Etihad, Lufthansa and EU Nationals Control

The LBA on 16 October 2014 reversed a decision to cancel 34 code share flights of Etihad and Airberlin that was taken a few days earlier. The reason for the earlier cancellation was that these code share flights violated the traffic rights agreement between Germany and the UAE. A meeting later in the month between both governments to discuss the bilateral will clarify things for the future. Lufthansa blames these code shares for the overcapacity on the Abu Dhabi route and called them unjustified.

Lufthansa has lobbied the EU to reexamine the control issues of foreign equity stakes in EU carriers and has lobbied for the courts to block Emirates Milan/JFK flights earlier in April 2014; those flights are now operated on a temporary authority pending an appeal's court decision.

Lufthansa has been more vociferous than most regarding the 3 Gulf carriers expansion into Europe. The EU now is examining whether Etihad controls Airberlin and Alitalia through its equity stakes and is also looking at the Delta/Virgin Atlantic deal. This has prompted the Swiss authorities to look at Etihad's control of Darwin Airlines now branded Etihad Regional.

The issue of foreign investors having control of EU carriers is  becoming a thorny issue. There is a needed balance required between control and the investment risk of bailing out a European carrier and preserving jobs and airline services to communities. The major EU legacy carriers are coming under pressure from EU LCCs and apparently from the Gulf carriers that they are not willing to invest more but are looking to cut costs and curtail services. Air France/KLM declined to increase its stake in Alitalia and Lufthansa was not interested in a minority stake. Etihad worked very hard to get the unions and the creditors to accept its terms for its USD 750 millions direct investment for a 49% equity stake in Alitalia. The problems of Lufthansa and AF/KL are compounded by the mega orders from the Gulf carriers for Airbus aircraft with the associated economic fallout of order cancellations.

Etihad will modify its agreements with its equity partners to comply with the EU and Swiss regulators control requirements. Etihad did the same in India when the regulators questioned its control of the Jet Airways board. Etihad will not jeopardize its strategy for expansion; one that is based on equity partnerships providing access to new markets, cost savings in aircraft acquisition, maintenance and other services and more traffic through its Abu Dhabi hub.

The airline industry is more global than ever; the EU has to balance its requirements and need of EU nationals control of its airlines and the foreign investment in these airlines. These investments preserve jobs and services in Europe at a time when its economies are under pressure and their own carriers are not willing to invest.

ADAT, Moving Forward or ...

In early May 2014, Etihad Airways acquired or took over Abu Dhabi Aircraft Technologies (ADAT), formerly Gulf Aircraft Maintenance Company (GAMCO), from Mubadala except for the Engine Shop.

GAMCO was founded in 1987 as a partnership between the Government of Abu Dhabi and Gulf Air who owned a 40% stake, primarily to undertake the existing wide body and new technology aircraft (L1011, B767, A320, A330 and A340) fleets of Gulf Air. As Gulf Air's financial situation deteriorated in 1997, GAMCO expanded its third party business and aircraft maintenance capabilities beyond the Gulf Air requirements. As a result GAMCO expanded to become one of the top 15 MROs globally and number 1 in MENA (between Europe and Singapore) with more than seventy (70) customers ranging from North America through Europe and MENA all the way to the Far East. In early 2006, Gulf Air pulled its maintenance from GAMCO following the 2005 withdrawal of the Abu Dhabi Government from Gulf Air. The relationship between Gulf Air and GAMCO was at best very uneasy.

As a result the Abu Dhabi Government acquired Gulf Air's 40% share in GAMCO and turned it over to Mubadala, a government investment arm in the aerospace and technology sector. In 2007 Mubadala rebranded GAMCO as ADAT.

When Etihad was formed in 2003, GAMCO was entrusted with the total maintenance and support of Etihad's expanding fleet. Fast forward to the present; a decade later Etihad has withdrawn and brought inhouse a substantial amount of services leaving ADAT to perform airframe heavy maintenance and components/engines repair and overhaul activities.

Beyond the press releases and the great sentiments of moving forward there is an underlying desire for Etihad to take total control of its total maintenance activities for several reasons (punctuality, quality etc..) and to improve the synergies with its airline equity partners. The next step will be to bring in maintenance from Airberlin, Jet Airways, Air Serbia, Air Seychelles and who knows Alitalia in the future in order to reduce cost and safeguard its investment. As Etihad tightens the reins and demands more and more attention to its fleet and its partners fleets, other customers will shy away. The region has never been known for balanced relationship.

Whether this is really moving forward or a case of Deja Vu, only time will tell

RAK Airways, Full Circle.

