We’re not in the 1980s anymore. After a great push to initiate it and many trials to stabilize it, globalization has finally taken hold of the aviation industry. Turning back the calendar benefits very few and passengers will ultimately vote on Open Skies with their dollars, or euros, or dinars.
Etihad Airways has announced that its Airbus A380, featuring the multi-room Residence suite and the whole “Reimagined” experience is headed for New York, with the first flight between JFK International Airport and the airline’s Abu Dhabi home beginning December 1, 2015.
The airline’s “Reimagined” experience introduced last year consists of a full redesign of all cabin classes, introducing a host of innovative design features and passenger experience enhancements. The airline revealed new seat designs throughout the aircraft, new amenities, new livery, and new crew uniforms last year. Etihad’s new A380 first flight took place in December of last year with entrepreneur and aviation aficionado Gino Bertuccio as the first passenger to enjoy The Residence experience.
James Hogan, Etihad Airways’ President and Chief Executive Officer, said: “The United States is a strategically important part of Etihad Airways’ growing global network and as a result of increased demand from our guests traveling between New York and Abu Dhabi—and onto the world, we are pleased to upgrade one of our two daily flights to an A380. At Etihad Airways, we are committed to offering unmatched luxury, comfort and convenience for our guests traveling with us across every class of service. New York marks the first US destination where we will introduce our industry-leading A380 aircraft products and experience.”
U.S. Strategic Value
To say that the U.S. is strategically important part to Etihad Airways is an understatement. With the recent disputes over Open Skies between U.S. domestic carriers and Gulf carriers, the introduction of the airline’s ultra-luxury cabin product offers passengers the option of enjoying a travel experience which no U.S. carrier has matched.
At the heart of the debate is whether all this luxury is funded by what U.S. carriers describe as subsidies from the Gulf nations where these airlines are based. American Airlines, Delta Airlines, and United have banded together to prepare a report which they indicate proves that Gulf carriers received over $40 billion in subsidies from their governments since 2004. Despite repeated requests from the press, the report has not yet been made public nor has it been shared with the Gulf carriers so that they can respond to the allegations.
The Gulf carriers have said that these U.S. carriers are merely trying to block competition by requesting a review of Open Skies policy, when they should instead focus on improving the quality of their product.
Exporting the Open Skies Debate
Contributing to the volatility of the Open Skies debate, is the overall effect of the rise of the Gulf carriers on the global aviation industry. These carriers have not only grown their fleets but also increased their interests in other airlines either through direct investment or partnership.
The concerns expressed by U.S. carriers have already been topic of heated discussion in the European Union, with appeals to the European Council to address issues of competitiveness ongoing. Still, Etihad has been successful in acquiring a 49% stake in troubled national carrier Alitalia, and has been hands-on in managing a strategic recovery of the carrier, including putting Etihad executives in place to manage the brand and oversee the airline’s finances.
In Europe, the Gulf carriers have already established a firm footprint, but they are only stretching their legs. Qatar Airways has recently said that it would like to increase its share of IAG—which owns and operates British Airways, Iberia and Spanish low-cost carrier, Vueling. Qatar Airways currently owns nearly 10% of IAG. IAG is in discussions to purchase Aer Lingus, of which Etihad Airways owns 4.11%.
Connections between Europe and the U.S. have traditionally been controlled by the regions’ legacy carriers, with international traffic to Europe and the US generally passing through on stopovers and connections for flights operated by the legacies and their foreign airline partners, which also provide valuable feeder traffic to their domestic services.
In both the EU and the US, legacies have relied on dominance of connections between the two regions to strengthen their financial positions. Their long-haul services have attracted passengers from international locations willing to pay for the premium services they offer. This common interest might explain why Delta has exported its $42 billion subsidy argument to Europe, meeting with EU officials to express concern over the shadow cast by the rising suns of the Gulf region.
The Hard Truth of the Hardware
The introduction of longer-range high-capacity aircraft, such as the A380 and the Boeing 777X, allow airlines the range to circumvent traditional stopovers, and the facilities to provide exceptional flying experiences. They also have the capacity to carry large numbers of passengers, making flight operations more efficient. Emirates has been highly successful in keeping the world’s largest fleet of these aircraft full and running smoothly, and has large orders on the books with both Airbus and Boeing for more. Likewise, Etihad and Qatar Airways are big buyers of big aircraft.
The large demand for aircraft from the Gulf carriers is key to the open question of potential negative financial impact to the aviation sector caused by the growth of the Gulf. The aircraft manufacturers, each based in Europe and the US respectively, employ thousands and keep even more gainfully employed through U.S. and European suppliers of components, subcomponents, and maintenance services.
