< Previous50 Vol. 25/06, June 2024 AVIATION Private jet travel cheaper than business class on some routes as ticket prices fluctuate As the demand for travel continues to soar with record rates post-pandemic, ticket prices continue to stay competitive, in some cases resulting in private jets option Private jet travel could prove to be more pocket-fr iendly through some routes as busi- ness class prices continue to fluctuate amid the recent increase in demand for travel globally. Although, private jets are usually associated as non-economical, a closer examination reveals that economic f actor s and chang ing market dynamics have rendered pr ivate jet as a more affordable option, in some cases. One prominent example is the route between Dubai and Saudi Arabia, where private jet travel, in some cases, be deemed more cost-ef- fective than traditional business class options. However, the price is subject to various factors including number of passenger s, aircraft type, and airline operators, among others. BY NICOLE ABIGAEL Travellers can now easily access real-time pricing information, compare quotes from multiple operators, and choose the most cost-effective optionarabianbusiness.com 51 AVIATION $14,000 The cost of a one-way dropoff to Riyadh from Dubai for a private aircraft seating eight people, according to Icarus Jet Here is how you can secure private jet trips at more economical rates than business class: Shor t-haul flights: Routes like Dubai to Saudi, for instance, make the cost of flying private at par with business class, especially in the case of groups. According to Icarus Jet, a one-way dropoff to Riyadh costs $14,000 for an aircraft seating eight people, bringing the cost per ticket to $1,750. Business class tickets from Dubai for Saudi via Saudia will set you back $2,405 for a two-hour flight. Empty leg flights: One key factor contributing to the cost-effectiveness of private jet travel on certain routes is the ability to charter empty leg flights. Empty legs occur when a private jet needs to return to its home base or relocate to another destination without passengers. To avoid flying empty, operators often offer these legs at significantly reduced prices. This presents an oppor- tunity for savvy travellers to secure a private jet experience at a fraction of the usual cost, particularly on popular routes like Dubai to Saudi Arabia. Abu Dhabi-owned Royal Jet chaired by Sheikh Mohammed bin Hamad bin Tahnoon Al Nahyan operates several private jets in the region. The website offers an ‘empty legs’ option, allowing travellers to view available flights, dates and capacity available to fly. Rise in digital platforms: Travel- lers can now easily access real-time pricing information, compare quotes from multiple operators, and choose the most cost-effective option. This transparency has driven increased competition among private jet oper- ators, leading to lower prices and more attractive offers for consumers. Flexibility of choice: The cost-ef- fectiveness of private jet travel on select routes can be attributed to the ability to optimise aircraft capacity. While commercial airlines operate with fixed seating configurations, private jets offer greater flexibility. By selecting an appropriately sized private jet for the number of passengers, travellers can avoid paying for unused seats, making private jet travel a sensible economic choice for groups. Passenger count significantly influences the cost-effectiveness of private versus business class travel Perceived value vs. actual cost: When considering the total cost of business class tickets for multiple passengers, along with expenses such as ground transportation and airport lounges, the price difference between private jet charters and traditional air travel becomes less differential. Number of passengers: Passenger count significantly influences the cost-effectiveness of private versus business class travel. While private flying is often more economical for group travellers, solo flyers typically find better value in business class. Yet, for small groups of two to three passengers, private jets can be compet- itive, especially on shorter routes where fuel expenses can be divided. As the group size expands to four or more passenger s, pr ivate jets become progressively cost-effective, with the per-person cost decreasing. Several additional factors contribute to the equation, including whether the private jet is privately owned or chartered, with chartering generally carrying a higher price tag. The overall cost is also influ- enced by airport fees, ground handling charges, fuel expenses, and various other variables. Private Jet companies operating