Established in 2003, the Abu Dhabi carrier is one of the “big three” airlines of the Middle East, alongside Dubai-based Emirates and Doha’s Qatar Airways.
The airline has gained quite a reputation over its 15 year history. Rated a 5-Star airline by Skytrax, Etihad flies to 90 destinations worldwide and operates a large fleet of Boeing and Airbus aircraft, including the Airbus A380, the world’s largest commercial aircraft.
However, Etihad Airways has been on the decline for the past few years—retiring aircraft, cutting destinations, and laying-off staff, losing boatloads of money along the way.
Here are a few reasons Etihad could conceivably go out of business in the next decade or so.
- Strong competition from Emirates.
Established in 1985, Emirates is one of the largest airlines in the world, serving 150 destinations on all inhabited continents, with a fleet of 100 A380s and 150 777s. Emirates is also a 5-Star Skytrax airline, carrying nearly 60 million passengers a year.
It’s important to note that Emirates operates out of Dubai, just an hour-and-a-half away from Etihad’s Abu Dhabi base.
But despite their geographical proximity, these two airlines are going down very different paths.
While Emirates collected $762 million dollars in profits last year, Etihad only made $103 million and actually lost $1.87 billion dollars.
This graph compares the profits of the Gulf Three over a ten year period from 2006–2016. As you can see, Emirates is absolutely killing the competition, with Qatar in second and Etihad lagging way behind.
There are a few reasons why I believe Emirates is so much bigger than Etihad.
- Emirates operates out of Dubai, which is a major tourist destination and has lots of exciting things to see such as the Burj Khalifa (world’s tallest structure), the Palm Islands, lots of fancy shopping malls, and a hot nightlife. On the other hand, Etihad’s Abu Dhabi is less exciting. I have visited both cities, and let me tell you firsthand that Abu Dhabi is one of the most boring capitals in the world.
- Dubai International Airport is much larger and more luxurious than Abu Dhabi’s. I’ve connected on flights between both airports many times, and Abu Dhabi has one of the worst airport designs in the world with tons of passengers ferrying through a relatively small terminal^.
- I’ve flown on Etihad twice and Emirates four times, and in my experience Emirates has been a much better airline. Food, flight entertainment, and service were all better, despite Etihad also being 5-stars.
^AUH is building the large Midfield Terminal, scheduled to open next year, so hopefully this will change.
2. Al-Maktoum International Airport.
Dubai Al-Maktoum International Airport (DWC), scheduled for completion in the 2020s, will be one of the largest and most technologically advanced airports in the world and is projected to carry between 160 million and 260 million passengers annually.
Most importantly, DWC is 23 miles closer to Abu Dhabi than the current Dubai International Airport.
In the 2020s, Emirates will become even larger, with 256 total new A380s, 777s, and 787–10s to join the fleet, and with a new hub they will expand to several new destinations across the world—surely increasing the airline’s revenue.
When Emirates shifts all operations to DWC in 2025, the airline will steal tons of customers from the Abu Dhabi market, costing Etihad hundreds of millions in lost revenue.
3. Terrible investments in airlines.
Etihad had an absolutely terrible strategy to invest in failing airlines to try and make them great again.
In December 2011, Etihad purchased a 29 percent stake in the German carrier Air Berlin for $84.75 million dollars and loaned $296 million dollars to the company to purchase new aircraft.
Air Berlin later filed for bankruptcy and ceased operations in 2017.
In 2014, Etihad purchased a 49 percent stake Alitalia for $2 billion dollars, only for the company to go bankrupt a few years later.
Etihad also purchased shares in Air Serbia, Air Seychelles, and Jet Airways. There are rumors the company will sell their entire 24 percent stake in Jet Airways by December 2018.
The company’s terrible investment strategy cost them billions of dollars, and is partially the reason why the airline has been bleeding cash the last few years. On the other hand, Emirates has steered clear of investing in other airlines.
What will become of Etihad Airways?
There is strong reason to believe Etihad will merge into Emirates in the next couple decades.
