[joshuayu2000]

The problem is the AUH midfield terminal will not be completed until 2017 (earliest). Currently AUH is packed with EY, AB, HM, etc, a lot of EY flight are departed from T1 or need to assess with transit buses.

Therefore even the fleet expansion is on in the next few years, the lack of space in the terminal building would become a bottleneck for its network expansion

[MarcusUK]

I flew through AUH several times with stopovers in the last 2 months.
Whilst the terminals are certainly busy, the work is huge and going ahead well for the new facilities.
I saw it was busy, but not inefficient, and no such delays like LHR. Etihad has managed for the last 11 years with its expansion, and I am sure it will continue to grow within its capabilities and hub.

The Terminal for Premium passengers for Etihad already works very well indeed, leading to a smooth entry and exit to the airport with all of its transportation, and ground facilities quick and easy to navigate.

The best example of a bottleneck would be LHR!
And we will be waiting 15 years + for any change to that in the UK.

[AMcWhirter]

Interesting development in Italy. One wonders whether the Etihad/Alitalia investment is connected in some way … ?

http://www.businesstraveller.com/news/emiratesa-milan-new-york-route-cancelled-orders

[Tom Otley]

Just had a very interesting session at the CAPA conference in Dublin on loyalty programmes and Etihad’s strategy.

One thing I didn’t know is that when Etihad invests its money in these airlines, it also gets access to the loyalty programmes (and values its stake in the airlines’ accordingly)

http://articles.economictimes.indiatimes.com/2014-02-06/news/47089829_1_etihad-airways-jet-and-etihad-jet-airways

http://uk.reuters.com/article/2012/12/18/uk-airberlin-etihad-idUKBRE8BH0FE20121218

http://www.thenational.ae/business/industry-insights/aviation/etihad-airways-goes-the-extra-mile-with-loyalty-programme-spin-off

http://www.airserbia.com/en/home/main_menu/our_loyalty_program/air_serbia_etihad_guest.html

[canucklad]

Agreed Alex

A definite case of reading between the lines regarding Alitalia. Etihad’s approach certainly seems to be more collaborative than EK’s.

On the other hand as I intimated on the Qantas topic the UAE carriers are particularly adept at arm pulling to protect their interests.

Don’t for one minute think that Etihad aren’t that bothered about their bigger leviathan of a neighbour hiving off custom from what should be Alitalia’s premium route!

So I’m sure Hogan’s team have been doing quite a bit of behind the scenes lobbying in Rome’s corridors of power.

The above articles make for interesting reading, especially the fact that airlines would prefer not to have these schemes on their own books! Personally, I predict that the companies that own these programmes based on the value of data will ultimately suffer the same fate as the dot.com bubble.

[LuganoPirate]

I commented on the Emirates article already Alex, but if Etihad buys into Alitalia I think it will be a wake up call for them. Many have invested in Alitalia and had their fingers well and truly burnt. AF is the just the latest. Some years ago KLM looked at buying into Alitalia, from memory i think it cost them €300,000,000 just to walk away.

Years back Swissair entered into discussions with them but decided the better bet would be SABENA!!!

The whole corporate mentality of Italian companies is so far removed from that of the Anglo Saxon model. since it incorporates politics, North – South rivalry, Unions and a host of other factors which will make any sort of integration very difficult.

I can see the BT headline already: Etihad abandons Alitalia after pumping in xxx million!!!

[BusinessBabble]

Purchasing a share in the loyalty program is a very shrewd investment strategy by Etihad, it effectively underwrites the investment in the airline.

The loyalty program is probably the most valuable part of these various loss making airlines, so even if the airlines goes bust the loyalty program will retain a value for Etihad. As an example, the Qantas loyalty program has been discussed as being worth $1.5 to $2.5 billion, the market capitalisation of Qantas is about $2.5 billion.

[MarcusUK]

KLm did buy part of Alitalia, around a 25% stake. However, with the rumours around late last year, KLM made a definite “No” to re-financing as The Board refused this. As a result, AF/KLM wrote off a $1B loss for Alitalia for 2013, and their share capacity fell to around 11%.

It would be VERY interesting to see the values of the European Airlines Loyalty programs, BA, LH, KLM / AF.

Etihad are expertly crafted in these matters, and as mentioned many times, their investments obvious or not, are a strategy with all the pieces being put in place that will come together very well.
Their approach is quite unique, a model away from Alliances and In my view and probably theirs, a new Model of Aviation business for the future.

[canucklad]

Very interesting indeed Marcus.

I tried ,albeit fleetingly to find out the value of the granddaddy of them scheme, Tesco’s club card. Alas slightly more difficult than a simple Google search.

Definitely going to stick to my point above. Over inflated made up monetary value attached to a company that has no physical assets. Their primary asset is some personal data that might predict my future buying habits. Good luck to them if they can work out my mad random thinking mind!

