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Etihad Airways Cuts San Francisco; First Gulf Carrier to Cut a US route in 9 Years

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Etihad Airways Cuts San Francisco; First Gulf Carrier to Cut a US route in 9 Years

Etihad Airways Cuts San Francisco; First Gulf Carrier to Cut a US route in 9 Years
June 14
14:02 2017

Written by Rohan Anand and Benjamin Bearup

MIAMI – Abu Dhabi-based Etihad Airways (EY) announced that they are pulling out of the San Francisco (SFO) market effective October 29, 2017. The announcement comes less than three years since the route launched on November 18, 2014.

Etihad has been flying the Boeing 777-200(LR) three times weekly to SFO after previously operating the larger 777-300(ER) daily, originally dry-leased from one of its Etihad Group airlines, Jet Airways. The Indian carrier is part of Etihad’s portfolio, in which the Arab carrier owns a 49% share.

Etihad eventually began flying to SFO on its own metal in April 2016 using a 777-200(LR). However, the airline decided to decrease frequencies on its SFO route from daily to three weekly in February 2017, opting instead to redeploy the capacity to grow its Dallas/Ft. Worth (DFW) station to daily services in response to stronger demand from that destination.

Declining performance forces route closures


The decision to pull out of San Francisco comes months after Etihad announced a major restructuring plan to turn the airline profitable. As part of the plan, longtime Etihad CEO and visionary James Hogan departed the company and was replaced by Interim CEO Ray Gammell. Etihad has been facing economic hardship from struggling investments and falling passenger numbers from the United States.

Etihad is effectively the first Gulf carrier to suspend a US station in nearly a decade. Among the “Big Three” Gulf carriers—Emirates, Etihad and Qatar Airways—the only carrier who has previously canceled scheduled service to the U.S. has been Qatar Airways, which discontinued its Newark – Geneva – Doha routing in November 2008.

Etihad’s long-haul network in other regions has experienced changes as well. In March 2017, Etihad also canceled service to São Paulo, opting instead to expand its presence in Latin America in an offline manner via a new codeshare agreement with Lufthansa (LH), which went into place on February 1, 2017. Etihad carries Lufthansa’s code on twice daily flights between Abu Dhabi and Frankfurt and Munich, and Lufthansa carries Etihad’s code between Frankfurt and Rio de Janeiro and Bogota.

Partners in crisis, too


Alitalia, of which Etihad holds a 49% minority position in, was declared insolvent in May and recently filed for Chapter 15 bankruptcy in the United States. In addition to Alitalia, Etihad Airways has been facing economic hardship from partner Air Berlin. Just last month, Bloomberg uncovered that Etihad had agreed to provide $382 million dollars in new funds to the German carrier over the next 18 months.

Etihad has been facing decreasing demand from the United States after the Department of Homeland Security enacted its “laptop ban” that prohibits large electronic devices from being in aircraft cabins from several Middle Eastern airports including Abu Dhabi.

Emirates (EK), Etihad’s biggest competitor in the region, recently announced a wave of cuts to the United States citing President Trump’s self-proclaimed “Muslim ban.” While Emirates did not pull out of any markets, it did announce capacity and frequency cuts to its Boston, Fort Lauderdale, Los Angeles, Seattle, and Orlando routes.

In San Francisco, Etihad has also had to contend with Air India’s highly successful nonstop route from Delhi (DEL) to SFO, which has been in operation since December 2015. Air India is not only a Star Alliance carrier, which is appealing to a Star Alliance fortress hub like SFO, but also offers competitive connections over Delhi to multiple Indian markets.

Air India and Etihad effectively compete for similar types of traffic heading to Northern California and the Indian subcontinent; however, the laptop ban has worked very unfavorably against Etihad given the number of corporate travelers in this corridor.

Etihad will continue to serve Chicago, Dallas/Ft. Worth, Los Angeles, New York – JFK, Toronto, and Washington – Dulles in North America. It is unclear where Etihad plans to allocate the airframe that will be freed up by the decision to close San Francisco at this time, but the carrier has stated that it will be, “redeployed across the carriers’ network.”

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A Global Review of Commercial Flight since 1994: the leading Commercial Aviation publication in North America and 35 nations worldwide. Based in Miami, Florida.

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