On Monday, Etihad Airways, widely branded as the young pretender in West Asian aviation, reported a tripling of profits to $42 million in 2012. The airline’s chief, James Hogan, attributed this in part to savings, along with the revenue boost from the ‘equity alliance’ of stakes in four other airlines, especially airberlin and Virgin Australia.
The Abu Dhabi-based carrier, which will mark its first full decade of operations this year, seems to be carrying through its success into 2013, having started the New Year by setting a record for the number of passengers carried across its worldwide network in a single day. Etihad looks set to replicate its success with alliances, with plans to buy 24 per cent of Jet Airways, the second-largest carrier in India.
The airlines’ success is despite the downturn in the Gulf economies that has reduced passenger footfalls across the globe and at most transhipment hubs. Etihad has been quick to delink its success from royal largesse or cheap Gulf fuel. But beyond the externalities, Etihad, which operates about 70 per cent of traffic at the Abu Dhabi airport, has pulled into the slipstream of its Dubai-based big brother, Emirates Airline, which too in November last, had announced a more than doubling of its first-half net profit to $462.9 million in the six months to September 30. There are outliers in that market, of course like Manama-based rival Gulf Air which continues to be in the red, with business hit by Bahrain’s political unrest and competition from Emirates and Etihad.
Airline profits can be fickle, but the ten-year lifespan of Etihad coincides with a period when the Indian aviation, despite a CAGR of over 15 per cent, has been in difficult times. The Etihad success story is a clear contrast to the way Air India and erstwhile Indian Airlines performed.
But now the overall performance of the Indian aviation sector seems to be finally picking up, with record profits at SpiceJet (Rs 102 crore) and Jet Airways (Rs 85 crore) in the quarter ended December. The numbers sort of replicated the first quarter positive performance. IndiGo has been a steady performer, while there is a whiff of a possible operational turnaround at beleaguered Air India.
Anil is a Senior Editor based in New Delhi.