DUBLIN // Etihad Airways will focus on costs this year to boost margins as a higher number of airline seats on the market puts pressure on airfares.
“The focus on cost to offset the challenges of yield will be considerable,” James Hogan, the Etihad Aviation Group chief executive, said in Dublin on Tuesday ahead of the annual meeting of the International Air Travel Association. Mr Hogan said that by the end of the first quarter, the airline had put a freeze on new hiring that will “probably last until the end of the year”.
Globally, a softening in demand is causing concerns across the aviation industry this year. Iata, a trade body that includes 260 airlines, said that air traffic grew by a mere 4.6 per cent annually in April, the slowest growth since January 2015. Capacity, or seats that need to be filled by airlines, grew 4.9 per cent in April, meaning that carriers are flying with more empty seats. Airlines are slashing their fares to protect their market share and stay competitive.
Terror attacks in Brussels, North Africa and Turkey led travel demand to ebb across the globe. The disruptive impact of the Brussels Airport attack had hit the European travel market in particular, causing demand to rise by a mere 1.8 per cent in April, down from the 6 per cent growth recorded in March.
“The biggest challenge for airlines this year is capacity, [there’s] a lot of capacity [or seats to the market],” said Mr Hogan. “Worldwide you’re seeing great deals or heavy discounting depending how you look at it.”
Additionally, airlines are bearing the brunt of currency fluctuations, a slowdown in the global economy and political uncertainties around the Brexit vote this month, which according to Mr Hogan is making “people nervous”.
“The whole market has been impacted due to corporations tightening their belt, so corporate travel has been impacted,” said Mr Hogan.
Nevertheless, Etihad still expects to meet its targets, as the airline anticipates carrying 19 million passengers this year, up from 17.6 million last year.
“India has been strong for us, South Asia has been strong for us,” said Mr Hogan.
selgazzar@thenational.ae
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