[BusinessBabble]

Hi Canucklad,

An interesting one to look at is a company called AIMIA. It was spun out of Air Canada, is listed on Toronto stock exchange and it’s main businesses are now Aeroplan and Nectar. It made Canadian $100million in 2013 and has a market capitalisation of Canadian $3 billion.

I agree with Marcus, could be a pretty crafty investment strategy by Etihad, maybe their ultimate strategy is to get their hands on the loyalty program’s, amalgamate and create a loyalty program mega business!

[AMcWhirter]

Hello LuganoPirate

Yes I follow the fortunes of the Italian car industry with great interest so understand how difficult it can be. Somewhere I still have a copy of the one and only joint Alitalia/KLM scheduled timetable which was published but, as you know, was never operated.

[MarcusUK]

Hi Alex.
Not in keeping exactly with the topic, but i bought a bargain flight to Sydney 10+ or so years ago, advertised at £395 Economy return. This was low for then even, though it was run by Alitalia.
I knew Alitalia did not meet the strict Australian safety standards and were not licensed to fly into Oz. So i found out it was a KLM 747 from Milan 3 days a week, and being a Gold FD member thought i would upgrade using my miles (not so mean then with miles the schemes!).

KLM denied they ran any services at all from Milan, only from AMS.
So i gave up.

Taking the Alitalia flight, I was not surprised but relieved to see a great big KLM blue 747 there at MSP after arriving in from LHR. Great! However, some wacky Alitalia woman decided I did not have a visa in my passport for Australia and went off with it after much argument. She had no idea it was electronic. She did not return for ages, and they were closing the flight, but she came back 1 minute before they did so. I was stressed and very angry at her, but with no time rushed on board sweating and really frantic.
I got in the door and it was closed!

The Purser took me to one side and i told him what happened, and he through it was outrageous, so took me upstairs to Business class. Great!
At Singapore, the change of crew and a very strict KLM Lady purser came up, told me she had been told what happened, but “Today I will permit you to remain upstairs, though it is not usual”.

I had my time in Australia for several weeks, arrived in Sydney airport saying goodbye’s to friends, and KLM told me that Alitalia had changed my flight return date 12 times! They were in chaos they said.
They gave me an MCO for £500, paid me £120 to stay overnight (i stayed back with my friends), and upgraded me the next day on the Amsterdam flight!

So, quite a good value trip in the end. if you can calculate the value. So much for a joint KLM / Alitalia timetable then or KLM running their services to Sydney.

I used the £500 for a return flight to Cape Town a few months later, and upgraded 2 of us to Business Class one way with miles. My veggie meal was not on board and i had little to eat. I complained in CPT to the station Manager via phone, and we were both upgraded to Business class on the return!!!
As if that were not enough, the Pilot had asked if he could fly all the way around Table mountain as a special treat for everyone, which he got permission to do, so we made a 1 &1/2 circles.

Truly fantastic, and back then the KLM service was really superb.
It won’t happen these days though i am sure!!!

[AMcWhirter]

Markus – Thanks for the feedback. A combined KL/AZ timetable was published but few flights were jointly operated before the co-operation (between the two airlines) was disbanded.

Diffcult to imagine today but I can remember the days when Australia was well served by European airlines. BA, of course, was Number One (as it proudly proclaimed in its 1988 timetable) and there was also Alitalia (as you mentioned), Austrian, JAT (of Yugoslavia), KLM (also mentione). Lufthansa, Olympic and French airline UTA.

Air France never did fly Down Under but Swissair tried, and failed, to gain traffic rights. Today’s Swiss would be welcomed but in the distant past (ie before the Gulfies came along) Australia used to practise an aviation policy which protected Qantas.

[transtraxman]

It seems that an agreement is imminent.

“Etihad Inches Closer To Buying Alitalia Stake”
(Airwise/Reuters 11-4-14)

http://news.airwise.com/story/view/1397223817.html

One of the issues is the number of employees to be sacked.
“Etihad has refused to negotiate with Italy’s unions, ………. The Gulf carrier wants the issue of job cuts settled before negotiations enter the final phase”.
“Etihad wants to lay-off 1,000 Alitalia workers on a permanent basis, while the remaining 1,000 could be put on temporary layoff schemes partially supported by the state”. This is out of a workforce of 14,000, the jobs of which 7,000 were reported to be on the cards.

[MarcusUK]

More analysis from the FT…

http://www.ft.com/cms/s/0/5b530d40-c2ed-11e3-94e0-00144feabdc0.html#axzz2yrmPiMsw

As indicated, for a rather small amount of money Etihad will have up to 49% of the shares and the influence with it.
Whilst there are many investors, AF / KLM have 11% (reduced last year), and Etihad have a 10 yr codeshare agreement with them. Alitalia of course is a major player in The Skyteam Alliance. Highly likely they will side with them, so any changes and re-structuring will not face any difficulties to push through at Board level.

Alex, I also flew Lauda Airlines Business return to Australia, really surprising me that they had a chef on board asking if he could make me a vegetarian thai curry from scratch!

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