Etihad has already allowed their pilots work for Emirates while retaining their seniority in the company.
With Al-Maktoum Intl serving as a midpoint between Dubai and Abu Dhabi, the two airlines could combine and operate a superhub airport with hundreds of destinations.
In conclusion, Etihad Airways has a terrible market strategy, and is getting outclassed by its competition who are slowly encroaching in the company’s markets. by Hari-Sanil
I’d definitely agree with Hari Sanil in the sense that Etihad is on thin ice, but let’s have a look at some others:
- Malaysian Airlines
MH is a successful airline, for Malaysia. However recently we’ve seen rapid expansion in the Pacific, with Lion Air and Garuda quickly growing in size. In fact, Lion has had to un-retire some 747s just to cope with demand. Both of these airlines also have 737-MAXs hot off the press, and Lion has been a launch/early customer of both (so far) commercially flying MAXs.
Malaysian, however, is sagging. With an aging fleet and only a handful of A350s (which, let’s face it, are probably an attempted middle finger to Boeing), they aren’t doing much about modern aircraft, namely: 777X, 787, A330NEO, 737MAX, and again not many A350s.
And their main issue: reputation. Although MH17 and MH370 weren’t Malaysian’s fault, they’ve heavily scarred the airline. Yes, it’s sad. Yes, I think it should be stopped. But it’s not up to the avgeeks to change that. MH is still a joke to the public and I don’t think we should expect that to change.
Wow is probably my favourite Icelandic airline, and with A320NEO/A330NEOs on the way, you’d expect them to be doing well.
However, the airline is cutting routes and having longer layovers, reducing efficiency. These are early stages of a bankruptcy. I don’t think WOW will go bankrupt!!! But they do share common current business strategies that Air Berlin, Monarch, and even Etihad have shown/are showing. Hopefully, they can continue to fly, despite these losses.
Apparently (do not trust me at all on this, after all we all know bad reviews tend to exaggerate things), WOW also needs to step up their game when it comes to customer service. I haven’t personally flown with them, so I don’t know.
3. Austrian Airlines
OS is different from most others in this list, as for the moment its not actually doing that poorly.
Austrian Airlines is part of the massive Lufthansa group. Above is LH’s fleet plans for 2025^.
As you can see, Austrian’s 767 and 777 are very vulnerable, with no current replacement. This doesn’t mean that OS will be terminated, it just means that for the meantime, LH hasn’t decided on what will be their successor. Personally, I’d love OS to have the 787, and I think it’d suit their fleet well.
So Austrian may not disappear from our skies, but we should expect some changes in Austria. Whether this means OS will have a complete transformation, or a termination, or even if LH decides to open a different subsidiary in Austria, it’s uncertain.
4. Nauru Airlines
This airline, again, isn’t doing too badly. However, with an average fleet age of over 21 years, Nauru may be forcefully grounded if they don’t order some new planes and fast.
Their youngest aircraft, for instance, is a 737–300.
Luckily, there’s one plane that is the same size as the 737–300, waaay more efficient, with better range and less required maintenance. Any guesses? No?
The 737–7MAX. If Nauru is somehow able to operate the B37M, they’d easily make it into the 2030s.
5. Allegiant Airlines
Okay I couldn’t resist.
If you follow ATC Memes – Funny Air Traffic Control Memes, you’d know about Allegiant’s… ‘interesting’ average fleet age. With their aging MadDog series aircraft (MD-80/90), Allegiant is the modern equivalent of ValuJet (without the whole fill the planes with explosives to save money part). However, I have surprisingly good faith in America’s sketchiest airline.
With orders for A320s (and A320NEOs I believe), AAY is very likely to fold over their bad reputation and become a pretty decent airline.
Well, that’s my five.
Again, you should definitely check out the other answers to get a good idea of the more technical side of things.
And by the way, I have nothing against any of the airlines I’ve listed here. A lot of them are very close to me and I would be very disappointed to see any of them disappear from our skies. by Lachie Smith