On January 1, 2014 RAK Airways suspended operations for the second time, citing rising costs, the conditions of the aviation industry and geopolitics. The airline indicated that the board will review the state of the airline and decide whether the airline will resume operations.

As usual things move fast in MENA. On February 2, 2014 Ras Al Khaimah Directorate of Civil Aviation signed an agreement with Air Arabia, designating it the National Carrier of Ras Al Khaimah. This morning February 4, 2014 Adel Ali, Air Arabia Group CEO confirmed to Dubai Eye that Ras Al Khaimah will be the airline's fourth hub and will be basing its aircraft there to operate to destinations in the Middle East and the Indian Sub Continent.

RAK Airways was founded in 2006 as the fifth UAE national carrier based in Ras Al Khaimah. It started operating in 2007. By 2009 the airline suspended operations. It announced the resumption of operations in 2010 but actually restarted in 2011. The second time around the airline was more organized and operated to ten (10) cities  (Abu Dhabi, Riyadh, Jeddah, Doha, Amman, Peshawar, Lahore, Islamabad, Calicut and Katmandhu) using two A320s in two (2) class configuration 8 Business and 160 in Economy.  RAK Airways operated to Abu Dhabi and had a code share with Etihad to London Heathrow, Manchester, Dublin, Geneva and Bangkok.

RAK Airways never had a defined business plan, other than the usual rhetoric of development of tourism and aviation in Ras Al Khaimah, and if it did it was never published. The airline had 7 CEOs in as many years.

Ras Al Khaimah is emerging as a tourist destination with 1.2 million visitors last year and global hotel chains like Hilton, Waldorf Astoria, Crowne Plaza, Rotana and others opening hotels and resorts in the emirate. These tourists preferred to fly to Dubai, since the majority of them came from destinations not served by RAK Airways.

Ras Al Khaimah government realized that going it alone in the Northern Emirates with their 800,000 inhabitants is not going to work out. Developing tourism using limited regional destinations does not work when most of the tourists hail from Europe and North America.

The question that raises itself now is how would Fujairah react to all of this, if at all? The emirate is developing into an important oil terminal with oil related industrial activities after the inauguration of the pipeline from Abu Dhabi to Fujaira. It boasts tourist areas like Khor Kalba, Massafi and the proximity to Khor Fakkan, the Sharjah resort on the Gulf of Oman. It is linked by a modern super highway to the major cities of the UAE, reducing travel times.

Another interesting issue will be the Ajman International Airport (under construction) which is in close proximity to Sharjah International Airport and Dubai International Airport and is raising ATM concerns within the UAE.

We wait and see

Flydubai: From a Low Cost to a Hybrid Airline

Flydubai is introducing a Business Class (click here for full story) as of October 2013 with a soft start on selected flights in August 2013 after the delivery of its first two (2) class aircraft. A twelve (12) seats at 42 inches pitch dedicated cabin with 900 hours of IFE on a 12.1 inches HD touch screen. A full Business Class service with a lounge, dedicated check in, priority baggage collection and other amenities. Flydubai just changed its business model from a low cost carrier to a hybrid if not legacy airline following in the footsteps of Bahrain Air. Who will bear the cost of this offering remains to be seen. Are we looking at a low cost business model? not really looking at what Flydubai is offering.


The reason for the change, passenger feedback!!! Ah well, why would a passenger looking for low fares want to pay for a Business Class service. I guess some passengers wanting to interline with Emirates flying in Business would want that.

To put things in context, Flydubai and Emirates passengers can book flights that start with one airline and continue on the other (interline) on either website. Passengers and luggage are transferred from one terminal to the other free of charge.

The main beneficiary of this change is Emirates, they will get additional Business Class feed from the growing network (now at 60 destinations) of Flydubai especially destinations not served by Emirates into theirs. I am sure there will be some schedule tweaking  from these destinations to optimize connecting times.

Dubai has always evolved and Flydubai should not be any different. Only time will tell how this move will impact costs at Flydubai and to a certain extent Emirates.

Simply India

"I don't see any major problem for the deal" quoting India's Civil Aviation minister as the JetIhad deal was put on hold by the Foreign Investment Promotion Board (FIPB) and the Securities and Exchange Board of India (SCIB). Both have requested more details on the deal in terms of how much control Etihad will have in Jet Airways relative to its 24% stake. The issue seems to be all about effective management and control. Etihad and Jet Airways will meet both regulators requirements, it is not in their interest no to.

