edealinfo
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How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 12:53 am

MODERATORS: This is a thread about Etihad NOT Jet Airways, so please do not merge this thread with the "Jet Airways Reports Cash Running Out" thread which is primarily read by Jet's Indian/American passengers. This thread is about Etihad which operates to far more countries than Jet Airways ever does, and therefore, this thread is geared to the far more persons interested in Etihad-related matters, who might otherwise be left out of the discussion since they wouldn't ordinarily look for Etihad under the Jet Airways thread.

Now for the post.....

Etihad has lost 10% of its base connecting passengers "in perpetuity" as Jet Airways has pulled the plug on its Abu Dhabi (ABU) hub, that ordinarily fed largely Indian passengers to Etihad's worldwide network. Eihad too used to connect its passengers, at AUH, and India, on its extensive code share agreement with Jet.

Over the past 6 months, Jet Airways has been bleeding cash and until a few days ago, was on the cusp of a rescue deal from Etihad which suddenly turned cold. Etihad balked, because among other things, it didn't want Jet's founder and Chairman of 25 years, Naresh Goyal (NG), of continued holding of more than 22% not for a X years but rather "in perpetuity". So, to give Etihad a taste of its Indian medicine, Jet pulled the rug on its AUH hub, which means that Etihad loses 10% of its connecting passengers "in perpetuity" as a tit-for-tit for Etihad's "in perpetuity" obligation on Mr. Goyal.

What has Etihad to lose besides its otherwise guaranteed 10% connecting passengers? Well, the opportunity to get Indian feed as Etihad has already exhausted its bilateral rights to India which has not increased rights to the UAE for almost a decade. Jet also held the most number of slots at India's financial capital, Mumbai, where NO SLOTS are available for virtually 24 hours with a few exceptions (1.30 to 2 am slots are available). India is also the world's second most populous nation and is on track to be the world's largest, ahead on China, in about 4 to 6 years. So, there is tremendous potential to have a partner In India with so much aviation potential. Think of it, with Jet codeshares, Etihad virtually doubles its capacity to India on a route that has frozen bi-laterals. So, it has lot to lose in the fallout to Jet.

Etihad currently owns about 24% of Jet and 49% of Jet's frequently flyer program. If Jet folds, Etihad loses its sunk costs.

So, how will Etihad manage its loss of connecting traffic? Will it cave and eventually kiss and make up with Jet?
 
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LAXintl
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 12:59 am

Lets remember Etihad's new business plan announced last year is to reduce the focus on transit traffic flow, and reshape network into more standalone routes based on O&D demand.

Any loss of 9W India traffic likely simply accelerates this transition, with some routes being shed in favor of ones that can stand on their own feet. (remember there is large Indian workforce in UAE, so there is underlying demand).
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:13 am

I think it will hurt EY a lot in the long run. Indian pax provide a lot of extra tonnage that allows EY to offer new destinations and/or additional frequencies. This in turn makes EY more competitive in non Indian markets and EY then attracts more non Indian pax. It is a circular process. While India is a price sensitive market, Jet FF were probably the creamy layer and include a lot of business pax. EY will feel this loss as well. That said, I think EY will eventually cave and invest more $$ in Jet and save the feed. The UAE is very familiar on how important India is to their own business success.
 
edealinfo
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:35 am

Will Etihad be on the hook for passengers who booked on Etihad ticket stock but operated on code share flight with Jet? If so, wouldn't Etihad lose its shirt having to pay full freight to accomodate these passengers on other carriers' flights?
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 2:38 am

While it may hurt a little in the short term, in the long term, they can operate their own flights if required as the AUH bilaterals still have plenty of seats left. Also, they can get into interline agreements with other LCCs like Indigo/SpiceJet if required, for connectivity from 2nd tier cities.
 
edealinfo
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 2:40 am

blrsea wrote:
While it may hurt a little in the short term, in the long term, they can operate their own flights if required as the AUH bilaterals still have plenty of seats left. Also, they can get into interline agreements with other LCCs like Indigo/SpiceJet if required, for connectivity from 2nd tier cities.

