What Would Happen if Emirates Took Over Etihad?

How are the mighty fallen! In March 2017, Etihad had just taken delivery of its fifth A330-200F, which joined five 777Fs. At the time, the airline served forty-two destinations with its fleet of ten shiny freighters, and former CEO James Hogan boasted that Etihad Cargo was well positioned to maximize opportunities, thanks largely to the company’s investment in partnerships. Unfortunately, the airline along with its cargo division were themselves pulled down by the failure of several of those investments. When Tony Douglas arrived in January 2018, one of the first things he did was ground Etihad’s entire fleet of A330 factory freighters.

Despite denials from both parties, rumors (most recently heard last month) have been swirling that one way to save Etihad would be for Emirates to take over. However, since the two carriers’ hubs are only about 100 km apart by road, what would be the value (other than political) of keeping two separate cargo hubs?

The chart below summarizes the freighter fleet and network of each airline:

*Emirates also has a cooperative cargo agreement with Cargolux
**Excludes AUH for Etihad and DWC for Emirates
***Not meaningful

In the last year, Etihad has slimmed down its freighter network to twenty-eight points, plus its Abu Dhabi hub. Meanwhile, Emirates serves nearly half again as many points, at forty-one. Although the two airlines only serve seven points in common nonstop from their hubs, those points make up over one-third of Etihad’s spokes, and short distances between some of the unique points in Europe served by both carriers only increase the amount of overlap. About the same overlap exists system-wide when non-hub flying is taken into account.

Adding Etihad’s freighter fleet to Emirates could increase service frequency to existing network points and free aircraft now serving duplicate routes to exploit new business opportunities. However, it is more than likely with today’s decelerating demand growth that if it acquires Etihad, Emirates will need to act quickly to eliminate overlap and create a combined freighter network smaller than the sum of today’s two carriers.

Learn more about trends in freighter operations 10-12 October at Cargo Facts Symposium, where a roundtable panel discussion will be dedicated to the topic. For more information, or to register, visit www.cargofactssymposium.com.

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