kevin
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Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:02 am

Etihad Airways, based in Abu Dhabi, is expected to buy as many as 38 new aircraft from Airbus and possibly Boeing for delivery by 2009. The airline plans to order the Airbus A330 and either the Airbus A340 or Boeing 777 however a decision expected now has been delayed a bit.

This is very good news. but Abu Dhabi and Dubai are not so faraway from each other, and having Emirates as your next door neighbour does not look so good for a new carrier. The traffic to UAE is good, but will they be able to fill so many seats. Too risky if you ask me./.
 
NYC777
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:03 am

I think they should be able to. Think of it as the Mid East version of competition between the major US carriers.
That which does not kill me makes me stronger.
 
kevin
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:10 am

Nyc777:

Competition is fine. But not when you direct competitor has an internationally recognised fame, outstanding reputation, has a nice sounding name (not so Arabic sounding, this can scare some Americans and Westerners) and especially when the owner of your direct competitor is the Sultan of UAE.
 
dutchjet
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:20 am

It seems that each of the Gulf states now want to operate a big airline.....I question whether there is enough traffic and demand to support each of these new and expanding carriers. EK's growth has been nothing short of amazing, and maybe they can pull it off (but remember how many planes and the size of the planes that they have on order...its hard to comprehend), but with Qatar and Etihad planning to grow, and Gulf Air still a major player in the region, it seems as if the market is getting very crowded.

I realize that the Gulf states are trying to transform themselves into major centers of international trade, and that each of the small nations are convinced that a huge international airline is a requirement to make this transformaton, but can air traffic support 3 or 4 major international hubs in the region?
 
Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:26 am

You have to think about GF who are having their second base, AUH 'attacked'
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NYC777
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:27 am

True but branding is what's going to get passengers in. If Eithad follows a similar branding as Emirates then I think they can really do well, especially if they're price competitive.
That which does not kill me makes me stronger.
 
kevin
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:31 am

I mean we can speculate, but I would not call it a speculation. One or more carriers in the Gulf will dissapear (go bancrupt, leave volontarily). Emirates has A 380s on order, same goes to Qatar. GF are steadily growing and now you've got Etihad... Not enough space and demand. Only if Etihad will become some sort of long haul LCC targetting Europe Asia or Europe Australia market.
That would be neat.
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:31 am

In the US, the country can handle multiple airlines, esp when considering the population there is 290+ million. Good basis to have multiple airlines.

The entire Gulf region's population barely reaches 35 million, and most countries in the middle east haven't adopted the open-skies policy between themselves. Thirdly, any carrier in the Gulf, especially due to the low population base, tend to rely on transit traffic (pax) for their revenue (and to fill up their seats).

I agree Kevin. It does sound risky. But then again, like Emirates, since the government of Abu Dhabi will own the airline, they'll be injecting it with cash, year after year, to help it going.
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voodoo
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:41 am

So.....whats the correct pronounciation of `Etihad' anyway? And what is its meaning?
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sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:48 am

Voodoo

pronounciation is "it-ti-had"
Its Arabic for united
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BA
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 5:49 am

Voodoo,

The correct pronunciation is "it-ti-hhad" and it means union, unity, or united depending on how it's used in context.

Which is quite hypocritical of course. Abu Dhabi creating its own airline to compete with Dubai is hardly expressing "unity," that's called competition.  Smile

Every emirate (state) in the UAE competes with each other, especially Dubai.

Some say that one day, after Sheikh Zayed dies, Dubai may secede from the UAE....

Many argue that it won't happen, but who knows.....

Sleak76 explained the situation perfectly. The fact is Emirates (the carrier of Dubai), Air Arabia (the carrier of Sharjah), and now Etihad Airways (the carrier of Abu Dhabi) are all highly government subsidized and these 3 cities are all very close to each other. If it weren't for these subsidies, only one large carrier could survive and perhaps another one that remains small. But thanks to the subsidies....you can have as many airlines as you want. That's the ideology in the UAE.

