NEW YORK — James Hogan was appointed president and CEO of the Etihad Aviation Group in May 2006. His responsibilities include finance, strategy and planning, people and performance, and information and technology.
He provides leadership, governance and strategic direction across all companies in the group, including Etihad Airways, Etihad Airways Engineering, the Hala Group and the airline equity partners. He serves as vice chairman on the boards of equity partners Alitalia, Jet Airways, Air Seychelles, Air Berlin and Air Serbia, Niki and Etihad Regional (Darwin Airline).
Hogan was ranked in 2015 among the Top 25 Most Influential Executives in the business travel industry by Business Travel News. Etihad Airways was named the 2016 Airline of the Year by Air Transport World magazine. Before coming to Etihad, he was president and CEO of Gulf Air. He was also Chief Executive of the Tesna Consortium, a group created to acquire Australia’s Ansett Airlines.
Hogan spoke to Airways about succession planning, how the airline raises the bar on the passenger experience, its fleet and network and plans for the future.
Airways: You were named group president and CEO for Etihad Aviation. What does that new job entail for you?
James Hogan: It’s not really a new job. It’s what I was already doing. What it means is that over the years, we’ve been growing the business with the Etihad Airline Partners, the engineering business, the destination holiday company and the airline.
So, now I’m able to keep the focus on all our operations and oversee the airline partners. Peter Baumgartner takes care of the day-to-day operations of the airline. Engineering is a new business that was stripped out from the airlines, and the holiday destination marketing company was also stripped out from the airlines.
This gives me a better perspective with greater width and depth. Now I have the ability to look at the great opportunities and strategies, along with having a little bit of scale and efficiency to work smarter.
I’m still the accountable officer for the airline. I still have oversight over our safety protocol. It’s just good business to have a platform where you have a strong succession plan. It’s nothing unusual. Airlines in America or any business in America does this all the time. It’s part of our overall planning. The year I started , we turned over $300 million. Today we’re at $26 billion for the group. It’s just putting a structure in place, which is just good business.
It was revealed earlier this month that the U.S. State Department might have an answer before the end of the summer on open skies. What do you think are the prospects of having a revised or even just a status quo open skies by the end of 2016?
It’s not my position to comment, because these are talks between two governments. All I can say is in our case, we’re very clear that we have not damaged U.S. carriers. We’ll stimulate traffic and continue to build our codeshare relationship with American Airlines and JetBlue. We’ll continue to serve markets where you don’t see U.S. flag carriers. We’ll also place suitable codeshares on American Airlines flights.
What’s different is that we’re young as far as other airlines are concerned, we’ve got fantastic products and we’ve got an engaged staff who enjoy working for us. And with the guest, at the end of the day, it’s their choice if they will travel with us. Certainly we’ve been creative, in my opinion. And in the documentation that we presented, we said we have not damaged the U.S. carriers, nor have we violated our contract.
How do you think this battle got to this level?
I’ve addressed this. It’s behind me and its business as usual. It’s now in the hands of the respective governments. We are confident in our position, so let’s wait and see what they have.
Why was Etihad Airways Partners established and how you think the program is going?
We see a changing aviation landscape. Our business is unique because we’re bound by the bilateral Chicago convention. So, in some cases, it’s about buying [partners’] access instead of dealing with bilateral challenges. But just as important, it’s about achieving scale and reducing duplication.
Whether it’s Air Seychelles or Air Serbia, they all have a strategy. But more importantly, what it gives us is a strong global network. We’re more than happy for Alitalia to work with SkyTeam and Air Berlin to work with oneworld. We work with 49 different codeshare partners.
The consumers choose a network so they can go from one point to the other. We use the connectivity of our map to enable us to build brands alongside each other and also reduce overhead. The training for Air Serbia’s cabin crew was undertaken in Abu Dhabi. Smaller carriers just can’t order 300 aircraft to catch up, so we believe this is a better way to go about our business.
What is your fleet going to look like five years from now?
We are going to always be the smallest of the Gulf carriers. But on our order book, we will be the largest operators of the 787. We will also be a large operator at the Airbus A350-900 and -1000, along with the next-generation 777. And within the region, we also operate [Airbus] A320 and A321. So what’s important to me is that the take advantage of the latest in technology that can be turned into a great aircraft. With our equity partners, we have a fleet today with more than 700 aircraft.
There’s been a move by airlines around the world toward two-cabin aircraft. What does that look like for Etihad?
Our A380 fleet is three classes. The 777 is two class and our long-range 777s are three class. Our 787s are a mix of two and three class, with approximately 40 percent having two class and 60 percent three class. It’s about deploying the right aircraft in the right region to get the right return. And quite frankly, if you travel on our 787 or A380 business class, I would argue that it’s better than most European and American airlines’ first class.
How do you face the challenge of continuously raising the bar on a passenger experience that is already one of the best in the world?
It’s all about the people and their training. We have cabin crew from 140 different nationalities. We have the same number of cabin crew as our competitors, but we train them differently, which is one of the advantages of being a non-legacy airline. We’ll have a food and beverage manager, a chef and a nanny on board our aircraft. We’re very focused and we train our people inside the cabin. They need to be visible.
I have a strong view that consistency and service have a correlation with the ability to improve average fares. Any aircraft you board will have 12 different languages spoken. The average age of our cabin crew is around 28 or 29, so they are very enthusiastic. We are fortunate to meet these great young people who work in Abu Dhabi and offer them good benefits, compensation and work environment. And we get the best out of them.
I have a cadet pilot program where anyone in the company can apply. We have 16 cabin crew who are now flying as A320 reserve officers on account of this program. So you have an environment where people can grow their careers and see expanding opportunities. Our pilots are fundamental for safety. The cabin crew is fundamental in service delivery.
Looking at Etihad’s future expansion, what regions are the most likely to get most new service in the next five years?
One of the biggest challenge of leading an airline is you have deal with things like war and the economy. These are tough times. So if we look at it over the horizon, we have a very good American network. We’ll probably add one more city, then that’s all. We’re very strong within the Europe and we are very focused on how we integrate within our European partners such as Alitalia, Air Berlin and Air Serbia. We have a good operation down in Australia and we’re very strong in India and Southeast Asia. The areas we need to develop, in time, are Africa and China.
You spoke earlier about the airline’s growth since you became CEO in 2006. What do you think the airline is going to look like 10 years from now?
I think you have to look at Abu Dhabi 10 years from now. Abu Dhabi is the capital of the United Arab Emirates and is at the crossroad for over one billion people flying. Look at the way Abu Dhabi has been developed over the last decade.
As a center of education, you have New York University. As a medical center for the region, you have the Cleveland Medical Group and the Bangkok Medical Group. If you look at it as a government center, It’s the headquarters for the [International Renewable Energy Agency] and the UN [development program]. It’s also a travel destination in its own right. We also have the Guggenheim and you have the new Midfield terminals [at Abu Dhabi International Airport].
So, if I look at the next four, eight and 12 years, Abu Dhabi is going to be one of the go cities to visit in the world, and we are very much part of that story. It has never been about building the biggest airline. It’s about building a starred airline that works with the opportunities in Abu Dhabi. We’re the best in class, we offer safety and service and we make money.