After the approval of the FIPB, the issue will be presented to the Cabinet Committee on Economic Affairs for final approval. 

It is not that the various regulators require clarifications that is a problem in India. It is the fact that one regulator approves the deal and things start moving along before the others clear it. One would think that there is a well thought out process for approving FDI, having talked about it so much, obviously not. 

Thoughts on Emirates Response to Jetihad

This post was first published in Bangalore Aviation as a part of a guest post titled Three-way Analysis: How does Emirates respond to Jetihad? written in collaboration with Devesh Agarwal and Vinay Bhaskara of Bangalore Aviation. This blog has been enhanced with their insight of the Indian aviation industry and government dynamics.

The Indian government has the knack of making interesting decisions like encouraging Air India to dump prices to gain market share causing mayhem in the market place and increasing Air India’s losses or Allowing Air Asia to invest in Indian aviation by approving a JV with the Tata and Bhatia group, creating an LCC that will put pressure on Indigo and SpiceJet. The latest was quadrupling the number of seats between India and Abu Dhabi which will benefit mostly Jet Airways and Etihad or Jetihad. 

In a Bangalore Aviation recent blog (http://www.bangaloreaviation.com/2013/04/infographic-airline-wise-share-of.html ) on International Traffic Share in and out of India showed Jet Airways share at 16.01%, Emirates at 13.04% and Etihad at 1.95%. The India market is important to the GCC carriers it provides feed to MENA, Europe and North America, a market that is being developed by these carriers with a station starting almost every month, the latest is Qatar Airways to Philadelphia. The latest India/UAE bilateral will almost double the allocated per week seats of Jetihad over Emirates.

Dubai has unofficially asked for a doubling of the per week seat allocation but requested an increase from 54200 to 72400 seats per week. 

Emirates can opt for an FDI in one of the LCCs and collect the prize of added capacity, an unlikely option after their earlier experience with SriLankan.

One option is for Emirates to code share with one of the large domestic players like Indigo or SpiceJet in order to increase its India feed and encourage them to operate into Dubai. Emirates currently code share with Jet Airways on the Mumbai and Delhi daily flights to Dubai. Flydubai flies only to three destinations Hyderabad, Ahmedabad and Lucknow and would like to increase its India destinations (which is less than 2% of its capacity). Flydubai is capable to fly to smaller secondary airports providing feed to Emirates through the link on their respective websites.

Code sharing is a short term solution. Ultimately, the real solution has to be through the India-UAE bilateral. Emirates needs the increased capacity for itself and Flydubai. Emirates can leverage Dubai’s position as a global hub and destination for Indians. Indians are the top expatriate investors in Dubai property (9 Billion AED) and the UAE is the second trading partner of India and has billions of dollars in investments. Add to the mix, almost two (2) million NRIs living in the UAE, a good proportion affluent. Dubai can also leverage its stature in the UAE to push the boundaries of the bilateral. Jetihad has shown that Air India and indeed the airline industry interests can be put aside by the government if the stakes and overall benefits are framed correctly. 

How Emirates and by extension Flydubai and indeed Air Arabia will frame their argument remains to be seen. Regardless, with the lack of a clear India Aviation Policy, the government will react to a properly framed request.

April, A Month of Surprises and Controversies

April has been an interesting month for Etihad and the region. No surprises, well maybe a few small ones.

The big news is Etihad's 24% equity stake in Jet Airways for $379 million, no surprises here.
This will increase Etihad's reach in India which was only 2% of India's international traffic in 2011/2012. It will also provide Jet Airways with an international hub in Abu Dhabi. The equity stake will come with the usual joint fuel purchases, insurance, maintenance and ground handling, etc. to save both airlines money.
 
The surprise is, two days later, the Indian Government signing an agreement with the UAE allowing for 50,000 seats weekly for each side from the current 13000 between India and Abu Dhabi phased in over 3 years. A move that miffed Indian carriers, and Jet airways wants 41600 seats (its current share is 4285 seats). So far so good, except Air India is now faced with a problem much bigger than Emirates. A GCC airline with a tremendous Indian market reach and feed. Air India is expected to get its act together and start competing, ah well more likely they will ask for more government subsidy, at a cost to the taxpayer which is much more than Etihad's FDI.

FDI was intended to inject foreign investment in the existing airlines to allow them to expand.
Well maybe not, earlier the Indian government approved a joint venture between Air Asia and the Tata Group, Air Asia India. A low cost airline that will compete with Spice Jet and Indigo. The two airlines least affected by the Etihad/Jet Airways deal. That will keep the aviation market in India in a state of flux.

