Etihad CEO: U.S. Carriers Are Trying to “Stifle Competition”

Etihad Airways CEO said air carriers should look to the U.K. for inspiration on how to keep the airline industry competitive.

Abu-Dhabi’s Etihad Airways President and Chief Executive Officer James Hogan said in a speech Thursday that new competition must continue to thrive despite entrenched interests of dominate-airline legacy carriers.

“Air travel is the lifeblood of the modern economy. But while the modern globalized economy has seen trade and tourism jump forward in leaps and bounds, the structure of our industry has shuffled forward only a few tiny step,” Hogan said while delivering a lecture at the Royal Aeronautical Society in London.

Hogan noted that while air travel contributes greatly to global trade, the commercial airline industry’s current regulatory system limits consolidation, competition and consumer choice.

“This is an industry which cries out for new competition, across many different markets; but it is one in which smaller operators can only operate in niche environments” Hogan said. “That means this is an industry which requires a massive cost of entry to compete.”

Etihad’s growth model has supplemented investment in organic growth with strategic equity partnerships, allowing Etihad to compete against larger competitors.

“Currently, the U.S. carriers are investing tens of millions of dollars to attempt to stifle competition, and we have seen similar moves by some the larger European legacy carriers,” Hogan said. “

“The victim here is the customer; the cost is innovation.”

In August, FlyerTalk reported that Etihad, its airport services business and five equity partners a secured $500 million round of funding on the international markets.

Etihad Airways, Etihad Airport Services, airberlin, Air Serbia, Air Seychelles, Alitalia and Jet Airways together raised the funds, which will be used for capital expenditure, investment in fleet and refinancing, depending on each individual airline’s needs.

“The success of this transaction is a major endorsement of the shared vision and strategies of these businesses by the global financial community,” said Hogan at the time.

The September transaction was the first time Etihad and its partners raised funds together. To date, Etihad has raised over $11 billion from more than 80 financial institutions.

[Photo: Etihad Airways]