Innovation at Etihad Airways

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CASE STUDY

Innovation at Etihad

Airways


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Innovation At Etihad Airways

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Abstract

This paper is a mini case study presented on the innovation strategies and innovative

products/services at Etihad Airways. For the purpose of this paper, primary and secondary

research was undertaken to establish facts- and relevance of the primary data was created with

the help of secondary data. For the purpose of primary data, an interview was conducted with

Mr. Ghaith Matar, the head of marketing department at Etihad Airways Abu Dhabi, to learn

about the innovations at his company, and the strategies used to follow suit. Throughout the

paper, secondary data has been used to validate information acquired from the point of

contact, and this information was taken from a variety of sources including newspaper articles,

company website, etc. Through the end of the case study, recommendations were offered to

the company in the light of the information gathered generally and academically.


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Contents

Company Description ..................................................................................................................... 2

Innovation at Etihad Airways ......................................................................................................... 5

In flight/ Cabin Innovations ........................................................................................................ 6

Recommendations ........................................................................................................................... 7

Appendices ...................................................................................................................................... 9

Bibliography ................................................................................................................................. 13


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Company Description

Etihad Airways is a renowned name in the global aviation industry and is the national carrier of

the United Arab Emirates. Etihad Airwaysis headquartered at Abu Dhabi and was incorporated

in 2003 by the orders of the royal ruler of the nation and has a fleet size of 104 (Etihad Airways,

2014). The airline started operations in 2003 and in 2013 it had revenue of approximately US

$6.1 million. Today, Etihad is one of the fastest growing airlines of the world and most of this

success can be dedicated to the immensely successful marketing and innovation Etihad Airways

has conducted and experienced over the years. Etihad operates through narrow and wide

bodied Airbus & Boeing aircrafts and has a fast growing network in Middle East, Asia, Europe,

North America, Canada & Australia (CAPA, 2014).

Etihad is governed by aboard of directorschaired byHH Sheikh Hamed bin Zayed Al Nahyan.

The vice chairman at Etihad is Mr. HH Sheikh Khaled bin Zayed Al Nahyan. The Board consists of

seven independent non-executive members and has two sub-committees, being an Executive

Committee and an Audit Committee, each with its own charter and chairman.

The airline is led byJames Hogan(formerly CEO ofGulf Air) who was appointed as President

andChief Executive Officeron 10 September 2006.


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Innovation at Etihad Airways

According to the interviewee Mr. Ghaith Matar, the head of marketing department at Etihad

Airways Abu Dhabi, the chief and foremost philosophy of Etihad Airways is to perfectly reflect

the Arabian hospitality, culture and generosity through its global operations. Moreover, Etihad

Airways chief corporate philosophy is to become a bridge of hospitality between the East and

West. Ghaith Matar stated that the mission of Etihad Airline is simply to become the number

one airline carrier of this worldwhile the goal of Etihad airways is to be a truly 21st century,

global airline, challenging and changing the established conventions of airline hospitality.

However, Ghaith Matar also believes that the company does not follow other airlines in

adopting all these polices; instead it focuses on internal innovation to lead the industry in

introducing innovative hospitality services. Etihad Airways innovates to lead the airline industry

globally.

Keeping this description of innovation at Etihad in mind, the table in Appendix 1 identifies

Etihad as a Technology Driver, which makes the company a first mover in innovation, and

translates into excessive R&D investment. According to Mr. Ghaith Matar, Etihad Airways has a

very active Research & Development Department and the company spends far more than its

direct competitors in innovative developments and research projects.


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Being a Technology Driver is the reason why Etihad airways won the board service innovation

awards in 2012 and 2013 (Etihad, 2013). Mr. Matar stated that The Company also has policies

to hone and promote internal innovation unlike many of the companies operating in UAE.

Undoubtedly, Etihad is one company that is innovating above par of western companies.

When questioned about innovative products or services at Etihad, Mr. Ghaith Matar stated that

although innovative services and products at Etihad are plenty including culinary innovations,

Human Resource Innovations and Customer Service Innovations, the most recent development

has been the In-flight or Cabin design innovation.

In flight/ Cabin Innovations

In 2008, Etihad decided to lead the aviation industry by offering an innovative cabin design by

partnering with designing agencies from around the world (Factory Design Official, 2014).

According to Mr. Ghaith Matar, the strategy adopted by Etihad was the Strategic Alliance for

the purpose of this innovation, although generally the company primarily depends on Internal

R&D Spending (Refer to Appendix 2).

The vision of the company to be the Best Airline in the World was followed through an

innovative route, and Etihad decided to bring something unique and innovative to the table.

Thus, after careful consideration, Etihad decided that a single designing company cannot help

the organization achieve its goal of innovative design, and therefore three agencies, including


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Honour Branding, Factory Design, and Acumen Design were combined together, and were

called the EDC- Etihad Design Consortium (Factory Design Official, 2014).

On 8th

of May 2014, Etihad Airways showcased its new and innovative cabin design for the first

time at the Arabian Travel Market, Dubai (ETB News, 2014). The designs were for the airlines

premium cabins for the Airbus A380 and Boeing B787 Dreamliner aircrafts. However, the main

attraction of the evening was The Residenceby Etihad (Appendix 3). This was a private cabin

with three rooms, and offered facilities such as a living room, a shower room, and a double

bedroom (ETB News, 2014).

Mr. Ghaith Matar as a marketing head believes that this innovation was taken very positively by

business class and elite flyers and has served as a unique selling point for the company ever

since.

Recommendations

Although in terms of innovation, Etihad Airways easily outdoes most of its competitors, there

are some areas that the company has neglected over the years, which limit the usefulness of its

innovation programs. Firstly, Etihad has a significantly smaller reach as compared to rivals such

as Qatar Airlines. While the latter serves 125 destinations, Etihad Airways is still lagging behind

with approximately 100 destinations (ETN- Global Travel Industry News, 2013). This means that

although the company is investing a lot more in innovation as compared to other airlines, it is


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limiting itself in terms of the market share and the market segment that it is serving. Thus, the

complete benefits of investment in innovation can only be exploited when the adopters of

innovation increase.

Furthermore, general reviews on the internet about Etihad Airways reflect highly negative

customer sentiments about the company. It is seen that the reviews mostly complain about bad

customer service. Thus, although Etihad Airways is trying to innovate and serve the passengers

in the best possible ways, it needs to start by changing the brand perception through effective

marketing techniques. This will ensure that the customers develop the right kind of confidence

to try the new and innovative services that Etihad is heavily spending on.


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Appendices

Appendix 1


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Appendix 2


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Appendix 3

The Residencelounge room (Source: Acumen Design Associates, 2014)


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The Residencedouble bedroom (Source: Acumen Design Associates, 2014)

The unique curved aisle of the B787 First Suitescabin (Source: Acumen Design Associates, 2014)


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Bibliography

Acumen Design Associates, 2014. Acumen Design Associates | Transport and Product Design

Consultancy | London UK | Etihad Airways unveil the most luxurious living spaces in the

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CAPA, 2014. CAPA Centre for Aviation: Etihad. [Online] Available at:

http://centreforaviation.com/profiles/airlines/etihad-airways-ey [Accessed 15 May

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ETB News, 2014. Etihad Airways ATM Stand Displays World-Leading Innovation At Arabian

Travel Market. [Online] Available at: http://australia.etbnews.com/204265/etihad-

airways-atm-stand-displays-world-leading-innovation-arabian-travel-market/ [Accessed5 July 2014].

Etihad Airways, 2012. Etihad Airways wins on board service innovation award. [Online]

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Innovation at Etihad Airways