Another surprise is a code share agreement between Air Canada and yes Etihad. Two years back a request for additional frequencies and destinations for Etihad and Emirates had Air Canada up in arms to the point that it strained diplomatic relations to the point the UAE government revoked the entry visa at arrival for Canadians among other things. Things have been improving and Canadians got their visas on arrival privileges back. It seems Air Canada realized there are Canadians living in the UAE.

Abu Dhabi was in the center of some controversy, a DHS proposal for a US Immigration and Customs pre clearance arrangement in Abu Dhabi. This had US Carriers, A4A and others complaining, putting it mildly, that this will provide an advantage to a foreign carrier in a city where no US carriers operate. Well, that prompted Dubai to put itself forward as an alternative, after all both Delta and United operate to Dubai and Emirates has more USA frequencies. I am sure we will be hearing about this in the coming few weeks.

Of course the old complaint of EXIM bank financing of foreign airlines' aircraft purchases came up again. Delta and others do not like it, according to them it affords foreign competitors owned by governments an undue advantage. These days competing aircraft are almost technically and operationally similar, so financing tips the balance. Europe has ECA to support Airbus, go figure Delta. Considering that US carriers don't even consider the MENA market worthwhile, taking the amount of direct flights to the region as an indication, the only thing it will achieve is loss of jobs at Boeing and their suppliers. US carriers have to learn to compete on service, I mean service comparable to GCC and Asian airlines and of course it would help if they increase the frequency from a daily flight to Dubai to a few other destinations in the region.

Last but not least, Qatar is demanding and Canada is resisting a request to move the ICAO headquarters from Montreal, where it has been since 1947. The reasons are location (too far for Europe and Asia), harsh winters, high taxes and of course visas, Canada makes it hard for delegates to get visas. Qatar proposed Doha as an alternative and is ready to build the new head quarters and fund the UN agency's running costs starting from 2017 (the lease for the HQ ends at the end of 2016)

On the lighter side of things passenger traffic increased in MENA and a few airlines were profitable!

Beginnings.....

Every journey must come to an end and every end marks a new beginning. In May 1996, this journey began when I joined GAMCO as the Manager of Quality Assurance after eighteen years with Royal Jordanian. Amman was home and will always be.

Sixteen and half years and three jobs later it is about to end. I was forty when I came to the UAE, I used to joke and say; life starts at forty. Life in the Emirates had its ups and downs, but it was fun. Abu Dhabi is a great place to raise kids. The UAE became another place we call home.

Now, it is about to end and a new beginning at a place we learned to also call home, Sterling Heights, Michigan. As of mid January 2013 I will relocate and the chances are I will be on my own, a daunting thought. Scared, damn right but more importantly very excited. Aviation, is a tough business, now more than ever but every challenge is an opportunity.

I want to take this opportunity, regardless of what I am doing, I plan to mentor young men and women who made or want to make aviation their career, maybe teach. Help them rediscover the spirit that my generation had when we were young. The drive and passion that we had for an industry that is now reduced to numbers and shareholders equity. Somewhere along the way we all forgot that there are stakeholders other than shareholders who are as important if not more important.

We all forgot that aviation is about people, people who fly, maintain, build aircraft and all those who make it happen. It is about people who dare to dream and live the dream. It is about people who fly to their dream vacations or to conclude the business deal of their life; to people flying to new beginnings, challenges and opportunities.

All Happening in the UAE

The United Arab Emirates Aviation sector is by far the most dynamic and vibrant in the region both the GCC and the wider MENA. No day passes without an amazing activity.

Emirates Airlines is the most valuable airline brand in the world for 2012, ahead of Singapore Airlines and Lufthansa at USD 3.7 Billions. The airlines continues as the role model and bench mark for its regional competitors. The airline signed a 10 years code share agreement with Qantas, an agreement that has far reaching implications in Asia and to oneworld.

In Seattle, Tim Clark said that Emirates will buy another 40 A380s to bring the total to 130 aircraft. One problem is space at Dubai Airport. The airline will become the largest airbus customer. On the same note Emirates started its A380 service to Melbourne this Thursday, 27 September 2012. He also told Boeing that the first B777-300ER will be retired by 2017 and the airline would like to replace the fleet with a new updated B777. It was a good time to start "bellyaching" to get a new jet started.

On the domestic front, Rotana Jet started its double daily flight to Al Ain from Abu Dhabi Thursday,
27 September 2012, bringing its domestic network to four (4) destinations. Ten (10) days after the inauguration of its daily flight to Fujairah. Rotana Jet is planning flights to Sharjah, Ras Al Khaimah and Al Ruwais.

