Etihad Airways' all-economy service another move in addressing low yield markets

Etihad Airways this month announced plans to introduce its first "all economy" class aircraft to its fleet in Oct-2010. This carrier will be the only non-LCC in the Middle East operating such a configuration, although the product bears some similarity to to the 'Gulf Traveller' product that CEO, James Hogan, introduced while heading Gulf Air. The purpose is mainly to tap into the high volume but low yielding markets more effectively. This segment is being addressed aggressively by neighbouring flydubai, based in Dubai and, a few kilometres further along the road in the UAE, the highly successful Sharjah-based Air Arabia. Other low cost airlines from outside the UAE are also targeting the UAE markets. Full service airlines around the world have long struggled with the decision whether to adopt a LCC subsidiary or to segment their operation in this way. In each case different considerations apply. Etihad, in treading the middle path, may have got it right in this market.