in the Middle East ExecuJet – Headquartered in Switzer- land, ExecuJet is a global aviation company offering a range of services, including aircraft charter, manage- ment, sales, and maintenance. With a fleet exceeding 150 aircraft, ExecuJet operates an FBO (Fixed Base Opera- tor) facility at Dubai International Airport (DXB). This facility caters to VIP, diplomatic, and crisis flights, along with f acilitating transfer s between private aircraft and commer- cial airlines. Spanning over 7,000 square meter s, the f acility offer s hangar space and ramp parking. Royal Jet – Headquartered in Abu Dhabi, Royal Jet is a charter operator specialising in luxury travel between the UAE and Europe. Under the chairman- ship of Sheikh Mohammed Bin Hamad Bin Tahnoon Al Nahyan, it operates from Abu Dhabi International Airport. The VIP lounge offers a curated expe- rience with local artwork, historical artifacts, and regional products. The fleet consists of twelve Boeing Business Jets and three Bombardier Global 5000/6000 aircraft. Vista Jet – A Swiss-based private aviation company boasts a global presence, with a fleet exceeding 70 aircraft ranging from ultra-long-range jets to super-mid-size and mid-size jets. Established in 2010, their Dubai office caters to the MEA markets, providing various char ter options such as one-way, round-trip, and empty leg flights. Paramount Business Jets – Para- mount Business Jets, headquartered in Dubai, offer s pr ivate jet char ter services. Their extensive fleet of over 50 aircraft includes various models such as the Hawker 800 XP and Learjet 60XR (midsize jets), the Challenger 604, Legacy 600, and Falcon 900 DX (large jets), the Global Express XRS (ultra-long-range jets), and the Embraer Lineage 1000 (VIP airliner). There are several other jet opera- tors in the region offering an extensive fleet for private travel including Pris- tine Jet, Prime Jet, Falcon Aviation, Nas Jet, Arab Wings and more. 52 Vol. 25/06, June 2024 AVIATION arabianbusiness.com 53 AVIATION ETIHAD GOES BACK TO THE FUTURE The UAE’s national carrier Etihad is on course for a remarkable growth under new leadership, with talk of an IPO. For new CEO Antonoaldo Neves, the strategy looks set to take the airline to new heights BY ANIL BHOYRUL AVIATION $1.56BN The total revenue posted by Etihad Airways in the first quarter of 2024 Remember this? Etihad Airways and its ambitious CEO making a host of announce- ments to “usher in a new phase of sustainable growth, underpinned by a robust strategic plan.” The dizzy heights of carrying 18 million passengers a year were floated, and a network that would expand to 125 destinations. This “pivotal turning point in the carrier’s journey” was also heavily laden with the X-factor: Flight EY1 touched do wn at J ohn F. Kennedy International Airpor t in New York, showcasing the A380 double-decker service featuring the Residence, a three-room suite in the sky. In a handful of years, the fleet size would be over 150. But no, this wasn’t May 2014 when the then Group CEO James Hogan outlined the airline’s spectacular vision at a spectacular event in Abu Dhabi, in front of the world’s media. This was just five months ago, as new Group CEO Antonoaldo Neves laid down his own marker. If it all sounds familiar, it’s because it is. Ten years later, with a global pandemic to deal with in between, Etihad Airways is back – and back to the future. Etihad Airways 2030 strategy Neves recently spelled out in detail the “Etihad Airways 2030” strategy, backed by ADQ Holdings. A network of 125 destinations are part of the 2030 plan, to link Asia and Europe. And a focus on connecting short and medium-haul destinations in the GCC, India, and Asia with long-haul destinations in Europe and the East Coast of America. “In 2017, our fleet peaked at 110 aircraft, and we worked on reducing the fleet size between 2019 and 2022. Today, we are witnessing the return of our large aircraft such as the Airbus A380, Boeing 787, and Boeing 777, resulting in an increase in our fleet to 86 aircraft, and we expect it to reach a total of 160 aircraft by 2030,” says Neves.54 Vol. 25/06, June 2024 AVIATION The airline currently flies to over 70 destinations worldwide, having launched 12 new destinations last year. The announcement marks a return to the pre-Covid growth strategy under- taken by Hogan, which after his depar- ture in 2017, was largely ditched by his successor Tony Douglas. Last year Douglas himself departed, with Neves now effectively skipping the seven years between himself and Hogan to once again make Etihad a world beater. The missing years, the lost years, call it what you like, no one can argue that the