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Etihad Airlines’ Input to UAE Industry’s Growth Report

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Updated: Jul 26th, 2021

When organizations launch their operations, they always aim at maximizing profits in the process of meeting their customers’ tastes and preferences. Markedly, the stakeholders have to ensure that the firm attains its strategic goals and objectives. In their objectives, organizations attempt to expand their services, recruit, and retain many competent employees, as well as comply with the stipulations of company regulations of ensuring that they submit tax returns to the tax office of the country in which they operate. The Etihad Airways has been playing significant roles in the business sector of the UAE and the Gulf Cooperation Council (GCC) region. The crowded Gulf region airspace has experienced stiff competitions among key players like the Emirates Airline, Qatar Airways, Jazeera Airways, and the Etihad Airways. In expanding its services across the Gulf region, the company intended to assert its presence in the airline industry. With their excellent connectivity and several weekly flights across the region, the Etihad Airways has benefited directly or indirectly the economy of the UAE as well as the GCC region (Etihad Airways Annual Report 2013, 2014). The report seeks to expound on the contributions of the Etihad Airline to the growth and development of the UAE and the GCC.

The United Arab Emirates airline is state-owned; Etihad Airline, which is based in Abu Dhabi began operating in 2003, and, markedly, by the end of 2012/2013 fiscal year, it had carried 11.5 million travellers. From its base in Abu Dhabi, the company flies to 111 traveller and freight destinations in the Americas, Europe, Middle East, Asia, and Africa (Competition in the skies, 2014). Apart from owning a fleet of 105 airbus and Boeing Aircraft, the company has equity investments in Jet Airways, Virgin Australia, airberlin, and Air Serbia. According to the Etihad President and CEO, James Hogan, the company is also on the verge of enacting equity investments in Swiss-based Etihad Regional and Alitalia. With all these investments, the Abu Dhabi State-Owned airline boasts of having an employee base of over 20,000, as well as serving 111 announced or existing destination in 63 nations globally. In addition to the 11.5 million passengers, Etihad Airways recorded 486,752 tons and overall revenues of $6.1 billion at the end of 2013. James Hogan believes that the company still needs to venture into many destinations, especially in Africa. Clearly, the existence of the airline firm has led to construction and expansion of many terminals. The continued expansions in its services are clear indications of growth of the business sector, not only in the UAE, but also in the greater GCC member nations.

The entry of the Etihad airline in the GCC region made the Jazeera Airways and Qatar Airways to join calls for a unified airspace in 2009 given that it was a potential bottleneck for the Gulf Cooperation Council (GCC) region’s growth and development. Similar to the liberalization witnessed in the European airspace in 1997, the President and CEO of the Etihad Airways holds that the move would be beneficial to the economy of the GCC region. He explains that more routes will make it possible for the airline industry to reach and even surpass its potential. From this analogy, the transport liberalization implies more aircraft to operate in the region. As a result, there will be several constructions of aircraft to match the needs of the growing sector. Importation of aircraft materials as well as the technocrats increases the technology base of the business sector (Competition in the skies, 2014). Infrastructural development plays critical roles in the overall growth of a country’s economy, and with the construction of more aircraft and expansion of airports in the GCC region, the Etihad Airline is helping in the overall growth and development. For example, the competition among Qatar, Emirates, and Etihad Airlines in the GCC region has seen countries like Saudi Arabia, the UAE, Bahrain, Oman, and Qatar allocate large-sums of money for building new airports and expanding the present ones. This is clear evidence that Etihad Airways has created direct impacts to the growth and development of the UAE and the GCC’s economies. The initiatives of placing old aircraft and constructing new terminals and expanding existing ones are meant to improve travellers’ experience. In the Dubai Air Show of November 2013, the Etihad Airline, just like its competitors – Emirates and Qatar Airlines, placed orders for aircraft costing QR243.88 billion ($67 billion) to help it meet the needs of the expansive market (Competition in the skies, 2014).

In easing the movements of passengers and cargos in this region, the Etihad Airline is helping in reducing the time and cost of trade if the consignments were to use an alternative means of transport to their destinations. This point borrows heavily from the concept of international trade. By using air transport, businesspersons find it easy to reach the target customers with their products at relatively low prices. Therefore, the Etihad Airways, just like other airline firms in the region, has enhanced trade within the UAE and its environs – the GCC region. Apart from being a tax-compliant firm, the company offers flexible flight schedules to meet the needs of tourists visiting the GCC region. With tourists coming from regions like the US and Europe, the company has been able to bring into the UAE and the GCC region great revenues in terms of foreign exchange. For example, the Etihad Airline and Air Seychelles recently made changes in their schedules in order to serve the interests of their guests (Etihad Airways and Air Seychelles enhance connectivity with new Abu Dhabi-Seychelles schedule, 2014). The changes are expected to take effect from 1st December; it will ensure that tourists and other passengers have more convenient travel preferences.

From an overall analysis, the Gulf airlines, which have a global traffic share of 9%, projected a profit of 12% of the global target by the end of 2014 (Competition in the skies, 2014). This reveals the great extents that the Etihad Airline and its counterparts have moved in their pursuit to offering better services to their passengers. A report from International Air Transport Association (IATA) in 2012 revealed how the Gulf carriers have extensively expanded the economy of the region. These import-based economies get effective transport from the Etihad Airline in order to diversify their services.

In retrospect, the expansion of the Etihad Airline has resulted in the growth of the tourism industry in the GCC region. Besides, its ability to offer quality and flexible services to its passengers and cargos are clear indicators of the company’s support in growing and developing the economy. The more than 20,000 employees working for the company are able to improve their living standards. As an indicator of economic growth, the company has reduced the rate of unemployment. The Etihad Airways has also continued to adopt new technologies in all its key departments in order to continue offering outstanding services to its customers. In October 2014, the company partnered with SAP SE to provide latest technologies in the airline industry (Etihad Airways Selects SAP as a Strategic Technology Partner for Business Transformation, 2014). The move has led to the development of the IT solution firm. Clearly, the operations of the Etihad Airways have impacted positively on the economies of the UAE and the GCC region.

References

Competition in the skies. (2014). Web.

Etihad Airways and Air Seychelles enhance connectivity with new Abu Dhabi-Seychelles schedule. (2014). Web.

Etihad Airways Annual Report 2013. Web.

Etihad Airways Selects SAP as a Strategic Technology Partner for Business Transformation. (2014). Web.

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IvyPanda. 2021. "Etihad Airlines’ Input to UAE Industry's Growth." July 26, 2021. https://ivypanda.com/essays/etihad-airlines-input-to-uae-industrys-growth/.

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IvyPanda. (2021) 'Etihad Airlines’ Input to UAE Industry's Growth'. 26 July.

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