I have heard that if Air Arabia ever makes a profit, it won't happen until 2006 at the earliest. Haven't heard anything about Etihad.

While as an aviation enthusiast, it's great to see more airlines, it's sad to see that Abu Dhabi has ventured off in an endeavor like Dubai that will end up endangering Gulf Air which maintains its second largest hub in Abu Dhabi.

Again...hardly unity.

But I guess that's how it works...

Regards

[Edited 2004-07-16 22:51:30]
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
 
b727fan
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:07 am

BA and Sleak76 ;
You guy hit the nail right on the head! Good analogies.
If I may add, I think since all carriers are vastly subsidized by their governments, perhaps some the competition would be based on rivalries of the regional Sheikhs rather than actual "expansion & profit"!! I lived in Dubai for 5 years 88-92 and I have seen how some of the people like to show off!
Regards
 
Korg747
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:09 am

Speaking of Etihad's order (United airline of the arab:D). Do you all think it's going for airbus only or would Etihad get smart and split it with Both Boeing and Airbus?
Please excuse my English!
 
DfwRevolution
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:14 am

Do you all think it's going for airbus only or would Etihad get smart and split it with Both Boeing and Airbus?

I find it no mistake that Boeing released an update yesterday touting improved performance of the 773ER and 772LR. These improvements should help the hot and high performance of the 777, already better than that of the A340, and could help push Boeing through.

I'm personally hoping for the 777 (hey I'm a BA shareholder, what do you expect  Big grin ). The 777 has all the technical merits to justify its aquisition, but the A330s do slightly help the A340, not that opperating A330s and 777s side by side is unheard of.
 
nwacrew
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:38 am

Since the Emirates apparently have BILLIONS of dollars to fritter away on HUGE airlines competing for the same transit passengers, imagine if some of that petroleum largesse was used to help feed the hungry, provide treatment to AIDS victims in third world countries, or (Praise Allah!), get their Palestinian bretheren out of the hovels they've been living in since the end of World War ll...
 
ushermittwoch
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:44 am

"provide treatment to AIDS victims in third world countries"

Would also be nice if your country did the same, w/o economical or "moral" interests attached.
Where have all the tri-jets gone...
 
DfwRevolution
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 6:44 am

imagine if some of that petroleum largesse was used to help feed the hungry, provide treatment to AIDS victims in third world countries, or (Praise Allah!), get their Palestinian bretheren out of the hovels they've been living in since the end of World War ll...

Just to nip a politcal cluster bomb in the making, check where all our tax dollars go. The U.S.A isn't exactly the most benevolent nation on Earth either, hell most our money goes to either Social Security or the D.o.D. But yes, it would be nice if EVERYONE in the world were a little more... caring.
 
nwacrew
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 7:02 am

Yes, the United States spends billions irresponsibly as well. I didn't mean to suggest I'm letting crooked, self-serving Washington D.C. off the hook.

It just burns me when I read about vast sums of money being squandered when most of the world's population is in need of the very basics: food, clean water, health care...
 
whitehatter
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 7:14 am

So the United Arab Emirates has got two carriers.

One called United and one Emirates

did everyone miss that?  Wink/being sarcastic
Lead me not into temptation, I can find my own way there...
 
a300
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 7:46 am

Actually there is also Air Arabia based in Sharjah, UAE. There is now an airline for United, Arab and Emirates.
The population of Persian Gulf is actually well above 100 million. You guys did not mention the most populated country, Iran which covers the entire northern coast.
Boland Aseman Jayegah Man Ast.
 
ME AVN FAN
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 9:22 am

A300; Kuwait, Saudi Arabia, Bahrain, Qatar, the U.A.E. and Oman are at the "Arabian Gulf". It is the same as the one of Persia, just another name. But terminology matters ! And while Iran is in Asia, the Arab countries mentioned are in the Arab World .
 
whitehatter
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 9:29 am

Good luck to Etihad anyway.