Etihad giant has been awak- ened and is once again taking its right- ful place on the global airline stage. But this time around, will it stay there? Neves has zero doubt and is even entertaining talk of an IPO to fund expansion. The omens are good, considering Etihad has pretty much been down this growth road before with huge success. Three eras defined Etihad has effectively had three lifespans – Etihad v1, the Hogan years, Etihad v2, the Douglas years and Etihad v3 – with Neves at the helm. In fact, the numbers for v1 and v3 look remarkably similar, and are sure to fuel investor appetite if an IPO does take shape. The Etihad v1 spanned 11 years, with Hogan taking the helm after a four-year stint as boss of Gulf Air. Etihad Airways had been created in 2003, with a vision “to redefine air travel, connecting the world through our hub at Abu Dhabi International Airport,” it announced at the time. On November 12, 2003, the first Etihad flight – to Beirut – took off, and less than a year later, $8bn of plane orders were made. When Hogan arrived, Etihad was a three-year-old airline with $300m of revenues. When he departed in 2017, it had grown into a diversified travel and aviation group generating $20bn annu- ally. The Etihad brand became known worldwide, supporting the wider brand of Abu Dhabi as an important centre for business, trade and tourism. Hogan’s vision and strategy were shaped by the mandate from the airline’s shareholder, the Government of Abu Etihad Airways’ average passenger load factor stands at 86 percent for the first quarter of 2024 Antonoaldo Neves was appointed Group CEO of Etihad Aviation Group in October 2022arabianbusiness.com 55 AVIATION Dhabi. This mandate stipulated the crea- tion of a competitive best-in-class global airline, synonymous with the premium brand of Abu Dhabi, and the development of a business that would support and enable the Abu Dhabi 2030 economic plan by contributing to the emirate’s economic growth and development. Abu Dhabi’s aviation infrastructure The creation of Etihad Aviation Group brought together critical elements of Abu Dhabi’s aviation infrastructure including Etihad Airways, Etihad Airport Services, Etihad Engineering, Etihad Aviation Training and Hala, a holidays division, driving significant financial and operational benefits as a direct result of the alignment created by this strategy. By 2017, Etihad was carrying 18.6 million passengers, creating more than 91,700 jobs in Abu Dhabi and across the world and delivering $6.1bn in revenue. Its economic impact to the emirate of Abu Dhabi was estimated by Oxford Economics to be more than $9.6bn. In less than a decade, Hogan had led the business to become one of the fastest- growing airlines in history. As an organic growth story, Etihad’s development was unprecedented. Etihad also operated at a level of financial transparency unprecedented for a new national carrier. It started publishing annual reports in 2010, and shared full financial details with insti- tutions around the world. With two of the world’s most success- ful and well-established ‘mega-connec- tors’ on its doorstep, in Emirates Airline and Qatar Airways, organic network growth could not be enough, however. Etihad could not build the feed traffic on its own to serve a global network that could compete against these two much longer-established competitors. To complement the airline’s organic growth and overcome bilateral and slot constraints, and meet the mandate set by the Government of Abu Dhabi, Etihad developed its equity alliance strategy. This used minority investments in other airlines – these were minority investments, which provided the only expansion option possible within the airline industry’s regulatory framework. In December 2011, Etihad became airberlin’s largest single shareholder with a stake of just under 30 percent (and gaining access to 33 million new passengers). In January 2012, Etihad paid $20m for a 40 percent stake in Air Seychelles, whilst in April 2013 it took a 24 percent stake in India’s Jet Airways for $379m. Four months later, a 49 percent stake in the newly branded Air Serbia was agreed, followed by a 33 percent stake in Swiss regional carrier Darwin Airline – and in 2014 a 49 percent stake in Alitalia. Securing Etihad’s future growth Etihad appeared unstoppable, having also in November 2013 made the largest ever fleet order, for 199 aircraft and 294 engines in a deal worth $67bn, which would have secured the airline’s future growth and competitive position out to 2040. As for the equity investments, they more than recovered the outlay cost for their acquisition. They significantly increased passenger