Bottom line, a lot of this is possible when you have an unlimited bank account.
I will give EY full marks once they can dig themselves out of this mess that Hogan got them into.
It is not that simple : other airlines have been subsidized to similar hundreds of millions & yet stagnated over decades ( Alitalia, Aeroflot ). So Hogan shares something few CEOs have achieved ( think STC, AAB, TF, MOL ), it does take some genius few actually have.
It did help to have Abu Dhabi's deep pockets, I for one am still surprised EY achieved this much at all.
But Dubai was the whole way more ambitious & busy building landmark skyscrappers & throwing new lands on the sea on a scale no country but China has matched ( Pudong, Macau, etc. ) : that alone created O/D & tourism attractions Abu Dhabi is far from having, even Abu Dhabi's Ferrari thing or museums idea will only attract a fraction of what the Burj Khalifa does daily. Yet it did put AUH on the map, and globally, there are signs Abu Dhabi recouped its investments with EY, but that could not continue in that fashion. Dubai has fared so much better & has leap-frogged every other Emirate in the region, even the state of Qatar is no match.
One thing many people forget is that the Etihad equity alliance only existed so that Etihad could gain extra feed from the markets where these airlines were based in. There was almost no cooperation between other airlines. The whole system Etihad built was flawed from the start because AUH expected other governments to be as protective of their carriers as Abu Dhabi was. That's why they were so confident when they purchased Air Berlin or Alitalia. In the end it was like a group of illiterate people trying to write a novel.
It may look that way now, but the move into Virgin Australia & Air Berlin was smart, it allowed growth for EY's East & West banks out of AUH.
AB was also a smart move considering how protective Germany is & should be. But AB's demise is in great part due to the delays at TXL, their whole model & investment were geared on TXL opening eons ago, not something foreseeable when EY invested in it & took their 29%.
I always considered AZ a lame duck, never understood the idea of "Etihad Regional" around the Alps, any darwinian consideration told it was bound to fail. I hear Air Serbia was doing fine but it is a small airline, peanuts really, just as Air Seychelles.
Jet Airways is perhaps EY's best joker these days, but Hogan left before he could reap the profits.
1) Was EY grown sustainably? The unfortunate answer is No.
2) The competitive region is a possible killer for EY. You have to be #1 or #2 or you are nothing.
4) I think the alliances are warming up to EY. 9W was the one wise acquisition which changed everything. But AB, AZ, and others? It was a questionable business case day
5) EY isn't reaching with profit. QR isn't either. Who has deeper pockets? Because of the HUGE amount of money destroyed in the equity alliance, EY is in trouble.
8) EY is a major brand now. Now to do something with it.
Sadly, Hogan burned through so much money the Abu Dhabi economy must be questioned on viability. Can they now pay to invest to recover their economy before production drops and others take over the energy market? Solar is a totally different market than 2005. Much to my pleasant surprise, it is a viable industry now. So is electric cars (Tesla is its own off topic discussion). Because of the energy alternatives, EY will never be as subsidized again. Should it be? Hogan tried to put Abu Dhabi on the map, but I would argue Dubai did a *much* better job of meeting Western, Indian, Chinese, and regional company needs. What will the other Emirates do if Dubai meets their own housing needs?
1. It is not that simple. Economics rank Airlines as "non-contestable markets"
, meaning huge entry & exit costs. Particularly at the scale of a FSC, when the trend to day is to launch LCCs & ULCCs. So "sustainability" is not the major issue, nor the sole, it all depends on how long & how much investors want to bleed money before reaping profits. There are special provisions in GATT & WTO agreements pertaining to "strategic sectors".
2. It is still remarkable that EY achieved no.3 in that competitive context within a decade and not too distant from QR.
4. True, specially with SkyTeam AF & KL, actually more with KL & DL as Jet Airways is bypassing AUH & flying directly to AMS to connect PAX. Also QR's entry into OneWorld has had dramatic effects in OneWorld ( QR investments in IAG, LATAM & CX, plus all the PAX transfers ), yet we have not yet heard of Skyteam considering publicly EY as a future partner.
5. No. EY did put AUH on the map & attract investment into Abu Dhabi, although at a considerable smaller rate than EK did to Dubai. Macroeconomically speaking, the money on EY was well spent, but couldn't go on like this, there are better ways to make money.
8. Exactly. Yet they are making mistakes : premium pax are complaining about perks gone & so they are looking onto EK. Other moves were needed : EY withdrawals from DFW & SFO are sound.
9. Your last point : whatever money Abu Dhabi lost in EY's Equity Alliance is small change compared to its overall economy, and as I said, globally recouped. More importantly, it was strategically sound, because contrary to the other Emirates, Abu Dhabi has oil aplenty & has way more desert land than all other emirates combined to expand. The problem for Abu Dhabi is succeeding its economic transition
, going from a oil-based economy to one of services, where aviation is the jewel in the crown. Abu Dhabi will not export solar energy, everyone around has enough Sun, roofs & desert surfaces to do that, so Abu Dhabi has to do something similar & yet different than Dubai ( which have succeeded remarkably well, from a smaller base & not without financial problems ).
As it stands, I think Abu Dhabi will continue supporting EY because it is crucial to their development in the future ( same with Qatar & QR, gaz reserves are even bigger ).
To me, EY are an economic oddity in the grand scheme of things, an EK-EY merger makes sense on the surface. However, because of that exclusive geographic position to connect the world, and what is more in an ever growing aviation market, there is actually economic room for 3 or more players. One also forgets that thanks to the Gulf Wars, the UAE rose to become the new financial center of the whole Middle-East & will remain so for a long time.
On a sidenote, everyone speaks of TK ( which is a hefty 3h hours away as the jet flies ), but no one is paying attention to IR or SV, which have much much larger populations & could very well be key players within a decade or two.