Etihad to push further into China

Carrier in talks with authorities in move for more passenger routes throughout country

CHINA. Beijing. James Hogan, the CEO of Etihad Airways. Photographed in the Raffles hotel in Beijing by Sean Gallagher for the National. 2010

BEIJING // Etihad Airways is aiming to add more flights from Abu Dhabi to Beijing and launch new routes into China to take advantage of a growing economy in the world's most populous nation. Airline officials are meeting representatives of China's civil aviation authorities today to discuss plans for more destinations and to make the Beijing route, currently five times a week, a daily service.

Etihad hopes to launch a passenger service to Shanghai late next year or early in 2012, and is also considering flights to Guangzhou. The carrier already services these two cities, but only for freight. The launch of the Shanghai route was about "getting approval and getting the slots", said James Hogan, the chief executive of Etihad. "Ideally we want slots every day at the same time," Mr Hogan said. "Beyond that we'll be looking at Guangzhou from a planning perspective. What that says is that China is very important from a network perspective.

"We are very bullish about the future of our operation and penetration into the Chinese market, but we are only six years old. It's been a pragmatic and careful building by getting the right connectivity to the hub in Abu Dhabi to transfer traffic efficiently." Mr Hogan said the Beijing route had performed well, with 81 per cent of seats filled so far this year, compared with 75 per cent across all of the company's routes.

Business travellers and labourers flying to the UAE and transit traffic to African destinations, especially Khartoum in Sudan, were helping to drive the route's strong showing. Mr Hogan predicted Abu Dhabi would draw in many more Chinese tourists in future. "Abu Dhabi will become, in our mind, an important destination and we're working very closely with Abu Dhabi Tourism [Authority] with inbound programmes," he said.

The Beijing service using Airbus A330-200 aircraft was inaugurated in March 2008 with four services a week, increasing to five in March this year. From February this year the flight has continued from Beijing on to Nagoya in Japan, although Etihad has plans to separate the two services. This year the carrier has achieved record traffic on its cargo services to China, which include five flights a week to Shanghai, two a week to Tianjin and one or two a week to Guangzhou.

Mr Hogan described the carrier's cargo performance in China so far this year as exceptional, with aircraft holds on flights from China 89 per cent full. The commonest cargo items include mobile phones, clothing and electronic consoles. The company may increase freight services to China to as many as 14 flights a week as it replaces its leased McDonnell Douglas MD-11 and Airbus A300 freighters with its own Airbus A330s in the second half of this year.

"If you look at the challenges of last year, the first sector that usually goes into decline is cargo, and as you come out of the economic crisis freight is the first to come back," Mr Hogan said. Robert Bruce, an aviation analyst for CLSA Asia-Pacific Markets, said the Gulf carriers were "still not major players in China", although they were expanding. "Certainly Etihad has very aggressive growth plans in general relative to other carriers," Mr Bruce said.

He said Chinese carriers were also increasing capacity on international routes this year, after reducing international capacity last year and focusing more on domestic services. "This year we're seeing a far more balanced growth, with growth in the domestic and international markets," Mr Bruce said. Etihad started operations in 2004 and has 61 routes with an eventual target of about 100. This year it will launch its 62nd route, to Irbil in Iraq. The carrier hopes to break even by the end of next year.