numbers on to Etihad’s network, including travellers into Abu Dhabi, in line with the management mandate at the time. Etihad led initiatives to provide shared services which generated their own revenues streams, while also offering efficiencies for the equity partners. (From left) Tony Douglas led Etihad Aviation Group from January 2018 to October 2022; James Hogan was the President and CEO of Etihad Airways between 2006 and mid-2017 We are witnessing the return of our large aircraft such as the Airbus A380, Boeing 787, and Boeing 777, resulting in an increase in our fleet to 86 aircraft, and we expect it to reach a total of 160 aircraft by 2030 56 Vol. 25/06, June 2024 AVIATION India, then one of the world’s fastest growing aviation markets, epitomised the benefits of such a strategy. The invest- ment in Jet Airways enabled Etihad almost overnight to match the number of seats Emirates had to India and by early 2017 Etihad and its strategic part- ner offered 280 flights a week between Abu Dhabi and 18 Indian cities. These investments also ensured the continuity of airlines that were facing significant financial and operational pressures, Airberlin and Alitalia would have gone into administration with thousands of jobs lost, were it not for capital injections and aviation expertise of Etihad over a period of years. Of course, not all of it was smooth sailing. The new funding for Alitalia allowed it to develop a business strategy which was implemented from 2015 and delivered significant improvements to the business. In 2015, the Italian carri- er’s losses dropped dramatically to EUR199m ($216.4m), from EUR580m ($630.8m) the previous year. The plan was predicated on a number of strategic initiatives which required the collabora- tion of the Italian government. Unfor- tunately, these did not materialise, to the detriment of the business and Alitalia went into administration in 2017. Nevertheless, by the time Etihad v1 came to an end, Etihad was also strongly positioned for growth in 2017. Performance and financial position Etihad had one of the strongest balance sheets in the industry, including $14bn in equity. The airline, which had recorded successive independently audited profits from 2011 to 2015, was awarded a finan- cial credit rating of ‘A’ from Fitch Ratings in 2015, a rating still held today. In addition to its underlying perfor- mance and financial position, it had recently signed a memorandum of understanding with Lufthansa and TUI, to deliver a wide-ranging growth strategy across a range of markets, alongside airberlin. The deal was a potential game changer and involved the creation of a leisure airline juggernaut by combining the touristic operations of the Airberlin Group and the Ger man TUI fly company, including aircraft being oper- ated by TUI fly for airberlin under a wet-lease agreement. This new airline group was to serve a broad network of destinations from Germany, Austria and Switzerland. Harnessing the strengths of both the Etihad Aviation and TUI groups would have opened a world of opportunities for both entities – and Abu Dhabi – as the TUI group portfolio then included more than 300 hotels, 14 cruise liners, six European airlines with around 140 aircraft and a wide-reaching distribution network, covering more than 1,800 travel agencies and online portals. But in 2017, Hogan confirmed he was departing – to be replaced by Etihad Airways posted a profit after tax of $143m in the first quarter, signifying a solid start for the 2024 financial year I am delighted to see Etihad is back on track and returning to the pre- 2017 roadmap for growth. Reinvigorating the former fleet and network growth strategy will help the airline better compete with strong neighbouring airlines arabianbusiness.com 57 AVIATION Tony Douglas, who had been chief executive of Abu Dhabi Airpor ts Company (ADAC). Leadership V2 Douglas officially took over in Janu- ary 2018, but a good two years before the chaos of Covid, quickly began taking the airline and group in a totally new direction. The new Etihad management chose to withdraw from that growth strategy, cancelling the TUI agreement, and stepping back from the close engagement with Jet Airways, Air Serbia and Air Seychelles. Between January 1, 2017 and May 31, 2023, Etihad’s fleet decreased from 119 to 76 aircraft, representing a reduc- tion of 43 aircraft or 36 percent. Over the same period, Etihad’s aircraft order book decreased from 176 to 92 aircraft, representing a reduction of 84 aircraft or 48 percent. This decrease was primarily driven by the cancellation of some aircraft orders placed in 2013 for 48 Airbus aircraft. In July 2022, Douglas, in an inter- view