x Abu Dhabi, UAEMonday 24 July 2017

Asia will become the nucleus for aviation, says Etihad chief James Hogan

Etihad to focus its attention on emerging markets in the East, as chief executive James Hogan says Asia is the new nucleus for world air travel.

Etihad’s future network hub strategy is built around the opportunities in countries such as China and India. Above, Hongqiao Airport in Shanghai.
Etihad’s future network hub strategy is built around the opportunities in countries such as China and India. Above, Hongqiao Airport in Shanghai.

Growth in the aviation industry and liberalisation of regulations will make Asia the "new nucleus" for world air travel, said the head of Etihad Airways.

The balance of power in the industry is shifting east, partly because of tight government regulations faced by European carriers, said James Hogan, the chief executive of the Abu Dhabi airline.

"The centre of geopolitical gravity is being drawn rapidly and inexorably eastward towards Asian economic power," he said.

"We speak of Asia as the new centre of the world." Mr Hogan added that Etihad was focusing its attention on emerging economies in the East.

"Our future network hub strategy is built around the huge opportunities we see in provincial China, regional India and in other under-served growth areas."

Mr Hogan was speaking at an address on the "shifting geopolitics of aviation" held at the Lowy Institute for International Policy in Sydney.

He said that rapid growth of airlines in the emerging markets would see the focus of the aviation industry shift East. "Aviation will have a new nucleus: Asia," said Mr Hogan. "China has recently built 50 new airports. Another 50 will open before this decade is out … India, while slightly behind, is growing even faster."

The Association of South East Asian Nations (Asean), a bloc of 10 countries, has proposed a plan to establish a single aviation market with no traffic restrictions by 2015.

Mr Hogan said such a transition would represent a "free and efficient framework for landing rights and air traffic control". This compares favourably to the tight restrictions on landing rights seen in the West, he added.

"A disadvantage for the established carriers of Europe is their governments' limited vision for aviation," said Mr Hogan.

Saj Ahmad, the chief analyst at FBE Aerospace in London, said Asia represented an "excellent opportunity" for Middle East carriers. "This region not only has vast swathes of passenger traffic that can be tapped into, it is also home to the world's biggest freight movements too," said Mr Ahmad.

"The potential for growth in GCC-Asia travel will mean that demand needs to be fulfilled, and the Middle East airlines have a big chance to get a slice of the action with their ever-growing fleets."

However, another commentator said Middle East carriers faced stiff competition in Asian markets. "There is a certain level of saturation there," said Gaurav Sinha, the head of the travel industry branding agency Insignia. "It's not unchartered territory. If you want to break into them, you have to take on the market."

Asia already has a strong presence in routes from the UAE.

Flights to the Far East account for 40 per cent of passenger movements from Abu Dhabi International Airport, followed by the Middle East with 26 per cent and Europe with 20 per cent.

bflanagan@thenational.ae