Air Arabia will fly to Erbil on 14 October, its second Iraq destination. Not to be outdone Flydubai is launching new destinations to Bucharest on 1 October 2012 and Skopje from 18 October 2012.

Etihad Airways announced an increase to daily flights to Istanbul starting 1 January 2013. Two (2) weeks ago Etihad CEO led a team of Etihad Airways and airberlin executives to Boeing to look over the B787.
Both carriers are integrating their B787 programs and streamlining their infrastructure and purchasing activities. Etihad has forty one (41) and airberlin fifteen (15) B787s on order. Etihad has nine (9) B777s
to be delivered in the coming fifteen months.

To top it all the GCAA announced that August 2012 had almost sixty (60) thousands air traffic movements
a 6.9% increase over 2011.

ROTANA JET ..... TAKING OFF

ROTANA JET flew its first commercial domestic flight on 6 June 2012 from Abu Dhabi, Al Bateen Executive Airport to Sir Bani Yas, an island resort since then Dalma Island was added.

As of 19 September 2012 ROTANA JET will operate double daily flights to Fujairah from Abu Dhabi International Airport Terminal 2 followed but another double daily flights to Al Ain starting
26 September 2012. These will be followed by double daily flights to Sharjah and Ras Al Khaimah.
The plan is to go to three daily flights at a later stage. Flights to Dubai are under consideration. Ticket prices will start from one hundred and fifty (150) to Al Ain and from two hundred (200) Dirhams to the other destinations, way less than a taxi fare. ROTANA JET will be competing with the buses and the taxis. 

Being domestic flights, there will be no immigration and customs formalities, and passengers should be able to check in and board the aircraft in a short time. 

ROTANA JET operates two (2) EMBRAER ERJ145 carrying fifty (50) passengers. There will be a beverage service offered due to the short flight times. There are plans to add a third aircraft next month and a fourth by the end of the year. The plan is for twelve (12) new leased aircraft In the course of next year. There is demand and load factors are expected at 60% to 70% going up to 80% later.

Just like when low cost airlines started people were skeptical, so is the case with domestic air travel in a relatively small country. This can work and will probably work and as time goes on people will get used to the idea of flying to Abu Dhabi or Fujairah for a day of business or pleasure.

Etihad, The Pressure is On

In the news this week Etihad added half a million passengers to 2.4 million passengers an increase of 26% in Q1 2012, pushing revenues to US$ 989 a 28% increase making it the best Q1 ever (click here for details).

On the other hand Abu Dhabi hotels revenue rose by 1% and occupancy went down by 6% on the back of new properties coming on line. In absolute terms the number of guests increased by 17% over the same period in 2011 (click here for details).

The numbers are great in absolute terms, but they put pressure on the Abu Dhabi Tourism and Culture Authority and Etihad to fill the additional capacity. Etihad needs to increase the percentage of passengers who have Abu Dhabi and the UAE as their final destination.

ROTANA JET .... A UAE FIRST

Today June 6 2012 witnessed the first regional flight from Abu Dhabi (Al Bateen) to Sir Bani Yas, an island off the coast of Abu Dhabi, a resort and nature reserve. (full story here)

ROTANA JET (no connection to the hotel chain) is the first UAE regional jet operator. It will be operating two (2) EMBRAER EMB145 regional jets with a fifty (50) passengers capacity. The plan is to operate three(3) weekly flights to the island. Flights to Ras Alkhaimah, Fujairah and Al Ain are planned for the near future with possibly Dubai at a later date.

ROTANA JET (www.rotanajet.ae) started as a corporate jet operator. The airline is introducing a new means of connecting the northern emirates to Abu Dhabi with the aim of encouraging nationals and expatriates alike to travel within the UAE and enhancing tourism to Abu Dhabi.

Kudos for having the vision and the courage to start an intra emirates operation.

Canada's Aviation Competitiveness Revisited

In a recent development, the United Arab Emirates and Canada entered into nuclear cooperation talks that could see Canada become the main supplier of the UAE's nuclear reactors. A sign of thawing relations that went sour last year over additional flights for Emirates and Etihad to Canada. Canada in an attempt to protect Air Canada refused the UAE carriers additional flights in October 2010.