with the Daily Telegraph, summed up his time during Etihad v2: “We’ve had to reduce our employees from 29,000 down to 8,500 today. We’ve reduced the number of different aircraft types in our fleet from a massive, diverse fleet down to what I would describe as a two- horse stable with the 787 Dream- liner and the [Airbus] A350-1000. We’re an 18- year-old company. And we’ve made some pretty fundamental mistakes, you know, earlier on in our teenage years. And that’s why, for the last five years, we’ve had to go through the real challenge of a transformation that’s now delivered the results in a market that’s recovering.” That turned out to be one of his last interviews, with Arabian Business break- ing the story in September 2022 that Douglas was already planning to leave Etihad to join the new Saudi airline Riyadh Air – a month later his succes- sor Neves was announced. Etihad V3 His own successor – now in charge of Etihad v3, has now effectively signalled a move back towards the strategy of Etihad v1. So quick has Neves been on the return to growth plans, the website AGBI reported in February that the airline was now outsourcing some plans as it didn’t have enough capacity within its own fleet. Neves outlook for the future is an impressive looking g rowth map. Speaking at the Dubai Air Show in November last year, Neves unveiled details of Journey 2030, described as the “guiding plan that propels Etihad into the future.” Between November 2022 and 2023, the airline carried 13 million passengers, a 30 percent increase from 2022. Through Journey 2030, Neves said this growth trajectory is set to continue, projecting a return to Etihad’s peak in 2017. Since leaving Etihad, Hogan has rarely agreed to be interviewed and when approached by Arabian Busi- ness, he was reluctant to comment beyond saying: “I am delighted to see Etihad is back on track and returning to the pre-2017 roadmap for growth. Reinvigorating the former fleet and network growth strategy will help the airline better compete with strong neighbour ing airlines and new regional entrants.” He was, however, happy to laud the vision and guidance of the then Crown Prince of Abu Dhabi – and now UAE President – Sheikh Mohamed bin Zayed Al Nahyan. “It was both an honour and a priv- ilege to implement his mandate,” Hogan said. He also paid tribute to Khaldoon Khalifa Al Mubarak, describing the Mubadala Managing Director and Group CEO as “an extraordinary busi- nessman who provided invaluable support during his 11 years at Etihad.” As a business, it has been a story of many stops and starts, different flight paths and landing routes. But nearly 21 years since the first flight to Beirut, only a fool would bet against the airline’s future as a global giant. Etihad is set to expand its network and enhance its offerings while connecting an ever-greater number of travellers to and from Abu Dhabi 4.2M The number of passengers served by Etihad Airways in the first quarter of this year 58 Vol. 25/06, June 2024 The evolving fintech ecosystem in the Middle East Over the past three years (2021-2023), fintech startups in the region have received a total funding of approximately $2bn through 140-160 deals, with a 40-43 percent of a total share in the UAE By 2024, the Middle East’s fintech sector continues its upward trajectory, fuelled by growing internet penetration, smar tphone usage, and a youthful demographic eager to embrace dig ital financial services. With the Middle East being a predominantly Muslim region, there’s a significant emphasis on incor porating Islamic finance principles into fintech products and services. This includes Shar ia-compliant banking, investment, and insur- ance solutions. Traditional banking models are facing competition from agile fintech startups offering digital banking ser vices, including neobanks tailored to the needs of specific demographic segments. Digital wallets are also gaining popularity for their convenience and versatility in payments. The fintech ecosystem in the Middle East is attracting increasing atten- tion from both local and interna- tional investors. Additionally, part- nerships between fintech startups, established financial institutions, and technology firms are becoming more common, driving innovation and expansion in the sector. Governments in the region have increasingly recognised the poten- tial of fintech to drive economic growth and financial inclusion. Regulatory frameworks have evolved to support innovation while ensuring consumer protec- tion and financial stability. Investment and collaboration Rise of neobanks and digital wallets Focus on Islamic finance Continued growth Regulatory support Next >