It shows that the UAE isn't going to sit on its behind and wait for oil revenues in the Gulf States to dry up. Rather than palaces and US/EU stock market investments they are putting their capital to work at home into an industry which isn't petroleum-production.

That's where other Gulf states are going wrong. Saudi Arabia isn't forward planning with an investment plan into a new source of GDP, but exporting its capital into foreign investments. All it could potentially take is a diplomatic crisis and that would be frozen. At least the Emirates are building a new revenue producing industry which they see as being a global airline player.
Lead me not into temptation, I can find my own way there...
 
ACAfan
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 9:32 am

Iran is Iran and the Gulf is the Gulf, and never the twain shall meet.

Iran doesnt count because its population base is not on the coast, and Iran Air doesnt exactly depend on transit pax.

Abu Dhabi is a two hour drive west from Dubai. Abu Dhabi is a good business city and thus you will have the business pax who will fly business and first class. Dubai does have lots of business, but Dubai and Emirates depend on tourists to survive. Business pax flying O&D from Abu Dhabi dont really want to drive to DXB. They would choose from their local carriers like Gulf or Etihad.

Sharjah is a twenty minute drive east from Dubai. It is closer to Dubai than Baltimore is to Washington. Air Arabia is a discount airline that, like the US or Euro locos, takes advantage of cheap facilities in Sharjah. I suspect that many of their pax are fleeing high fares at DXB.
Freddie Laker ... May be at peace with his maker ... But he is a persona non grata ... with IATA
 
Ekairliner
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 10:33 am

In reply to BA and sleak76, i am not aware of air arbia and etihad condition as being subsidized by the governemnt or not, but i suspect they might have been as they just have started, but Emirates is NOT subsidized by the government anymore, for the last few years there has been no cash injected by the government into emirates, so if you don't have any proof don't just come up with things you don't know and you hear or assume is right.
 
Alessandro
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 10:50 am

Depends where they flying to? I think there´s always a demand for many planes during Ramadan and fuel cost can´t be that bad?
Why not the B7E7, I guess that Boeing would love to get customer in this part of the world...

From New Yorqatar to Califarbia...
 
DfwRevolution
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 11:31 am

Why not the B7E7, I guess that Boeing would love to get customer in this part of the world...

As great of an airplane as the 7E7 will likely be, if you can fill 300 seats don't go buying a 220-250 seat airplane! Improved economics are great, but if it means less revenue, the benefit will be minimal.

Depends where they flying to?

Great point, any idea of the routes Etihad wants to open up, or reinforce, with these new aircraft?
 
BA
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 7:24 pm

Ekairliner,

I know for certainty that Etihad and Air Arabia are both government subsidized.

Nwacrew,

Since the Emirates apparently have BILLIONS of dollars to fritter away on HUGE airlines competing for the same transit passengers, imagine if some of that petroleum largesse was used to help feed the hungry, provide treatment to AIDS victims in third world countries, or (Praise Allah!), get their Palestinian bretheren out of the hovels they've been living in since the end of World War ll...

While I agree that you do have a point that countries like the UAE are very rich and spend a lot of their money internally, the fact is they are helping outside a lot as well.

The UAE is financing the reconstruction one 400 homes in Gaza destroyed by Israel and is financing the de-mining operations in southern Lebanon in which 400,000 mines were planted by Israel during the 20 year occupation of southern Lebanon.

So they really are helping a lot outside.

DfwRevolution,

Great point, any idea of the routes Etihad wants to open up, or reinforce, with these new aircraft?

Their first destination was Beirut, then they opened Damascus and Amman. They then started Colombo, Bangkok, London and just recently Geneva and Munich.

I think they are planning to increase their Asia flights and routes and start flying to the Indian subcontinent. I'm sure they also would like to increase their Middle East network and include destinations like Cairo. Perhaps do a little more Europe expansion.

In the future, they want to start flights to North America.