Etihad has already exhausted 100% of its bilateral entitlements from AUH to india
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 7:20 am

edealinfo wrote:
Etihad has already exhausted 100% of its bilateral entitlements from AUH to india


Are those bilaterals for UAE-India overall, or EY/AUH specific?
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 7:33 am

edealinfo wrote:
blrsea wrote:
While it may hurt a little in the short term, in the long term, they can operate their own flights if required as the AUH bilaterals still have plenty of seats left. Also, they can get into interline agreements with other LCCs like Indigo/SpiceJet if required, for connectivity from 2nd tier cities.

Etihad has already exhausted 100% of its bilateral entitlements from AUH to india


Are u sure? as I recall Etihad had published reduced frequencies to many South Indian cities from S18 onwards.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 7:41 am

edealinfo wrote:
MODERATORS: This is a thread about Etihad NOT Jet Airways, so please do not merge this thread with the "Jet Airways Reports Cash Running Out" thread which is primarily read by Jet's Indian/American passengers. This thread is about Etihad which operates to far more countries than Jet Airways ever does, and therefore, this thread is geared to the far more persons interested in Etihad-related matters, who might otherwise be left out of the discussion since they wouldn't ordinarily look for Etihad under the Jet Airways thread.

Now for the post.....

Etihad has lost 10% of its base connecting passengers "in perpetuity" as Jet Airways has pulled the plug on its Abu Dhabi (ABU) hub, that ordinarily fed largely Indian passengers to Etihad's worldwide network. Eihad too used to connect its passengers, at AUH, and India, on its extensive code share agreement with Jet.

Over the past 6 months, Jet Airways has been bleeding cash and until a few days ago, was on the cusp of a rescue deal from Etihad which suddenly turned cold. Etihad balked, because among other things, it didn't want Jet's founder and Chairman of 25 years, Naresh Goyal (NG), of continued holding of more than 22% not for a X years but rather "in perpetuity". So, to give Etihad a taste of its Indian medicine, Jet pulled the rug on its AUH hub, which means that Etihad loses 10% of its connecting passengers "in perpetuity" as a tit-for-tit for Etihad's "in perpetuity" obligation on Mr. Goyal.

What has Etihad to lose besides its otherwise guaranteed 10% connecting passengers? Well, the opportunity to get Indian feed as Etihad has already exhausted its bilateral rights to India which has not increased rights to the UAE for almost a decade. Jet also held the most number of slots at India's financial capital, Mumbai, where NO SLOTS are available for virtually 24 hours with a few exceptions (1.30 to 2 am slots are available). India is also the world's second most populous nation and is on track to be the world's largest, ahead on China, in about 4 to 6 years. So, there is tremendous potential to have a partner In India with so much aviation potential. Think of it, with Jet codeshares, Etihad virtually doubles its capacity to India on a route that has frozen bi-laterals. So, it has lot to lose in the fallout to Jet.

Etihad currently owns about 24% of Jet and 49% of Jet's frequently flyer program. If Jet folds, Etihad loses its sunk costs.

So, how will Etihad manage its loss of connecting traffic? Will it cave and eventually kiss and make up with Jet?



Your information on EY exhausting it's bilateral rights is incorrect as a 4th DEL frequency was launched in March 2019 and EY has the capability to upguage frequency and/or capacity when required as has been seen in quite a few Indian cities for 2018.

Sure there will be a loss of 9W connections to cities in India where 9W flies and EY doesn't, however if you've kept track of 9W, you will notice they have steadily reduced frequency, capacity and destinations to AUH in the last 2 years.
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 7:42 am

edealinfo wrote:
blrsea wrote:
While it may hurt a little in the short term, in the long term, they can operate their own flights if required as the AUH bilaterals still have plenty of seats left. Also, they can get into interline agreements with other LCCs like Indigo/SpiceJet if required, for connectivity from 2nd tier cities.