Growth in the Gulf
The Gulf carriers are actively hiring. Job postings for operations, cabin crew and flight crew are continuous. Many of the key jobs available, such as in management, operations, and flight crew, go to expats from the U.S. and Europe, lured by attractive compensation packages, tax-free living, and other incentives offered by the airlines and the countries in which they are based. These carriers also carry droves of tourists from around the world who want to visit the EU and U.S. both of which are highly attractive travel destinations. The spending-power of these tourists has pitted the US tourism industry against the U.S. carriers on this debate.
Passengers flock to whichever airline offers a better product and good connections at an affordable price. Whether subsidies are involved, as the U.S. carriers allege, or whether, as the Gulf carriers claim, the efficiencies of their operations allow them to provide a higher standard for all passengers while keeping fares affordable while uniquely catering to the needs of the highest-revenue luxury passenger, becomes inconsequential.
This is the challenge ahead for U.S. carriers and EU carriers alike when fighting over ownership of the skies. For years, these same carriers have argued for greater globalization of the industry, and for access to routes which were previously protected by national carriers abroad. That is the very origin of Open Skies policies. U.S. and European legacy carriers fighting Open Skies and unfair competition today are, for better or worse, contending with the legacy they forged when they first asked that those skies be open.
For its part, Etihad Airways is happy to bring the battle home to the Big Apple. It will continue to offer double daily service between New York’s JFK Airport and Abu Dhabi, where the airline has seen increased demand. In 2014, Etihad Airways’ Business and Economy Class load factors exceeded 80% on the popular route.
Onboard the New Etihad A380
The Residence has had enough coverage to get everyone wondering about just how special the A380 “Reimagined” experience might be. Though sometimes labeled as over-the-top and the luxury of the 1%, it has been a very effective lure and brand emblem, and it has only just started flying.
Beyond The Residence and its butlers, Etihad offers nine First Apartments onboard the A380, which are 74% larger than the airline’s existing First Class suites and roomy enough to convert this section of the plane into a single aisle cabin on a wide-body aircraft. Each apartment offers a private living space with a lounge chair and an ottoman which opens up to become an 80.5” long fully flat bed. Passengers can be entertained on a 24” swiveling LCD TV monitor and can freshen up with a personal vanity unit in their cabin or even take advantage of the fully equipped shower room exclusive to First Class guests.
For those eager for luxury but with less cash to toss around, or who could not justify a First class suite on a corporate expense report, there are 70 Business Studios, set in a 1-2-1 configuration, on the upper deck of the A380 with direct aisle access and a fully flat bed of up to 80.5” in length. These passengers will also enjoy in-seat massage and the same pneumatic cushion control system installed in The Residence and the First Apartment seating.
First and Business class passengers can also hang out at the A380’s Lobby, a serviced lounge and bar area located between the two cabins, featuring leather sofas, refreshments and a large TV with USB connection.
The 415 passengers seated on the airline’s Economy Smart Seats enjoy enhanced comfort with unique, ergonomic ‘fixed wing’ headrests, lumbar support and a larger 11.1” personal TV monitor. Economy passengers also receive an amenity kit, a simple yet meaningful treat often reserved by other carriers to those flying at the front.
For the enjoyment of all onboard, the airline has introduced the latest Panasonic eX3 entertainment system with a new, modern interface, featuring more than 750 hours of on-demand entertainment, improved gaming, and high definition touchscreens across all cabins, including video touchscreen handsets which offer offering a second screen to play games or view the moving map while watching their program or movies on the larger screen. The airline offers seven channels of Live TV.
All passengers get access to USB and power points on every seat and noise canceling headsets with built-in magnetic audio jacks for improved sound quality. Etihad’s A380 is also fully connected with Wi-Fi and mobile connectivity. The airline reported an 80% increase in uptake of its connectivity services last year, and the advanced systems provided continue to make the product offering attractive to passengers. For a little extra piece of mind, the airline offers a Nanny service onboard.
Travel between the U.S. and Abu Dhabi is further facilitated by established agreements with US Customs and Border Protection (CBP) which has a Pre-clearance facility available at Abu Dhabi International Airport with advanced biometric kiosks to automate the identity verification process.
Flights can already be booked for travel on the A380 between New York’s JFK Airport and Abu Dhabi on the airline’s website, but not for The Residence. The airline has announced that tickets for that ultimate of air travel luxuries has already been booked within a few short hours of Etihad making reservations available.
More Growth to Come
Etihad will take delivery of four additional A380s in 2015. The next city to host this souped-up “Reimagined” A380 service is Sydney, Australia, starting June of this year. But the Etihad fleet also serves US destinations at Chicago’s O’Hare International Airport (ORD), Dallas-Fort Worth, Los Angeles, San Francisco and Washington’s D.C.’s Dulles International Airport (IAD).
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Photo credit: Interior of Etihad's luxe A380, which will soon begin flying between Abu Dhabi and New York City. Kamran Jebreili / Etihad Airways