On a different tack, last week IATA called upon Canada's policy makers to improve the country's aviation competitiveness including the reduction of the tax burden (read story here). This time the comparison is between Canada and Australia
- Direct GDP contribution 2.2% Canada vs 2.6% Australia
- Indirect GDP contribution (tourism and other activities) 2.8% Canada vs 6.1% Australia
- Passengers travelling to Canada 71 million vs 78 million to Australia in 2011 taking into account that Canada's
  population is 50% larger than that of Australia.
- The contribution to tax revenues is 19% higher in Canada than Australia not including the effect of the fuel tax
  which is double in Canada

However, there is a silver lining, British Columbia is removing the provincial tax on international jet fuel starting in April. This is a sign that Canada is starting to view aviation as a strategic asset and not just a tax revenue stream. Clearly the promotion of a competitive aviation sector will yield better results for the economy is terms of contribution to the GDP and employment. The protection of Air Canada at all costs against all competitors whether national or international has been the mainstay of the government's policy. This is similar to the Indian government's aviation policy that is based on the protection of Air India, and we can see the state of the aviation sector these days. It is approaching a melt down.

However, business considerations do come into the decision making process related to aviation matters. On the basis of the possibility that Qatar Airways may purchase the Bombardier C Series aircraft, Qatar Airways was awarded traffic rights 3 weeks after they were rejected for Emirates, Etihad and Qatar Airways.

So, at the end UAE carriers may still get their traffic rights, but Canada still lacks a vision for its aviation sector.


Related Blogs
Government Policy and The Airlines
Politics and The Airlines
Canada's Air Transport Competitiveness

The UAE 40th National Day

I arrived to the UAE in May 1996 in time for the 25th National Day of the UAE; to join GAMCO.
Today marks the 40th anniversary of the country. I came at the time the Abu Dhabi - Dubai road was not yet completed. Jumeirah was not built and the old Hard Rock Cafe was literally in the middle of nowhere.

The aviation scene had two major national players Emirates Airlines and GAMCO (now ADAT) and Gulf Air was the airline of Abu Dhabi. In 1996 Emirates had a fleet of 18 Airbus A310/A300-600 and the delivery of the 7  Boeing B777 order just started in the Spring of that year. GAMCO was practically the maintenance facility of Gulf Air (GF had a 40% share of GAMCO at the time) with less than 30% of its work performed for other airlines.

Aviation has come a long way in the last 15 years; Emirates is a Global airline with a fleet of  160+ aircraft and orders in excess of 210 aircraft and Dubai International Airport is poised to become the number 2 airport in the world, and definitely the most connected airport with more than 120 airlines serving it.

I was fortunate and privileged to be a part of this success story and was directly involved with GAMCO and by extension with Etihad Airways and Air Arabia in one capacity or another.

I was with GAMCO at the time Gulf Air started facing financial difficulties in 1997 and the decision was made to decrease the reliance on GF business in favour of third party work. In 1997 GAMCO won a 5 years contract to maintain the UK RAF fleet of 9 Lockheed L1011s which was subsequently renewed in 2002. Several other European, North American and regional airlines had long term contracts for the maintenance of their fleets. GAMCO was instrumental in the launching of  Etihad Airways in 2003; Etihad  has become an airline with Global reach. The Etihad fleet maintenance is currently managed and performed by ADAT.

Air Arabia the first LCC of the region was also launched in October 2003 a month before Etihad with GAMCO providing maintenance support. Air Arabia is a true success story pioneering a concept in a region used to full service airlines. I joined when Air Arabia had 5 Airbus A320s and left 4 years later when they had 16 aircraft and an order of another 44 A320 aircraft. The challenge facing everyone was to sustain profitable growth and in 2007 Air Arabia launched a successful IPO for 700 million USD which was 1.5 times oversubscribed to become the first airline in the region to go public, it is listed in the Dubai Financial Market.

Of course there are other success stories like Flydubai, DAE, Strata, Sanad and Amroc to name a few.

Congratulations to the UAE, a progressive, tolerant and forward thinking country in a turbulent region.

Etihad Airways Eighth Anniversary

This is not meant to be a chronological history of the airline, but my impressions as someone who was involved with the starting of the airline.

Etihad Airways flew on 5 November 2003 from Abu Dhabi to Al Ain and then on 12 November flew its frst commercial flight to Beirut. At the time the airline had Beirut, Damascus and Amman as destinations. Etihad Airways has expanded at a relatively faster rate than its competitors Emirates Airlines and Qatar Airways. The airline started with 2 Airbus A330s leased from TAM and an A340 leased from Boeing to a fleet of 63 aircraft (100 on order) serving 63 destinations in 43 countries and a cargo operation serving 14 destinations.

