One of Etihad Airways’ main instruments for success is its innate ability to partner with the right airlines in the most lucrative markets. These partnerships have been a mainstay for the ever-successful carrier.
Running an airline is nothing short of an intricate, complex undertaking. Airlines must not only understand the direction of the industry at a macro level, but they must also be able to readily access, assess and comprehend the smallest detail to achieve sustainable growth and profitability.
Achieving sustainable profitability depends on many factors; however, it all boils down to an airline’s ability to increase its revenues while reducing costs. More often than not, one of the ways airlines have been effective in doing this is through cooperative partnerships with other carriers.
While these partnerships take many forms such as a joint venture, business agreement or equity stake, many partnerships are supported by some form of codesharing agreement, which results in several positive benefits for all parties.
At its core, a codeshare allows an airline to expand its network with minimal investment of resources. Other benefits also come with that expansion. For example, airlines may increase their presence in regions beyond their own. Moreover, they may also receive incremental revenue support for new or “thin” markets that may not be profitably served by the operating carrier alone.
From a sales perspective, codesharing may increase a carrier’s preferential screen display in the plethora of global distribution systems and internet sales channels. This generates additional revenue, giving the airline a crucial competitive advantage.
Etihad’s growth strategy
Since its inception in 2003, Etihad Airways has remained one of the fastest-growing airlines in commercial aviation. Its route map is reflective of natural organic network growth, codeshare partnerships and minority equity investments in other airline entities.
As a result of its sound business strategy, the airline’s off-line network now boasts award-winning services to nearly 500 destinations across the globe and doesn’t appear to be slowing growth anytime soon.
“When we established this airline, we were not interested in duplicating the business strategies seen in other airlines,” said Greg Kaldahl, senior vice president of network management for Etihad Airways. “We’ve always seen ourselves as a disruptor in the industry, and we challenge the common business practices as much as we can.”
Etihad Airways has always taken a collaborative approach when building its business. From the very beginning, codeshare agreements were identified as an effective and efficient way to fundamentally help build the network. To that end, the airline has been steadily increasing the number of its codeshare partners over the years as part of its overall business strategy.
Etihad carried 17.4 mil passengers in 2015, a 17% growth in passengers versus the previous year.Share
Today, the airline has codeshare agreements with 51 airlines that provide additional service to hundreds of airports and transports millions of passengers worldwide across its strong virtual network.
Overall, equity partnerships and codeshare agreements delivered more than five million passengers to Etihad Airways’ flights last year, a 43 percent increase versus 2014. Clearly, this strategic approach has proven successful by providing convenient connections for passengers to thousands of markets worldwide. Moreover, it has significantly bolstered revenue generation.
“Approximately 29 percent of Etihad revenues are directly generated through strategic partnerships.” Walid Aryan, alliance processes managerShare
The challenges of real-time coordination
While tangible benefits of partnering with so many airlines can clearly be seen, it doesn’t come without challenges. The number of codeshare partners means the degree of coordination required between so many airlines can be staggering.
Managing codeshare associations and network coverage, as well as tracking the valuable resource of marketing-flight-number allocations is too time-consuming to complete manually without an automated and logical rules-based system.
To monitor and achieve the best impact from these partnerships, a large amount of effective modelling and reporting is necessary. When changes are made to either Etihad Airways’ or a partner’s operating schedules, the impact needs to be immediately ascertainable.
Identifying network coverage and network connectivity changes are fundamental to this exercise, as well. Network coverage examines how well a partnership extends the network reach to either meet or stimulate demand while network connectivity examines how well Etihad Airways and its partner airlines connect at major cities.
Problem, meet solution: Codeshare Manager
Sabre AirVision Codeshare Manager provides Etihad Airways the means to automate marketing-flight-number synchronization between operating and marketing airlines. It also offers an array of useful reports while affording the ability to automate many repetitive jobs.
Codeshare Manager facilitates the necessary automation while incorporating integration with the seamless transfer of schedules between and among Etihad Airways’ partner airlines. This automation enables the airline’s staff to focus on alliance priorities while maintaining a high standard of efficiency.
Etihad Airways now maintains its complex codeshare relationships in an easy and efficient manner. Additionally, the system determines the best connecting flights so the airline can quickly identify and take advantage of new or alternate codeshare flight opportunities as associated operating schedules change over time.
“Sabre’s Codeshare Manager gives us the ability to monitor schedule changes and quickly adapt to them, ensuring that the associated marketing flights are synchronized. This efficiency allows us to maintain focus on our codeshare agreement priorities and help us maintain a high product standard for our customers.”
The airline has enjoyed increased revenue by determining the ideal connecting flights, reduced costs by ensuring that marketing flights match operating flights, reduced time outlay due to automation, and reduced risks of outdated flight schedules from partner airlines.
Also contributing to this article is John Marquet, senior product manager for Sabre Airline Solutions. This article was adapted from Ascend magazine.