Growth Through Co-Ventures: Etihad's Strategy in the Competitive Aviation Industry

Case Code: BSTR485 Case Length: 19 Pages Period: 2003-2015 Pub Date: - Teaching Note: Available

Price: Rs.600 Organization: Etihad Airways Industry: Airlines Industry Countries: Middle East, Global Themes: Business Strategy, Strategic Alliances

Abstract Case Intro 1 Case Intro 2 Excerpts

Introduction

In February 2015, Etihad Airways (Etihad) won the 'Airline of the Year' title at the '2015 Aviation 100 Awards'. The award was given to the airline that received the highest number of votes from a variety of entities 5 associated with the airline industry. Philip Tozer-Pennington, Managing Editor of Airline Economics that organized the awards, said, "The Airline of the Year vote recognizes performance in fleet and financial management and execution of business plan – which in the case of Etihad Airways also takes into account its amazing ability to expand at very little cost into key markets across the globe in 2014."

Established in 2003 through a royal mandate in the Emirate of Abu Dhabi, Etihad struggled to become financially viable in its early days. It was James Hogan (Hogan), who was brought in as CEO in 2006, who developed a new business plan for the carrier and gave it a new direction. To build the business in the highly competitive aviation industry, Etihad adopted a collaborative approach. It implemented a partnership strategy, wherein it built up a repertoire of codeshare agreements and took up minority equity stakes in strategically important airlines. Over the years, Etihad took up stakes in Air Berlin, Virgin Australia, Aer Lingus, Air Seychelles, Air Serbia, Jet Airways, Darwin Airlines, and Alitalia.

Etihad's strategy paid off and by 2015, it had emerged as the fifth largest airline group in the world. The carrier was not only able to build a large network and enter markets which till then had been inaccessible, but it also experienced a significant growth in revenues. The young carrier was also able to compete effectively with much older and larger global airlines. Etihad also played a major role in elevating the economic climate of Abu Dhabi, strengthening its status as a key transit and tourist hub. Etihad’s partner airlines also benefited from this strategy in terms of financial turnarounds and network extension...

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