AAP General News (Australia)
08-01-2008
Vic: Middle East airline expands downunder
By Edwina Scott
MELBOURNE, Aug 1 AAP - James Hogan looks at home against the jagged Melbourne skyline
as he gazes across the city from his hotel room.
And so he should - the chief executive of the Middle Eastern Etihad Airways hails from Melbourne.
He returned this week to launch the airline's newest route from Tullamarine to Abu
Dhabi, in the United Arab Emirates.
Mr Hogan still maintains a home in his former stomping ground, but the
new route is
unlikely to benefit him directly.
"I actually live in London," he laughs.
"But I come to Melbourne to visit my dad."
Since leaving Melbourne 20 years ago, Mr Hogan has forged a formidable career in aviation.
Learning the ropes at the Ansett Airlines check-in desk, he eventually moved to British
Midland in 1997 where he became chief operating officer.
He then joined Gulf Air as chief executive, turning around the airline's fortunes by
cutting annual losses of more than $US100 million ($A106 million) by half.
He moved to Etihad Airways as CEO in 2006, when the airline was three years old.
Now, amid skyrocketing jet fuel prices and with staff cutbacks plaguing the industry,
he has compelling reasons to appear relaxed.
Etihad has defied the effects of economic slow-down in parts of Europe and the US,
and there's no signs of decline.
Last month it placed a $US43 billion ($A45.57 billion) order for 205
new aircraft.
Its success will see
new routes to Russia and Kazakhstan open later this year, adding
to routes to Chennai and Kozhikode in India and Minsk in Belarus, due to be launched in
August.
But like its competitors, Etihad must watch the price of fuel like a hawk.
"We embarked on a very aggressive hedging program at the end of 2006," Mr Hogan says.
"We were 70 per cent hedged in 2007, 80 per cent hedged in 2008.
"At this stage we're 40 per cent hedged for 2009.
"We're watching the trending at the moment, the second half of this year is tough.
"The airlines have to adjust with fuel surcharges, to get their cost base.
"We're in pretty good shape compared to most airlines in regard to fuel-hedging programs."
The Australian Embassy in Abu Dhabi estimates that around 15,000 Australian nationals
and more than 300 Australian companies are based in the United Arab Emirates.
Etihad's movement into Australia in 2007 reflected the steady expansion of Australian
companies into the Gulf region, he says.
Etihad aircraft are already flying daily from Sydney and Brisbane to Abu Dhabi at almost
90 per cent capacity.
An interline partnership formed between Etihad and Virgin Blue last November has also
enabled passengers from 22 Australian cities to connect to the international route from
Sydney and Brisbane.
The
new flight to Melbourne is initially projected to create at least 30
new jobs in Victoria.
Etihad's
new status is one of its greatest strengths, Mr Hogan says.
Tapping into the
new growth in South Asia, China and North Africa is within the airline's
operating radius, despite varying degrees of government regulation.
"We haven't got 60 years of institutional services or overheads that can be very difficult
to change," he says.
Despite its fresh entry in the market, Etihad bears many of the hallmarks of its main
competitor, Dubai-based Emirates.
Both emphasise world-class cuisine, on-demand in-flight entertainment and flat bed comfort.
In a volatile industry, it is people, rather than fuel prices, that he identifies as
the greatest challenge.
"Our biggest challenge is manpower - attracting enough people, the right people, to
come and live in the Middle East."
He is nonchalant about operating the airline as a government-owned company.
"The mandate we have is a commercial mandate and whilst the government is a shareholder,
the governance is of a commercial organisation and the challenges you'd expect from any
$US2.5 billion corporation," he says.
"We'll operate by the end of this year in 50 cities, with a global workforce ... it's
a fairly complex business.
"But within the framework of government we're all that you would expect in any publicly
listed company."
But Mr Hogan is far from putting his feet up.
He acknowledges that events such as wars, tsunamis and SARS can pose major barriers to expansion.
"You have to be flexible enough to manoeuvre through those risks when they hit you
in the face," he says.
Building up bilateral relationships is the key to growth, he says.
"You rely on
foreign affairs people to negotiate the opportunity to work and fly in
certain countries," he said.
"Those circumstances are sometimes out of your control because they come under the
umbrella of the Department of Transport or the Department of Economy, depending on the
country you're dealing with.
"We have a government that wants us to be one of the best airlines in the world, if
not the best."
AAP ees/pmu/it/bwl
KEYWORD: ETIHAD (AAP NEWSFEATURE) (PIX AVAILABLE) RPT
2008 AAP Information Services Pty Limited (AAP) or its Licensors.