Etihad has already exhausted 100% of its bilateral entitlements from AUH to india


That is incorrect.
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 8:38 am

waly777 wrote:
edealinfo wrote:
blrsea wrote:
While it may hurt a little in the short term, in the long term, they can operate their own flights if required as the AUH bilaterals still have plenty of seats left. Also, they can get into interline agreements with other LCCs like Indigo/SpiceJet if required, for connectivity from 2nd tier cities.

Etihad has already exhausted 100% of its bilateral entitlements from AUH to india


That is incorrect.


Correct, AUH has more than enough seats left in terms of bilaterals. And unlike what some people are suggesting, just cos Jet may go bust those can't and will not be revoked. Not unless they want to ruin relations with the UAE, which is quite good at the moment.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 8:55 am

Assuming 9W's route authorities under the ASA with UAE are freed up, how long would DGCA take to reallocate them?
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 8:58 am

If successful, I wonder what impact the 6E-TK deal might have on Etihad?

As for their new strategy, I don't think they will be successful in relying on O&D traffic, demand isn't enough to fill all the planes they currently have. For point to point passengers, they don't need more than 20 aircraft, if that many.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 9:11 am

With 9W dying a slow death, and may then be unable to get passengers from the regional airports to an EY station, perhaps EY can use the remaining bilaterals 'plug the holes' in the Indian network? There's a few spares lying around so why not replace 9W's once-a-day to Pune, and Goa a couple of days a week too. I don't know how many flights they can add, but there's a handful of other cities that could get a look-in.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 9:38 am

Over the last 6 months there have been numerous reductions on Etihad's India routes so I'm sure there is still plenty of room to add more again, as we have seen recently with Etihad immediately picking up the Delhi route that Jet Airways stopped.
Flight loads on Etihad to India are generally very high, so I would not be surprised if Etihad picked up the extra flights to Cochin and Bangalore again.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 11:27 am

Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 12:56 pm

MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

You do understand that there are more billionaires in India than in your country, don’t you? If I am not mistaken it has the 5th largest GDP in the world.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:04 pm

MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

It's funny we have a thread about how one side copes with a 10% down sizing while the other side has ~33% of its fleet impaired due to non payment of debts and further attrition likely.

It's going to be hard to hold all those valuable slots if you don't have aircraft to operate them, no?
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:07 pm

edealinfo wrote:
MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

You do understand that there are more billionaires in India than in your country, don’t you? If I am not mistaken it has the 5th largest GDP in the world.


What does this have to do with your original question though? Billionaires fly private jets.... :? :?
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edealinfo
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:17 pm

waly777 wrote:
edealinfo wrote:
MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

You do understand that there are more billionaires in India than in your country, don’t you? If I am not mistaken it has the 5th largest GDP in the world.


What does this have to do with your original question though? Billionaires fly private jets.... :? :?

Aah, you didn’t infer the larger point. India people are not all snake charmers. It is a thriving market with a population of over 1.2 billion. It’s middle class is larger than the entire population of the US. It has the 5the largest GDP in the world and that GDP doesn’t all belong to the many billionaires flying their private jets, one of whom hired Beyoncé to perform at his daughter’s wedding. and that cost was pocket change for him. India has arrived my friend
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:22 pm

Also, more money will be spent on India’s general elections than what was last spent on the last US Presedential election. this should give you an indication of the scope of the Indian economy
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 1:55 pm

Though India certainly has a robust economy and a large GDP, it does not have as many airline passengers as one might think, given its population. Especially when compared to China which has a similar population.

Countries With The Highest Number Of Air Passengers
Rank Country Number Of Air Passengers (2015)
1 United States 798,230,000
2 China 436,183,969
3 United Kingdom 131,449,680
4 Germany 115,540,886
5 Japan 113,762,000
6 Ireland 113,144,501
7 Brazil 102,039,359
8 India 98,927,860
9 Turkey 96,604,665
10 Indonesia 8,868,576

https://www.worldatlas.com/articles/cou ... ngers.html
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 2:30 pm

Revelation wrote:
MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

It's funny we have a thread about how one side copes with a 10% down sizing while the other side has ~33% of its fleet impaired due to non payment of debts and further attrition likely.

