By Deena Kamel
Etihad is in the middle of a strategic review that includes an evaluation of its investments in struggling affiliates Alitalia and Air Berlin.
Etihad Airways will let economy passengers coveting more elbow room bid online for adjacent seats as the Abu Dhabi-based carrier explores new ways to generate revenue in a tough market.
The long-haul airline is offering a “neighbor-free seat” option for economy-class passengers allowing them to bid for as many as three seats next to their own, Etihad said Thursday in an emailed statement. Economy passengers can also pay up to $250 for access to business-class lounges at the carrier’s Abu Dhabi hub and as much as $75 at airports in Europe, the U.S. and Australia, the company said.
“With all the difficulties Etihad is facing with its equity partners, Etihad is looking at lessons from low-cost models to charge for extra services,” John Strickland, director of JLS Consulting, said by phone from London. The seat-bidding system “is a neat way to gain a bit of revenue. It’s opportunistic: If they see in their booking trends that they can honor this, then why not?”
Etihad is in the middle of a strategic review that includes an evaluation of its investments in struggling affiliates Alitalia SpA and Air Berlin Plc. The government-run carrier faces intensified competition on routes to Europe and North America, and low oil prices have crimped demand for premium bookings in the Gulf. Etihad cut as many as 3,000 jobs last year to reduce costs, people with knowledge of the matter said at the time.
By charging fees for additional services, Etihad can keep ticket prices “as low and as competitive as possible,” Mohammad Al Bulooki, Etihad’s executive vice president commercial, said in the statement.
Emirates, Etihad’s Dubai-based rival, introduced fees for seat-selection last September and access to its premium lounges in February, amid slowing growth for airlines in the Gulf region.
“Especially in the Middle East, with major carriers facing a challenging business environment and falling yields, the focus on ancillary revenue streams is now a priority,” Diogenis Papiomytis, director of aerospace and defense at consultant Frost & Sullivan Inc., said by email from Dubai.
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Etihad is also introducing fees to upgrade services on the ground, it said. Business-class passengers can pay to use first-class lounges and a spa when flying from or transiting through Abu Dhabi. Starting July 3, premium customers in other cities will have the option of paying for chauffeur service at discounted rates. Passengers on the Residence, Etihad’s opulent cabins on Airbus A380s, will continue to get chauffeured for free, according to the statement.
Economy-class passengers can pay for access to business lounges in London, Manchester, Dublin, Paris, Washington, New York, Sydney and Melbourne for fees ranging from 45 pounds ($57) at London’s Heathrow to $75 at New York’s JFK. In Abu Dhabi, the fees reach 920 dirhams ($250) for an eight-hour stay, the airline said.