Very few people know how Etihad Airways started. The Amiri decree forming Etihad Airways was issued in July 2003, also appointing HE Dr. Sheikh Ahmed Bin Saif Al Nahyan as the first Chairman of the airline. He also was the Chairman of GAMCO now ADAT.

GAMCO's commercial, legal, contracts and finance resources were mobilized to set up the initial business plan and proceed with the AOC. Two aircraft were leased from TAM and then one A340 ex Singapore Airlines from Boeing. An MRO team of engineers and technical personnel had to become the start up team for the airline. A building slated to be the training center became the head office of the airline and the team handled functions like recruitment, purchasing of catering and commercial  equipment. At the time Air Arabia was starting and GAMCO was called upon to provide full maintenance and engineering support for it and Etihad which was not a problem for an MRO. One challenge was to set up airline functions like scheduling and maintenance control from scratch. GAMCO had extensive experience performing these functions for Gulf Air using GF's facilities, eventually that function was tuned over to the airline.

The airline was set up between July and November 2003 with aircraft leased and delivered and all commercial and cabin equipment provided. One challenge was the IFE system which was from Rockwell Collins a system that was not very popular in the region. Collins was called on to provide support and ensure a greater than 95% dispatch reliability of the system. A task that they performed efficiently.

Another challenge, that I was personally involved with, was providing logistics support for the A330s and the A340 at short notice. A support package was prepared and acquired from AJ Walter Aviation. The agreement was made during the 2003 Dubai Air Show.

Etihad Airways is an airline that a lot of us are proud to have been associated with it and believed in the vision that now is a world class airline spanning the globe.

Finally, everyone is dazzled with the performance of the airline that they all forget that it all began in an MRO by a bunch of engineers and technical people.

"The Cracked Record"........ Legacy Carriers vs. GCC Carriers

It flared up again, the accusations and arguments and counter arguments in the IATA AGM in Singapore (click here for full story). Mr. Giovanni Bsignani the outgoing Director General of IATA called for an end of the dispute between Gulf carriers and European/North American carriers in a civilized manner. He pointed out that the solution to call governments as advocates or referees has not worked and will not work and as responsible leaders of this global industry we should find a resolution by ourselves.

Of course, Air Canada will not have any of this and the litany of the Gulf carriers being supported by their governments as if Air Canada is not the darling of the Canadian Government the only difference is that the governments of the UAE and Qatar embrace an open sky regime while the government of Canada has one of the most noncompetitive and restrictive policy (read my blog Canada's Air Transport Competitiveness) Air Canada was supported by Austrian, a subsidiary of Lufthansa that has a record of opposing entry allowed under EU open sky agreements.

The problem lies in the fact that the Legacy carriers of Europe and North America are not able to match the growth of the Gulf carriers. I agree that they are at a disadvantage but it is not caused by government, it is caused by location, location location. The Ultra Range aircraft shifted the geographical center of aviation from Europe to MENA and the Gulf and allowed the carriers of the region to become real global airlines. The UAE and Qatar have always been open economies, yes they have requirements for local partners but they also have free zones that allow foreign companies to operate without a local partner.

So far the Europeans and the North American carriers have elected to lobby their governments to limit access for almost every airline from MENA. This is a failed policy, they forget that the Gulf carriers are developing markets in South America, Africa, the CIS and Asia locations where their governments have no influence.

The lack of innovative thinking and problem solving is indicative of organisations that have been very comfortable for a long time with the status quo and are at loss when the world changed. As long as these carriers bury their heads in the sand and go screaming to their governments there will be no solution. These Gulf carrier add value to the destinations they serve, they advertise them as holiday destinations something that the European and North American governments on the whole don't do.

So far no one knows exactly what they want other than stop the rapid growth of the Gulf carriers, in their countries, but would the threat go away when these carriers dominate traffic in Africa, South America and shut them out of there. I don't think so

The solution is to stop accusations and counter accusations and sit down and work equitable solutions that are win win.

This That and The Other

The last 10 days or so have been very bizarre. A long holiday the start of which coincided with Thanksgiving. Two holidays, Eid al Adha and Thanksgiving, two occasions for men and women to give thanks for the bounties God has given us.

It all started the evening before the holidays when Dubai World announced it wants to defer 60 Billion USD in debt for six months, the greatest faux pas in PR history. WOW, what were you thinking Dubai, by the time the holidays are over, all will be forgotten and life resumes normally. Well, the world freaked, a story like that and no one available for comment, not even the janitor, for 10 days. It did not help that Dubai disowned its off spring. As expected Dubai bashing restarted in the western press in earnest, stories like the city built on the sand, which assets Dubai will lose to Abu Dhabi but the best one was this crisis would derail the world economic recovery. Huh, 60 Billion USD in deferment will derail the world, what about the trillions lost and others spent for the bail out all over the world, get real people. Eventually cooler heads prevailed and the world settled down in anticipation.

