Growth for Abu Dhabi's Etihad helps to fuel US economy

Etihad Aviation Group on Monday put a value on its contribution to the US economy fuelled by the expansion of the airline and its hub in Abu Dhabi. In a report commissioned from Oxford Economics, a UK research firm, EAG reckoned its economic contribution to be US$10.7 billion, including supporting 108,000 jobs across the US. […]

Etihad Aviation Group on Monday put a value on its contribution to the US economy fuelled by the expansion of the airline and its hub in Abu Dhabi.

In a report commissioned from Oxford Economics, a UK research firm, EAG reckoned its economic contribution to be US$10.7 billion, including supporting 108,000 jobs across the US.

The report comes at a time when EAG’s chief executive, James Hogan, is in the US for the launch of the airline’s new lounge at LAX.

Mr Hogan emphasised the impact that EAG’s success will have on employment in the US. “The figures from the report clearly show the catalytic incremental effect that the Etihad Aviation Group will have in the job market and on the US economy in the years to come,” he noted.

The $10.7bn headline number includes the operation of direct flights to six hub cities in the US – New York, Chi­cago, San Francisco, Los Angeles, Washington and Dallas – as well as significant capital spending with US-based suppliers, mainly new aircraft.

Oxford Economics’ report calculates the “core economic contribution” at $3.8bn, supporting 30,300 jobs.

The larger number includes an estimated $1.9bn of spending by 280,000 international visitors carried by Etihad to US cities. It also factors in $1.1bn of “knock-on catalytic effect”, that is to say the boost to business from carrying individuals who do business in the US.

In 2016, Etihad expects to operate more than 4,700 flights to and from the US and carry about 1.2 million passengers, including transit to important emerging economies, the company says.

The Oxford Economics report estimates that Etihad business will expand over the next few years to the extent that EAG’s contribution to the US economy will rise to more than $18bn by 2024, supporting more than 171,000 jobs.

“EAG [and its partners] have made great strides to stimulate air travel to and from the United States, have created vital air corridors connecting global markets, and have become a key contributor to the US economy,” said Mr Hogan.​

It has been previously reported that talks are scheduled for this month with the state department over claims against Gulf airlines first made last spring by the dominant US carriers – American, United and Delta – of unfair competition, claims which have since been robustly refuted by Etihad, Emirates and Qatar Airways.

The Gulf carriers have made the case over the past year that the Open Skies policy has benefited US carriers with improved market access, as well as the US economy broadly.

“The industry feeling is that the case the three US carriers put forward doesn’t have anywhere to go,” said John Strickland at JLS Consulting, noting that the Gulf airlines are by far the best customers for Boeing, ordering more of its upcoming long-range aircraft – the 777X – than the US carriers combined.

Akbar Al Baker, chief of Qatar Airways, in a recent interview said he’d had visits from mayors of a dozen US cities who are looking for flights to replace those lost through the industry’s consolidation.

“But the unknown is what might happen if there is a President Trump after the autumn election,” said Mr Strickland. Mr Trump has been vocal against international trade deals in general.

The US state department has also heard from US airlines that oppose their compatriots’ efforts as anti-competitive, including Alaska Air and JetBlue, two of the country’s most popular carriers, as well as cargo flight operator FedEx.

amcauley@thenational.ae

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Source: Business

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