It's going to be hard to hold all those valuable slots if you don't have aircraft to operate them, no?

Err... Jet now has 2/3rds of the fleet grounded. Due to open rights, EY won't shrink 10%. It won't even be half that.

India will still be well served. So no reason to fret. This is just further unwinding of the equity alliance. Cest la vie. EY is finally getting onto a survivable path. Sadly, they will be tiny vs. ET, TK, QR, and EK. In other words, they will be a boutique airline.

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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 2:48 pm

myki wrote:
With 9W dying a slow death, and may then be unable to get passengers from the regional airports to an EY station, perhaps EY can use the remaining bilaterals 'plug the holes' in the Indian network? There's a few spares lying around so why not replace 9W's once-a-day to Pune, and Goa a couple of days a week too. I don't know how many flights they can add, but there's a handful of other cities that could get a look-in.

Except their bilaterals are limited in the number of airports in India that they can fly to
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 3:13 pm

lightsaber wrote:
Revelation wrote:
MIflyer12 wrote:
Why is this even a question? Firms deal with 10% demand reductions all the time. You retire/return a fraction of the fleet, lay off/encourage to retire/terminate short term contract workers, and wait for growth to resume. Lots of air carrier costs aren't even in fixed assets (read: people and fuel). This is basic restructuring - it's no mystery. Why do India and Italy fail at it? Political structures, not business intellect. The OP seems to be working from the assumption that India is a must-have market for Etihad. Dysfunctional structures and untrustworthy management in low-profit markets are to be avoided, not sought.

It's funny we have a thread about how one side copes with a 10% down sizing while the other side has ~33% of its fleet impaired due to non payment of debts and further attrition likely.

It's going to be hard to hold all those valuable slots if you don't have aircraft to operate them, no?

Err... Jet now has 2/3rds of the fleet grounded. Due to open rights, EY won't shrink 10%. It won't even be half that.

India will still be well served. So no reason to fret. This is just further unwinding of the equity alliance. Cest la vie. EY is finally getting onto a survivable path. Sadly, they will be tiny vs. ET, TK, QR, and EK. In other words, they will be a boutique airline.

Lightsaber


For starters, the Abu Dhabi Terminal needs to be completed to come close to DOH. The current terminal looks more like the old BOM one.

Hogan tried to ‘grow’ EY by Air Berlin and AlItalia acquisitions; that really caused them grief. Jet IMHO was a good investment but a bad idea to give NG unfettered cash.

So EY may still be resurrected but it will definitely different than what Hogan made it to be.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 3:23 pm

LAXintl wrote:
Lets remember Etihad's new business plan announced last year is to reduce the focus on transit traffic flow, and reshape network into more standalone routes based on O&D demand.

Any loss of 9W India traffic likely simply accelerates this transition, with some routes being shed in favor of ones that can stand on their own feet. (remember there is large Indian workforce in UAE, so there is underlying demand).


O&D traffic? Really? There are people who go to Abu Dhabi connected to the petroleum industry, but I really can't see any reason that huge numbers of widebodied jets would be going there every day for O&D traffic. I have a friend who grew up across the street whose husband worked as a chemical engineer in Abu Dhabi. She preferred to fly European carriers to and from Abu Dhabi so she could stay a few days in Paris or London on her way to or from Abu Dahbi.

I don't really see why there is a need for two hub carriers located about 70 miles apart. It makes more sense to combine Etihad and Emirates operations at DWC sometime in the future.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 4:33 pm

flyingclrs727 wrote:
I don't really see why there is a need for two hub carriers located about 70 miles apart. It makes more sense to combine Etihad and Emirates operations at DWC sometime in the future.

I like the idea. But to make it work, part of DWC must be on the Abu-Dhabi side. I see a need for $30billion+ USD to expand the airport to merge and then transport to Abu Dhabi needs to be arranged.

I suggested the idea in the Jet cash thread. As well as a Disneyland in this alternative universe.

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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 4:45 pm

edealinfo wrote:
waly777 wrote:
edealinfo wrote:
You do understand that there are more billionaires in India than in your country, don’t you? If I am not mistaken it has the 5th largest GDP in the world.


