Etihad vs. Emirates: Will Etihad be able to keep up?
Etihad Airways celebrated 15 years of operations last month. Emirates, on the other hand, turns 33 this month.
The 15th anniversary was a much-needed reprieve for Etihad, as the airline has had a very troubling couple of years. 2016 saw the airline report $1.95 billion in losses. 2017 proved a slightly better year, but the company was still in the red, reporting $1.52 billion in losses.
Emirates, on the other hand, reported a 30-year profit streak this year. Their profits totaled $762 million during the 2017-2018 period.
So, at an overview, how do these two aviation giants compare? Below, we look at important figures from both companies, for a general idea of how each is performing.
The figures tell a very interesting story. While the older veteran Emirates covers more destinations and owns more aircraft, with significantly greater returns and profit, Etihad is still triumphing in certain categories.
The image of a youthful, vigorous competitor is clearly seen in Etihad Airways here, with a huge order backlog of 160+ aircraft, compared to their older rival’s 77. Reports of their ambitions for growth were not exaggerated, it seems. They have also partnered up with more than double the amount of partners Emirates has, despite their competitor’s 18-year head start.
Etihad has also been pairing down their total number of aircrafts in recent years, in an effort to cut costs and improve profitability. They currently own 9 planes less than they did in 2016, when they owned 119.
The company’s restructuring has reached all the way to the top, with a new CEO having been instated in 2017.
Why is Etihad facing headwinds?
Etihad has gone through some tough times in recent years, reporting losses in 2016 and 2017, compared to Emirates’ 30 years of profitability.
Their troubles can be attributed to a number of factors.
Official data at the start of the year showed moderate passenger numbers at Abu Dhabi International, Etihad’s home base. The airport was expected to handle “around 25 million” passengers in 2017 compared with 24.5 million in 2016,” Reuters reported last year, marking a very incremental growth of about 2%. Passenger numbers at Dubai International Airport (DXB), however, continue to grow. Dubai’s Media Office revealed that passenger numbers grew year-on-year by 4.5%, after 7.85 million passengers travelled through the airport during the month of March. DXB is Emirates’ base hub.
Another external factor hindering the airline was the rising fuel prices. The ongoing US-China trade war, coupled with US sanctions on Iran, has led to the inflation of oil prices, following the 2014 slump. Emirates has been able to brace itself through the periods of erratic oil prices and other external challenges, weathering many decades of ups and downs while maintaining 30 years of profitability. Etihad has not had that luxury of flexibility that comes with age.
At a time when Etihad is trying its best to cut costs, with many staff being laid off, the last thing the Abu Dhabi carrier needed was a hike in fuel prices. In a side note, other airlines such as the Europe-based Lufthansa have also had to reduce their growth plans following this inflation.
Yet, Etihad somewhat got themselves in this mess. As mentioned earlier, their aggressive expansion plans and maneuvers happened in quick succession and in a short period of time, opening the airline up to obstacles and problems were the aviation landscape to become unfavorable – and that is exactly what happened. Wanting to expand and grow is a logical step for any business, yet Etihad was somewhat rushing its way to a leading position versus its competitors.
Looking ahead, Etihad will need to continue its restructuring process and its downscaling while maintaining a more realistic vision of the future. Emirates is their greatest competitor, but this is a slow-burn race that Etihad will have to be tactical about – there’s no shortcut to be taken here. Slow and steady does it.