In the Airline Industry, Expansion into Foreign Markets is Key

A February 9th New York Times article, "Etihad Airlines Looks to China and India for Growth," highlights the recent expansion and future prospects of the airline Etihad. 


Etihad is owned by the Abu Dhabi government and was founded five years ago in an effort to compete with its now gulf rival, Emirates. As a strategy, Etihad has been buying stake in several foreign airlines to expand their market and increase revenues. A recent purchase in 2011 gave Etihad 29% stake in Air Berlin, Germany's second largest airline. This purchase will give Etihad access to 35 million new passengers and an estimated 50 billion dollars in revenue in 2012. Earlier this year, the airline bought a 40% stake in Air Seychelles,  "giving it access to the African island country’s leisure market, which has grown increasingly popular with Chinese travelers."

To continue its expansion, CEO James Hogan said "Etihad was eager to identify “one or two” more strategic investments in other airlines over the coming years that could drive new passenger and cargo traffic to its ever-widening network of 82 destinations." Mr. Hogan is pleased by the Indian government's recent proposals to liberalize their aviation industry.  Struggling domestic carriers, including Kingfisher, have been lobbying government officials to raise the 26% foreign ownership cap on domestic airlines. Foreign investment would bring prosperity to both the domestic companies, and companies like Etihad, who wish to expand in the coming years. 

Even if India does not pass a law raising the 26% percent cap, Etihad is still expected to grow in the coming years. In 2011, it posted a 17% growth in customer traffic, three times higher than the international average of 15.9%.

http://www.nytimes.com/2012/02/10/business/global/etihad-airlines-looks-to-china-and-india-for-growth.html?scp=2&sq=airlines&st=cse