What does this have to do with your original question though? Billionaires fly private jets.... :? :?

Aah, you didn’t infer the larger point. India people are not all snake charmers. It is a thriving market with a population of over 1.2 billion. It’s middle class is larger than the entire population of the US. It has the 5the largest GDP in the world and that GDP doesn’t all belong to the many billionaires flying their private jets, one of whom hired Beyoncé to perform at his daughter’s wedding. and that cost was pocket change for him. India has arrived my friend


Again, little or nothing to do with your original question. I work with Indian colleagues in the industry and very aware of it's potential, however the international aviation market is quite small compared to the population as an overwhelming majority do not fly internationally.

To your original question, EY will be just fine with or without 9W. This opens up a chance to perhaps codeshare and interline with other airlines in India.

And smh @ snake charmer.... that was all your statement and inference, a bit ludicrous IMO.
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 5:02 pm

edealinfo wrote:
India people are not all snake charmers. It is a thriving market with a population of over 1.2 billion. It’s middle class is larger than the entire population of the US. It has the 5the largest GDP in the world and that GDP doesn’t all belong to the many billionaires flying their private jets


India having more billionaires than the U.S. with 4x the population and a bit over 1/8th the GDP ($20.5T for the US, $2.7T for India) only points to enormous inequality in the distribution of wealth -- and that doesn't lead to high propensity of the general population to travel. India may have a huge middle class, but that middle class certainly does not have the same level of wealth as the middle class in the U.S. and is less likely to be able to afford to travel by air.

Even if we go to per capita GDP adjusted for purchasing power parity (PPP), India is well below the world average (~$17,000) at $7,200 and about 12% of the U.S.'s $59,500. And just for reference, the UAE is 15-20% higher than the U.S. for GDP (PPP) per capita although I suspect that figure doesn't include the millions of guest workers who certainly do not enjoy the same level of wealth as UAE nationals. Or to put a finer point on it, if there were so much wealth in India, we wouldn't see the millions of Indian national guest workers in the UAE or the U.S. that we do.
 
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 5:16 pm

waly777 wrote:

EY will be just fine with or without 9W. This opens up a chance to perhaps codeshare and interline with other airlines in India.

That sums it up. Indigo as a partner suddenly spiked in value. Same with GoAir and SpiceJet.

With leasors looking to place 50+ aircraft elsewhere, Jet's value as a partner is now low. Too low to save them.

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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 6:04 pm

10% seems like a surprisingly small number given the importance of connecting traffic to Etihad
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edealinfo
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 6:07 pm

c933103 wrote:
10% seems like a surprisingly small number given the importance of connecting traffic to Etihad

That could be the case. Would you happen to know what it is?
 
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flyingclrs727
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 6:30 pm

lightsaber wrote:
flyingclrs727 wrote:
I don't really see why there is a need for two hub carriers located about 70 miles apart. It makes more sense to combine Etihad and Emirates operations at DWC sometime in the future.

I like the idea. But to make it work, part of DWC must be on the Abu-Dhabi side. I see a need for $30billion+ USD to expand the airport to merge and then transport to Abu Dhabi needs to be arranged.

I suggested the idea in the Jet cash thread. As well as a Disneyland in this alternative universe.

Lightsaber


I'm glad you like it. The distance between the two cities is comparable to the distance between Austin and San Antonio, except DXB and AUH each have huge international hub airports near each city while, Austin and San Antonio have much smaller airports that mostly have point to point domestic US flights. Austin now has daily transatlantic flights, but they are pretty much O&D. There have been many proposals over the years to replace the individual city airports with a new hub close to the geographical center of the two cities, but its rather unlikely a shared hub will ever built now that Mueller has been replaced with Bergstrom airport. Also traffic on I-35 is so congested that such an airport would be inconvenient for both cities.

