Etihad Airways which is a Abu Dhabi based carrier which purchased a 3.96% stake in Australia representing this Airline’s 4th purchase in the six months. Etihad stated that it purchased the stake via purchases in the open market in the recent weeks. There weren’t any details given about the money Etihad paid to buy the stake or that whether it has any plans of increasing the stake in the recent future. Etihad has this belief that this purchase of the stake in the virgin Australia will strengthen the relationship of 10 years between the two carriers.
Recently virgin Australia finished a restructure which unchained from the laws of foreign ownership. These laws were limiting the offshore investment to 49% in the company. These two airlines are a part of a coalition already which includes code sharing facilities on the other’s flights and flyer recognition. Etihad started its flights to Australia in March 2007 when it began its services to Sydney. Since 8 years, Etihad had been seeking states in the overseas actively to aid itself in competing with rivals like Qatar Airways and Emirates. 30 percent of the stake has so far been bought by the company in AirBerlin. Not only this but in Air Seychelles, it bought a stake of 40% in the months of December and February.
The chief Analyst of London Strategic Aero research named Saj Ahmad said that the organic growth of Etihad is not enough and that their policy of acquiring stakes in the other carriers which are being operated in the key markets will clatter more cages. Given the fact, that the stake is small in size, this would make no difference to the Qatar Airways and most probably a lesser difference to the Emirates.
Saj Ahmad has this belief that the deal could be a setback for Qantas which is an Australian carrier. The individual who should worry is Alan Joyce who is a Chief Executive Officer of Qantas. The deal basically accommodates Etihad in aiming for the popular domestic market of Australia. In this market, Virgin Australia for many years has given a very tough competition to Qantas and has taken away some of their very loyal customers. This will enable Etihad to have access to any of the Australian city by code shares in order to uplift the traffic figures. It is not clear that Qantas even ever took into account such an action when having its own planning and decision making. Qantas has been irresolute as of losing money, being late and losing passengers. They are aware of this thing that they will be under threat if the partnership gets successful. Qantas has no answer to this and it would be a bad idea if they decide to take a U-turn and wheedle emirates in some deal which had been news before as well. But there is no chance that Emirates will get into any deal with Qantas. Qantas as a result will suffer and Etihad will flourish with this partnership.