United Arab Emirates national carrier Eithad Airways has signed a codeshare agreement with TAP Portugal, expanding its global reach a little bit further. Etihad will gain a virtual network in Portugal – where competitors Emirates and Qatar Airways do not have flights to – by codesharing on TAP flights from common European points they both serve to Portugal, which Etihad does not fly directly to. TAP will codeshare on Etihad flights from their common European ports to Abu Dhabi. The agreement will largely force Emirates and Qatar, if they want a presence in the small Portuguese market, to either establish direct routes or partners with less geographically and schedule convenient carriers.
Etihad will place its code on TAP-operated flights from Lisbon to Brussels, Düsseldorf, Faro, Frankfurt, Funchal, Geneva, London, Milan and Porto, in addition to flights from Porto to Brussels and Geneva. In return, TAP will place its code on Etihad Airways flights to and from Brussels, Düsseldorf, Frankfurt, Geneva, London, and Milan, with the two carriers effectively establishing mini transfer hubs at those airports.
Etihad Airways is the Middle East’s master of strategic agreements such as this. The agreement with TAP is the carrier’s 34th codeshare partnership and its 14th codeshare agreement with a European airline.
The agreement is also another piece of the global network of partnerships that Etihad Airways has been building since James Hogan took over as CEO in 2006. At the end of 2007, the carrier had just six codeshare partners. By 2009, it was 19, with the airline adding another nine in 2010. The TAP Portugal agreement is the sixth that Etihad has added this year, and the carrier intends to sign further agreements, which help Etihad mirror the reach of competitor Emirates without the aircraft and time necessary to establish a physical network.
This web of codeshares that Etihad has entered into expands its international reach tremendously: the network of 70 destinations the airline serves with its own aircraft is augmented by more than 200 codeshare destinations operated by its partners. Codeshares give Etihad passengers seamless access to the US West Coast or the centre of Australia, all without the airline having to fly beyond major gateway destinations.
The benefits of these agreements are manyfold. For the passenger, codeshares offer a smoother travel experience, with easier ticketing and connectivity and a shared responsibility for operations between the airlines.
For Etihad, its partnerships offer a wider range of destinations outside of the hubs to which it operates, increasing its feeder traffic and potential passenger catchment. The partnerships also generate significant revenue: in 2010, Etihad Airways' various partnerships – including one with French rail company SNCF – were responsible for 13% of the airline’s passenger revenue. The USD288 million earned was a 100% increase from 2009.
In 2010, the airline went beyond simple codeshare agreements, by forging an alliance with Virgin Australia. The alliance, which has anti-trust approval from the Australian Competition and Consumer Commission (ACCC), allows the carriers to cooperate on joint pricing and scheduling of services across their networks. However, it has not gone as far as several of the anti-trust immunised agreements between the members of the various global airline alliances signed in recent years, as the carriers will not share revenue although they will coordinate pricing to achieve metal neutrality. Virgin Australia's long-haul arm V Australia only operated three weekly services to Abu Dhabi from Sydney. Etihad offers 11 weekly services from Sydney as well as services from Brisbane and Melbourne.
The carriers cooperate on joint pricing and scheduling of services across their networks. The ACCC considered the alliance was likely to promote competition and result in new international services, particularly between Australia and Abu Dhabi with onward connections to Europe.
Partnerships are now integral to Etihad’s strategy, which is constantly evolving to reflect the ever-changing airline market. Etihad has reportedly opened talks with Virgin Atlantic, should the carrier acquire bmi from Lufthansa.