Why Etihad's tickets are more expensive than others'

A customer walks into a travel agency in Mumbai, seeking tickets for Washington, DC. The staff at the counter recommends an European airline as having the best connection. The customer casually asks if there is an Etihad Airways flight.

Within minutes of this conversation, sales executives from Etihad walk into the travel agent's office, reminding them of their new flight to that destination and seek their support to increase sales.

Those travel agents who promote the airline are offered incentives and gifts, as part of this mystery-shopper exercise.

Once in a while airline executives do call on travel agents, pretending to be customers, but Etihad's marketing exercise for its Washington flight in March was significant.

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It was also an indication that the airline management was stepping up efforts to increase sales from India, amid intense competition from rival airlines from West Asia and Europe.

The Abu Dhabi-based airline, which just signed up a strategic alliance with Jet Airways, operates 63 flights to nine Indian cities. Over 75 per cent of its passengers from India travel onwards, from Abu Dhabi.

Air-traffic data and Etihad's pricing strategy indicate that the airline's focus is to tap Indian leisure travellers and corporate clients, rather than blue-collar workers, migrating to Abu Dhabi.

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Etihad flies 136-seater, Airbus A320 planes on Abu Dhabi-India routes. A random check of Etihad's website and online portals show that Etihad's one-way fare to Abu Dhabi for June (around Rs 19,000) is higher than those offered by other airlines (Rs 11,000 upwards).

"The average fare which Etihad needs to charge to break even on the India-routes will be higher than other airlines, as its aircraft have fewer seats," says an aviation expert.

"Etihad is positioned as a premium brand. All its advertising and imagery show that it is not a run-of-the-mill airline which flies to Abu Dhabi," he adds.

Over the past few months, Etihad has upgraded its product and services, adding a new in-flight entertainment system and a LinkedIn tool for its passengers. It is also making a strong pitch to increase its number of corporate clients from India.

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According to travel agents, corporate travellers look for competitive fares, features offered and a wide network, especially in the US and Europe when booking.

Etihad ticks those boxes - onward connections within three hours of arrival in Abu Dhabi, and frills like limousine pick-ups and drops at select airports and lounges with a spa, champagne bar and cigar room for its first-class passengers.

Etihad began operations in November, 1993, and is now counted among the big three in the West Asian skies, along with Emirates and Qatar Airways.

Through its equity investments, strategic alliances and code shares (it has 43 code-share partners now), Etihad is developing a global network covering all the continents.

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Last year, it added new flights including one to Ahmedabad and increased frequency to cities such as Dusseldorf, Kuwait and Bangkok. It is launching flights to Ho Chi Minh City and Sao Paolo this year.

"Our goal is to be a profitable, sustainable business, growing in line with Abu Dhabi. By 2020, we plan to be a major global business, with potentially 25 million passengers per year, 27,000 employees and up to 100 destinations," Etihad CEO James Hogan said last year.

Etihad's current fleet size is nearly a third of that of Emirates. Etihad has 65 passenger aircraft, while Emirates has 189, including 31 super-jumbo Airbus A380s.

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With fewer planes, Etihad's frequency and own-capacity on key routes like New York are no match for Emirates'.

"Etihad does not fly wide body planes to India and hence, filling up the flight is not a problem. Often one does not get a seat on Etihad flights to Abu Dhabi .There has been a problem of supply, which has now been solved following its alliance with Jet Airways. Etihad will have to increase its promotions and marketing," says Ritika Modi, regional president of Uniglobe Travel.

Etihad plans to add capacity on the Mumbai route with an Airbus A330.

"Emirates is a dominant player in India but Etihad will be a force to reckon with after its Jet Airways-alliance. The two airlines can have a greater synergy through code shares, joint frequent-flyer programmes and use of common facilities such as lounges," says Pradip Lulla, general secretary of Travel Agents Federation of India.