AI pilot for now
The use of artificial intelligence in the aviation sector is rapidly growing – similar to other sectors.
“When you look at maintenance, MRO [maintenance, repair and overhaul], which is a big part of any aviation business, AI is going to play a key role in making sure records, processes are much more efficient,” Mr Hogan explained.
AI will help airlines with areas such as strategy and procurement, he said.
“Flying an aircraft, I think you're going to need a pilot. I would be a lot more comfortable with the pilot there, and that will continue, in my opinion,” he added.
One company that has already deployed AI in its production line is Comac, according to Mr Hogan, who visited its factory in Shanghai.
So could the Chinese aircraft maker pose strong competition to industry leaders Airbus and Boeing?
“It’s a long road. So, when you're looking at the industrial base to build capability, from the airframe to engines and the components for those engines, it's a long road. Nevertheless, Comac has placed their aircraft into Vietnam and into Indonesia. Domestic Chinese aircraft are being operated. The equivalent of a A320 narrow body will be going into the Chinese carriers,” he said.
“So, in time, yes.”
Mr Hogan said he was “impressed” by the company’s ambition, “with the progressive management and roll-out, because safety, records, capability are all important aspects if you're going to challenge [in the] long-term, Airbus and Boeing”.
Emerging future hubs
While Mr Hogan is confident that tailwinds will propel the Gulf’s aviation sector forward, he also remains bullish about future growth coming from Asia and Africa.
“The Asian hubs of Singapore, Malaysia, Bangkok – are very mature, the Indian hubs, even though it's a huge market, still need to emerge,” he said.
“With regards to Africa, it's still immature. However, the population is growing. From a population perspective, it's going to be one of the dominant markets in the coming years, and under the Belt and Road Initiative, many airports have been built through the Chinese programmes in Africa.”
While the European and US markets are mature, emerging markets of India, Africa and the Gulf will continue to become much more powerful, he added.
“Over the horizon, I continue to see a strong aviation market … I continue to see the hubs change, as we've seen in Dubai from in the early days, transfer to a destination. The same in Abu Dhabi, from a transfer to a destination, the destinations become much stronger [and there is] innovation in different ways through technology.”
Etihad legacy
Mr Hogan served as chief executive of Etihad Airways from September 2006 to July 2017, overseeing its development from a three-year-old airline into the Etihad Aviation Group. He oversaw the creation of the equity alliance, involving the acquisition of minority equity stakes in eight airlines, including airberlin and Alitalia, to accelerate growth. The airline later changed its strategy as part of a five-year turnaround plan aimed at cutting costs and reducing its loss.
“I've been gone for some time. I stand by the great airline and I was given the opportunity to build, and I stand by my legacy and my strategy,” Mr Hogan said.
“Even today, airlines continue with new codeshare deals, and I was very strong on codeshare,” he said. With equity partnerships, meanwhile, “you are stretching your network worldwide … through your fleet size and your ownership, you're achieving scale”.
“I came into Etihad in the early years and we worked in a Portacabin on the side of Abu Dhabi Airport. And the mandate I was given … was very clear. That was to build an airline that was best in class, safe, was an economic enabler and created jobs,” he said. “What I'm very proud about is the Emiratisation that we developed.”
Lauding the new Midfield Terminal in the UAE capital, he added: “I'm very proud of the Etihad brand and I'm very proud of what Abu Dhabi has achieved.”