Regards
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
 
Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 8:28 pm

and include destinations like Cairo

I'll only believe it when it happens. Their original plan was to start CAI flight on December 19th, but it never materialied due to the current bi-lateral agreement between Egypt and the UAE. Every time I've contacted Etihad I've got more or less the same reply, 'Cairo is high on our agenda and we hope to start operations their soon'. The problem is the route is a gold-mine for MS(A300-600R/A330), who do not want to end up competiting against GF(A330s) and EY(A330s) and loosing their market share. Latest I heard was they would start this November. I guess we have to wait and see.

Horus
EGYPT: A 7,000 Year Old Civilisation
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sat Jul 17, 2004 11:49 pm

EKAirliner

Not sure why you got all upset at BA and myself for what we wrote.

If you would like to believe that Emirates is self-sustaining then, by all means, enjoy that theory. I personally cannot see a self-standing commercial airline that can withstand 2 gulf wars, the SARS epidemic in the Far East, and the general downturn in the world economy and still be able to announce profits of hundreds of millions.

All self-standing airlines (I mean by self-standing as in not yearly cash infusion by its government) have been hurt by the scenarios that I mentioned above. Look at the American carriers, British Airways, Swiss Air, Sabena, etc. Either they were deep in red or simply went out of business. Yet, at the same time, EK keeps posting profits of unusual (and suspiscious) amounts and orders billions of dollars worth of airplanes (imagine the interest on those loans by itself)!

Sorry man but when I compare world airlines facing reduced profits and EK anouncing profit increases of 50-100%, makes me wonder just how involved the Dubai government is with EK and its finances.

Plus it makes sense.. Dubai government injects money into it's airline and, in return, Ek grows and brings in tourists to spend in that city. They both 'cross-fincance' (each other).

As i said before in another thread, the day an international and independant accounting firm reviews the accounts (balance sheet) of Emirates and confirms that the term 'Other Revenue' isn't government related, is the day I might change my thought about Emirates actually is a self-reliant non-subsidized airline.

Cheers.
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Vimanav
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 12:07 am

You know Sleak76...

I fully endorse your views reflected in reply 28 - couldn't agree more... and I won't ask you for a source Smile/happy/getting dizzy

rgds//Vimanav
Sarfaroshi kii tamannaa ab hamaare dil mein hai, Dekhnaa hai zor kitnaa baazu-e-qaatil mein hai
 
Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 12:12 am

Vimanav and Sleak76 agreeing, now that's something I never thought I'd see...hahahaha Big thumbs up
EGYPT: A 7,000 Year Old Civilisation
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 1:15 am

Vimanav
Thanks for the vote of confidence  Smile

Horus,
hehe.. suprises come in different form.

Cheers to you both  Big thumbs up
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captain777
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 1:20 am

Now thats nice....We only need Vimanav to agree with me on anything now Big grin
the sky is the limit.............actually FL410 is the limit
 
B747-437B
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 2:51 am

We only need Vimanav to agree with me on anything now

If you posted something worth agreeing about, perhaps he would oblige.
"The A340-300 may boast a long range, but the A340 is underpowered" -- Robert Milton, CEO - Air Canada
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 2:57 am

Captain777

Cheers to you too  Big thumbs up
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SR 103
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 2:59 am

Vimanav,

I really wish you could just tell them who your source is. I'd love to see their reaction if you did!

SR 103
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 3:07 am

SR103

BTW, I think your post would be better suited in that thread. I don't think we should discuss that issue in here.

But seeing that you did, if I can simply say that Vimanav has already mentioned a source, which is already considered a good/reliable source to go with. What's left is for me to cross-check it.

I've already started to enjoy Vimanav's posts and information that he gets. It does seem to be pretty much reliable.


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David_itl
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 3:09 am

Sleak76, is PriceWaterhouseCoopers suitably independent and international for you? They do the auditing for EK. Taken from this profile of Maurice Flanagan.

David
 
sleak76
Posts: 306
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 3:26 am

David

Even when i wrote independant accounting firm I still had my doubts that I would 100% agree that the government isn't pumping money in. You know why?