Abu Dhabi and Dubai have the opposite situation. There is still plenty open space between the two for a high speed ground transport in addition to a new airport. DXB is close to limits of its ability to expand. Only a large new airport with space for many runways and terminals will do for replacing both DXB and AUH. Having Emirates and Etihad co-locate their hubs at one airport helps increase the number of potential connections which would be very beneficial to Etihad. Of course then there is the question of what to do with DXB and AUH after DWC becomes fully operational. Without some sort of capacity restrictions, they could undermine DWC financially.
 
c933103
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 6:38 pm

ScottB wrote:
edealinfo wrote:
India people are not all snake charmers. It is a thriving market with a population of over 1.2 billion. It’s middle class is larger than the entire population of the US. It has the 5the largest GDP in the world and that GDP doesn’t all belong to the many billionaires flying their private jets


India having more billionaires than the U.S. with 4x the population and a bit over 1/8th the GDP ($20.5T for the US, $2.7T for India) only points to enormous inequality in the distribution of wealth -- and that doesn't lead to high propensity of the general population to travel. India may have a huge middle class, but that middle class certainly does not have the same level of wealth as the middle class in the U.S. and is less likely to be able to afford to travel by air.

Even if we go to per capita GDP adjusted for purchasing power parity (PPP), India is well below the world average (~$17,000) at $7,200 and about 12% of the U.S.'s $59,500. And just for reference, the UAE is 15-20% higher than the U.S. for GDP (PPP) per capita although I suspect that figure doesn't include the millions of guest workers who certainly do not enjoy the same level of wealth as UAE nationals. Or to put a finer point on it, if there were so much wealth in India, we wouldn't see the millions of Indian national guest workers in the UAE or the U.S. that we do.

In a developing economy like India or China, air travel demand really isn't dependent on the wealth level of general public but on the group and size of population that are more well off. In such case, extreme poverty gap could help air travel demand. Let say hypothetically a country with 1 Billion population concentrated most of its wealth on top 10% population, then we will be seeing a market size of 100 Million wealthy people, and that will already be more people that can afford air travel than all other developed countries except America in the world, and perhaps have more wealth than normal citizens in those countries because they concentrated all the wealth of other people into their own hands.
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ScottB
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 6:57 pm

c933103 wrote:
Let say hypothetically a country with 1 Billion population concentrated most of its wealth on top 10% population, then we will be seeing a market size of 100 Million wealthy people, and that will already be more people that can afford air travel than all other developed countries except America in the world, and perhaps have more wealth than normal citizens in those countries because they concentrated all the wealth of other people into their own hands.


One could argue that, but then you're talking about a market of 100 million people and not one billion, and even in the most extreme case, per capita GDP (PPP) would be just above that of the U.S. But then that doesn't support the argument of "It’s middle class is larger than the entire population of the US."
 
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lightsaber
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 8:38 pm

edealinfo wrote:
c933103 wrote:
10% seems like a surprisingly small number given the importance of connecting traffic to Etihad

That could be the case. Would you happen to know what it is?

Only 4 flights were cancelled. EY isn't using their full allocation either:

https://pointsofarabia.com/jet-airways- ... abu-dhabi/

Delhi, Mumbai, and Pune. That is all that was cancelled. I have trouble believing it was even 10%.

Honestly, I wouldn't have looked as 10% sounded about right. This is only 4 flights lost. :yawn:

Lightsaber

Late edit:

I agree India is a large potential market. Yesterday, Jet's contribution wasn't enough to discuss (in my opinion). Obviously the 9W feed was nice, but not market changing. Any Indian airline could supplement that trivial number of seats.
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NWADTWE16
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Tue Mar 19, 2019 8:42 pm

This seems to me exactly why the A380 was created, and Etihad has a few of those they are looking to find routes for.
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OSL777FLYER
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Re: How Will Etihad Cope With 10% Base Reduction in Passengers in "Perpetuity"?

Wed Mar 20, 2019 6:45 am

How high are yields for flights from the UAE to India? Are they mostly for expats?

Also, one could wonder if Etihad in the future could maybe join the Star Alliance. Then they can partner with Air India. Problem solved.

Alternatively, partner with a low-cost carrier. e.g. Indigo.

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