All that while, the UAE celebrated the 38th anniversary of the union. A celebration which was nothing like the previous 13 I witnessed here. Emaraties expressed so much pride in their country, union and culture, a real coming of age.

Of course I did not get 10 days of holidays, private sector you know, The three days between Eid and National days were so full and hectic having to cope with the introduction of 2 new aircraft types in 6 months.

Of course it was not all work work, on National Day we had a Tweetup at Wild Peeta, great company, great fun and so diverse.

All in all a fun week or so, but really weird, freaky weird.

National Day

Tomorrow December 2, 2009 marks the 38th National Day of The United Arab Emirates (UAE). The only true and successful union in the Arab World. The result of the Vision of Sheikh Zayed of Abu Dhabi and Sheikh Rashed of Dubai (may they rest in peace) that forged a federal union of seven emirates known at the time as the trucial states. A vision that transformed a desert into one of the most dynamic and visionary countries in the world.

I arrived to the UAE in 1996 at the time of the 25th anniversary and was fortunate enough to witness and experience and may be contribute in a small way to its development. The change in the last 13 years was staggering and amazing. A vision so powerful, it galvanised Emaratis and Expatriates alike.

The UAE is a country that is tolerant towards religion, life styles and most expatriates' idiosyncrasies. This tolerance provides an environment that promotes a very comfortable life style, which is rarely found in any other country, just ask any expatriate that has returned home.

It is a tribute to the Rulers and Emaraties who along with millions of expatriates, have sustained, nurtured and developed the original vision that created this great nation.

Finally, thank you to all Emaraties for making us feel welcome and at home, in spite of our diverse life styles.

Wishing you all a Happy National Day

Autumn

I grew up in Jordan and Autumn was not the colourful season, Spring was the great colourful season. I went to college in Southern California (LA) and there was not an Autumn country either. Then of course the UAE where Autumn is remembered for the cooling down of the weather.

There is nothing like a North American Autumn. My first one was in 1977, I graduated and my sister was going to Bryn Mawr. The whole family was in Philadelphia, it was late September and for the first time I saw the colours of Autumn, such an overwhelming cacophony (I like this word, I know it has to do with sound and not sure it is the right one) of colours.

There were the few remaining greens but then the yellows, browns, oranges, reds and everything in between. I was so thrilled, it has left an everlasting impression, even though I am a colour blue person.

It was not until we moved to Michigan in 2004 that I had the time to take in all these colours, I remember walking with my son from school one after noon, a distance of no more than a mile and a half, and we collected more than 20 leaves of different shades and colours. Imagine, all of that in a mile and half.

Nothing compares to Fall in Michigan it is an experience in the beauty of nature, a true feast for the eyes.

The Place That Does

I was never a great fan of Dubai. Having lived in the United Arab Emirates (UAE) for almost 14 years, I always thought Dubai was artificial and ostentatious, not the best place to raise kids.

For the last year or so I have to drive across Dubai almost on daily basis. There is nothing like driving across Dubai in the early morning, very light traffic and easy driving, it gives one the opportunity to look at all these towers and reflect on how things were several years back.

Dubai, or to be more exact the Rulers of Dubai, had a vision and that vision evolves and changes year on year. That vision puts Dubai in a league of its own, not only within the UAE but globally. What differentiates Dubai is the will to implement that vision and realise it, at a time far richer and larger countries did not have the will. When Dubai started building the Metro a few years back, I could never figure why the rail went up and down instead of a simpler straight line, last year I saw overpasses being built over where the metro line dips. A vision so detailed that was designed a few years back and only being finalised now with such precision.

The recession has not been very kind to Dubai, but in a way it was needed to provide a reality check of what has become a totally changed Dubai which has lost its sense of balance. What is painful is the negative press that attacked Dubai and the UAE. Some of it is justified and is being addressed by amending existing laws or passing new ones. It is the hypocrisy of a lot of the authors of these articles that really angers me, why was it OK when Dubai was boom city and now it is all wrong.

Dubai is The Place That Does. Dubai is a place with a VISION, but more importantly a place that goes forth and delivers on that vision as planned and on time (well a few months late sometimes but better late than never).

Am I a greater fan of Dubai, well I am less critical of the place and sometimes I think it is actually cool. It is a privilege to be in The Place That Does.