One thing comes to mind: The Enron scandal and Arthur Andersen's role in it!

So i guess acounting firms are easily purchased these days. As we saw with Enron.
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captain777
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 3:28 am

Ibtelashna wellah ib hela salfa

Well please don't let us start this thread agian in this post.

Cheers Sleak76
the sky is the limit.............actually FL410 is the limit
 
teahan
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 8:58 pm

An article in today's Seattle Times suggests a mix of A330s, A340s and A380s to be announced tomorrow.

J.
Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 9:28 pm

Are you sure Teahan? No 777s?

Horus
EGYPT: A 7,000 Year Old Civilisation
 
teahan
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 9:32 pm

Goodbye SR-LX MD-11 / 6th of March 1991 to the 31st of October 2004
 
Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Sun Jul 18, 2004 9:48 pm

Thanks for the link Teahan. I'm surprised they're going for the A380 too. That would leave 3 carriers with bases literally just miles apart operating these huge jets, competing for exactly the same market...

Horus

EGYPT: A 7,000 Year Old Civilisation
 
EurostarVA
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RE: Etihad To Place Huge Order... Bad Investment?

Mon Jul 19, 2004 4:11 am

Although I am very confident in Emirates' future, I am very doubtful about any prospects for success for Etihad. Some of my reasons:

1- There is no well defined synergy between Etihad and the progress and development of Abu Dhabi. Dubai, by contrast, is exploding with increasing tourist arrivals, construction and above all, a vision that is becoming more and more a reality. Abu Dhabi seems to have the oil money, but is getting tired of trying to emulate Dubai.

2- The corporate branding of Etihad is very poor. Their aircraft looks like a government aircraft (with the eagle logo) and their overall brand is keen on doing one thing, immitating Emirates. I think new players should focus more on being innovative, and this is precisely why I think low-cost Air Arabia will eventually be profitable after developing its market.

3- For Etihad to fill their new aircraft, they will need an expanding market and growing traffic figures. Abu Dhabi has not yet embraced an open sky policy, which such cities as Beirut and Dubai have proved to be an excellent stimulus in attracting more passengers into the region (due to lower air fares resulting from competition).

4- Gulf Air, being still the official carrier of Abu Dhabi, may prove to be a complication due to aeropolitical factors. Although personally, I believe that it is only a matter of time before Gulf Air scales down to become the national carrier of Bahrain only (which I support).

5- Emirates has a better management team which has been onboard for a long time (Maurice Flanagan among them). I read an interview with Etihad's Sheikh boss and he does not appear to be very knowledgable of the aviation industry, let alone managing a new start-up ordering the Airbus A380.

I could go on. I am very, very skeptical about Etihad ever becoming profitable in this state and in the current business environment.

EurostarVA
If there is a will, there is a way
 
StarGoldLHR
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RE: Etihad To Place Huge Order... Bad Investment?

Mon Jul 19, 2004 4:16 am

Maybe just maybe the man on the street on the gulf has a bit more money and wants to travel, so as overall personal lifestyle and wealth increases in the Gulf... they want to fly more like the rest of us ???

So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
 
sleak76
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RE: Etihad To Place Huge Order... Bad Investment?

Mon Jul 19, 2004 4:29 am

they want to fly more like the rest of us???

Care to elaborate abit, StargoldLHR?
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Horus
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RE: Etihad To Place Huge Order... Bad Investment?

Mon Jul 19, 2004 4:33 am

Stargold, I'm half English half Egyptian, so am I 'us' or 'them'?  Big thumbs up

Horus

EGYPT: A 7,000 Year Old Civilisation
 
ACAfan
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RE: Etihad To Place Huge Order... Bad Investment?

Mon Jul 19, 2004 9:00 am

Although personally, I believe that it is only a matter of time before Gulf Air scales down to become the national carrier of Bahrain only (which I support).

A superhub at Manama plus a focus city at Muscat would seem likely.
Freddie Laker ... May be at peace with his maker ... But he is a persona non grata ... with IATA

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