Bloomberg News

Etihad Partners Coordinate Fleet Plans in Boeing, Airbus Talks

August 07, 2013

Etihad Airways PJSC is coordinating fleet strategy with partners including Air Berlin Plc (AB1) and Jet Airways (India) Ltd. (JETIN) amid the “final stages” of talks with Boeing Co. (BA:US) and Airbus SAS (EAD) on potential orders in coming decades.

Business-class layout is part of the three carriers’ planning as the carriers negotiate with suppliers on possible airliner purchases from 2020 through 2040 in a cost-reduction drive, Etihad Chief Executive Officer James Hogan said at a conference in Sydney today.

Etihad’s tie-ups with airlines through equity stakes contrast with policies at major carriers that focus more on global marketing alliances and joint ventures. Common procurement and cross-leasing of items from aircraft and engines to seating allows airlines to get a better price and smooth out fluctuations in regional demand.

“Most airlines want to one-up the competition in business and first class, so it’s a really interesting thing that Etihad is doing” in unifying cabin designs with those of partner carriers, Oliver Lamb, director of Pacific Aviation Consulting, said by phone from Sydney today. “It certainly does make sense in terms of airlines keeping their costs down.”

Etihad, which is based in Abu Dhabi, is developing partnerships with Jet Air, Air Berlin, Virgin Australia Holdings Ltd. (VAH), Aer Lingus Group Plc (AERL), Serbia’s Jat Airways and Air Seychelles Ltd. The links will offer a global fleet exceeding 500 aircraft, according to a slide Hogan showed at the CAPA Australia Pacific Aviation Summit in Sydney.

Fleet Comparisons

That’s comparable to the 573 aircraft flown by Air France-KLM Group (AF) and greater than the 197 planes in the fleet of Dubai-based Emirates’ fleet, 139 used by Singapore Airlines Ltd. (SIA) and 377 operated by British Airways and Iberia parent International Consolidated Airlines Group SA (IAG), Hogan said in the presentation.

There will probably be another two to six weeks of discussions on the Etihad group’s aircraft orders, he said.

“The way we’ve constructed the deal is a group deal, so the group can take advantage of it,” he said. “In the past, Boeing and Airbus would never have done that.”

Any airline in which Etihad has a stake of more than 3 percent will be able to deal jointly with the group, Hogan said. Procurement teams from the partners meet to coordinate strategy every six to eight weeks. Economy and business class seats will have different fabrics, though will otherwise be similar, he said.

A330 Revamp

Air Berlin has already retro-fitted its wide-body Airbus A330s with business-class seats matching Etihad’s, Hogan said. Etihad uses a Virgin Australia Boeing 777 on legs from Abu Dhabi to Kuala Lumpur between its return flights to Australia.

The airlines’ cabin coordination matches Boeing’s move to make previously optional features standard on the manufacturer’s latest model, the 787 Dreamliner, Ken Morton, a spokesman for the Chicago-based planemaker, said by e-mail.

“The commonality makes the 787 more easily transferred between operators,” and “even the engines can be switched from one type to the other,” Morton said. “Manufacturing longer runs of similar aircraft enables us to produce aircraft at more attractive prices for our customers.”

While economy-class seats are already largely standardized across carriers, the shift to a unified business class may pose risks to fit-out companies offering customized premium cabins, Lamb said. Suppliers include Wellington, Florida-based B/E Aerospace Inc. (BEAV:US) and Wichita, Kansas-based DeCrane Aerospace Inc.

“It’s more the third-party providers who may feel the effects of this,” he said by phone. “The airlines may end up having greater buying power than they do at the moment.”

To contact the reporter on this story: David Fickling in Sydney at

To contact the editor responsible for this story: Anand Krishnamoorthy at

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  • BEAV
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