Skift ran an interview with Etihad Aviation Group CEO James Hogan and there are several interesting points.
He says loads on their US flights are “acceptable” but “there’s pressure on yield” (prices are too low). Since they look to fly to gateways and leverage the networks of their partner airlines, he doesn’t see much more US expansion “Maybe one more city. That’s it” and since their current US partner is American and they already fly to New York JFK, Dallas, Los Angeles, Chicago (and non-American hubs Washington Dulles and San Francisco) my guess would be that leaves Miami for Latin America connectivity.
Philadelphia would duplicate connections out of New York and Chicago, Phoenix isn’t a strong international market for the Mideast and India, and Charlotte offers good connectivity but little originating traffic as well.
While Etihad has an onboard chef for first class, that person is really a crew member with kitchen experience — and that helps hold down food costs because they’re also experienced at getting the most out of ingredients with less waste.
Hogan also offers this assessment of their premium The Residence product on their Airbus A380s which fly from Abu Dhabo to New York, London, Mumbai, Sydney and Melbourne:
Abu Dhabi-London is running around 40 percent sale. It goes down to Sydney, and it comes to New York, and this is incremental space that could have been a shower. No one can get it for free, but you can use points. We have a good take up. We get government officials using it. We get people celebrating anniversaries. For some people, it’s on their bucket list.
The Residence displaces just a single first class seat, and the additional space comes from real estate that would either be an underutilized lounge or another bathroom.
Qantas A380 Lounge Area
I’m surprised they’re selling the seat 40% of the time on London flights, I’ve been onboard New York JFK when it’s been occupied, but on the whole actually selling the seat isn’t a huge revenue driver. The way to think about it is the 10th first class seat, most likely to go unoccupied (that you can occasionally sell at a premium) but where they find that “[t]he halo effect is considerable” — exactly the language I’ve been using to describe the top-end premium cabin offerings from the Gulf carriers.
Offering something as over-the-top as the Residence, but also regular first class suites and bars and showers as they and competitors do, helps create a brand imagine such that consumers believe their offerings are better even though in business class at least the hard product isn’t superior to what American and Delta offer (and eventually United).
For those who would buy the Residence there’s a seating area that accommodates two passengers. There’s a private bathroom with shower. And there’s a separate bedroom.
Houston, TX would have a significant amount of originating traffic. Also, a hub for South America.
I just told by Etihad call center agents that Etihad’s chauffeur will not be available very soon for award bookings with AAdvantage miles.
I’d be curious to find out how often it’s filled to New York and Australia. London would have more premium demand (especially from the Middle East) than the other destinations. I’d also like to know which “government officials” get to fly in it!
Typo: Abu Dhabo
@Raya: Emirates has just downgraded their Houston flight from an A380 to a 777, so I suspect the originating traffic isn’t as strong as you think. Also, IAH is only a hub for United, which doesn’t partner with Etihad. They use American’s hub at DFW for South American connections instead.
Dumb question from someone who could never afford it – I see in pictures that residence has two seats – when you book it do you get those two seats for yourself? I can’t imagine booking only one and then sharing it with another random passenger. Or is it meant to be for two people, in which case are those prices we read about per person or per Residence? Could two people book one Residence and one coach seat and then both spend the entire flight in Residence leaving the coach seat empty?
Ivan, I’m pretty sure the Residence ticket includes passage for up to two passengers. At booking you can select one or two guests and the price is the same ($32k or so one way). Don’t know how it works for miles but given that it costs 2.3 million etihad guest points or something one way i’d hope that it would include two guests also.
Nice article!
Any chance of A380 coming to LAX?
@Ivan – as I understand it, the price quoted for the Residence reserves the entire thing, and you can bring a +1 included in the price. No need to buy the additional coach seat.
I would be amazed if The Residence is booked more than 10% of the time on any routes other than LHR. You can check forward bookings over the next 3 months on routes like SYD and MEL and see it is booked one flight a month, maximum. I dont think EY ever expected to make money from the Residence – its purely a marketing/halo effect that makes your average Y pax go ‘ohh, there’s a full-size bed in First Class – the whole plane must be amazing!’ without realising the Y experience is almost identical from airline to airline.
I’ve used the F shower on the A380 and while a novelty, it was disappointing because its extremely cramped. I dont know why they made the front bathroom bigger than the shower itself. EY wanted to differentiate their A380s from EY which they did by both having a single aisle F cabin and having The Residence rather than 2 full size F showers.
Why not ATL?
One point that Hogan brought up in the interview that I found interesting is the fact that they don’t feel the need to run with a premium economy, since their regular economy is basically equal to PE. Out of curiosity, I looked at Seatguru to see just how roomy these seats were, given the bragging. The short version is seats less than 18″ wide and 31-33″ pitch. Tight.
“Offering something as over-the-top as the Residence, but also regular first class suites and bars and showers as they and competitors do, helps create a brand imagine such that consumers believe their offerings are better even though in business class at least the hard product isn’t superior to what American and Delta offer (and eventually United).”
I know you’ve made this claim many times before, and I might even agree if we’re talking Emirates (with angled seats on 777’s) and to a lesser extent Qatar (lack of direct aisle access on many aircraft, and some angled seats still) vs. Delta (fully flat seats with direct aisle acces for all, on long-haul wide-bodies). But the statement is hard to defend if you’re also including American and Etihad, and in this case Etihad’s A380’s. Many of AA’s aircraft are still flying with angled seats in business, and the retrofit keeps getting delayed. Even when finished there will be a tremendous variation in product (five different flat seats in long-haul business, by my count). Compare this to Etihad, which basically just has two business class products – the Solstys seat and the A380/B787 “Business Studio.” The latter is a truly class-leading product. I checked it out briefly when I flew Etihad’s Apartment a few months ago, and my impressions matched the many positive reports online (that this was close to other carriers’ first class in terms of hard product). The Business Studio handily beats AA’s best product (the Cirrus seat), and even the Solstys seat is competitive with or better than much of what AA is flying. And of course we’re not talking soft product at all.
Ive been lucky enough to fly all 3 classes on EY (never The Residence however!) and I must say while the premium classes live up to or beyond all the hype, Economy Class, whilst the soft product is fine, the hard product i.e. seats, pitch etc I find hopelessly uncomfortable and cramped.
In fact would have to say well behind QF, SQ, EK etc.
So the reasoning for no PE is beyond me. When I have chosen PE it is for the hard product i.e. personal space, seat pitch etc.