INTERVIEW: AMER KHAN COUNTRY MANAGER ETIHAD AIRWAYS

ABU DHABI IS BECOMING VACATION HOT SPOT OF THE WORLD

PAGE REPORT
Nov 16 - 22, 2009

HOW DID YOU START YOUR CAREER IN ETIHAD AIRWAYS?

Previously I was based in Dubai, working with the American Airlines and being in the UAE you can't help but notice how huge Etihad really is. It is not just an airline, but a major stakeholder in all the ongoing development in the UAE. So, it was an honour to join the Etihad network. It is a young airline, just six years old but within this short span it has become one of the most prestigious airlines of the world. I am very happy to be part of this larger than life network.

As you have worked for many airlines globally, we are eager to have your opinion about the status and potential of Pakistan's aviation industry.

The aviation industry in Pakistan is at a very interesting stage in its life cycle, and despite the difficult economic outlook worldwide, the Pakistani aviation industry seems to be strong enough to take on newer and more exciting projects.

Pakistan is one of the key destinations of Etihad Airways. We have a healthy loyal customer base in Pakistan and prospects for future growth are good. We have recently extended our services in Sialkot, Multan, Hyderabad, Mirpur, Gujranwala, Kharian, and Faisalabad through 'Discover the World Marketing'.

Currently we have daily flights from Karachi, Islamabad and Lahore and twice a week from Peshawar that is 23 weekly flights with excellent onward connections to the rest of the Etihad network, especially North America and Europe.

WHICH SERVICES HAS ETIHAD AIRWAYS RECENTLY INTRODUCED?

Etihad keeps coming up with newer ideas to make ourselves stand out from any other airline in the world. Our most recent innovation is the "Inspired Services", our range of top-of-the-line on ground and in-flight facilities. Our premium lounges have a variety of relaxation and entertainment programs like the world renowned Six Senses Spa, fine dinning, family room with specially trained nannies and a range of magazines, television, and online entertainment options.

We have also recently inaugurated our new Diamond First Class Suite, which is currently available on the London-Abu Dhabi flights and is slowly getting changed in all our aircrafts. The seats have been designed to cater not just to the comfort of Etihad guests but to provide them with the luxury that is expected from Etihad. The strategically placed privacy shell in the new Etihad Diamond First Class ensures maximum space with easy access to the aisles and also has space for our guests to dine with a companion or another guest, with an extra-large dining table as well as personal dining space within the compartment in addition to many other personal care touches from Etihad.

Last year we did our premium lounges at our home base - the Abu Dhabi Airport - designed to give our guests the ultimate travel experience as soon as they enter the airport. The very same dedicated lounge facilities has been recently inaugurated at Frankfurt and on October 1st when we moved our operations to Heathrow Terminal 4 , we simultaneously opened our dedicated Diamond First and Pearl Business lounges in London as well.

WHAT CHANGES HAS THE AVIATION INDUSTRY WITNESSED DUE TO THE ECONOMIC RECESSION? HOW HAVE YOU DEALT WITH THE NEW CHALLENGES?

There was a major decrease in travels of corporate clients from multi-nationals as they reduced their travel spends. Like all airlines Etihad was also affected by this decline. However, we were able to reduce the impact of this by containing our costs and through other initiatives.

Etihad witnessed a great year in 2008 and our first half in 2009 was strong as well. Etihad flew more than 616,000 passengers this July, a 9% increase on passenger numbers as compared to July 2008.

Etihad also introduced new destinations such as Melbourne, Chicago, Larnaca, Athens, Astana, Istanbul, and Cape Town. Hyderabad will be launched later this year with Colombo and Japan coming on line in the first quarter of 2010.

IN YOUR OPINION AS A NEW PART OF THE ETIHAD FAMILY WHAT MAKES ETIHAD STAND OUT FROM OTHER AIRLINES?

Etihad is a new airline and within its six year of operation, it was classified as one of the top desirable means of travel throughout its network. What I have learnt about Etihad and what appealed me the most when I was offered to join this team was the airline's ambition to bring the very best to its customers genuinely. It is premium airline, one which is fit to cater a king as well as the common person like myself.

Etihad brings with it a promise of class and comfort to not just its premium class customers but also to the economy class. Passengers not only have access to luxury in-flight services but the on ground arrangements and services provided by the airline are world class as well. Etihad Airways truly believes in taking you from Abu Dhabi to the world.

DO YOU THINK ABU DHABI HAS THE POTENTIAL TO BECOME THE GLOBAL CAPITAL OF BUSINESS AND TOURISM, WHILE DUBAI IS ALSO VYING FOR THE SAME SLOT?

Abu Dhabi being the capital and the commercial hub is the gateway to UAE. Dubai, our sister city is a major part of the UAE and has been very active in the tourism department for a long time. It is the tourism hub for travellers from everywhere in the world. It serves a great vacation spot and rightfully so is kept busy throughout the year what with concerts, the DSF, safaris and many new and innovative happenings.

Abu Dhabi on the other hand has slowly developed over the years to present itself as the entire world. It is the business, commercial and cultural hub of the UAE. Take for example our latest projects such as the Saadiyat Island it will become Abu Dhabi's cultural district with the world-renowned landmarks to be built on this island. This cultural district will be home to the world's largest concentration of premier cultural institutions, including the Guggenheim Abu Dhabi Museum, the Louvre Abu Dhabi and the Sheikh Zayed National Museum.

The Yas Marina Island is the venue for the Ferrari Formula One race held earlier this month in Abu Dhabi. The island currently under development will be hosting signature hotels, the Ferrari theme park, water park, and the Abu Dhabi destination retail development of 300,000 sq m retail area, links and parkland golf courses, lagoon hotels, marinas, polo clubs, apartments, villas and numerous food & beverage outlets that will create a unique international tourist destination.

Slowly and gradually, Abu Dhabi is inching its way towards becoming the corporate vacation hot spot of the world.

TELL US ABOUT ETIHAD'S CORPORATE SOCIAL RESPONSIBILITY?

Etihad takes its social responsibilities seriously and seeks opportunities to work with local groups to ensure the economic and social wellbeing of communities in which it operates. Etihad Airways has actively contributed towards the social sector in Pakistan since first entering the market, by extending its support to the Zubeida Khalid Memorial Trust (ZKMT), a local NGO, and a cause to which Etihad Guest Members have contributed immensely by donating their frequent flyer miles. Etihad Guest program globally donates to various charities and projects.

Etihad also regularly sponsors charity fundraisers to help raise funds to support rehabilitation of the 2005 earthquake victims in northern Pakistan, education and welfare of abused women in Pakistan as well as donation of equipment as a local children's hospital. Most recently, Etihad in collaboration with the Rotary Club held a fundraiser to raise money for the Pannah, battered women's shelter and the Brenton Canary hostel for girls.

WHAT MAJOR TRENDS DO YOU FORESEE IN THE AIRLINE INDUSTRY IN GENERAL AND ETIHAD AIRWAYS IN PARTICULAR?

The airline industry is facing what is acknowledged to be the toughest cycle in its history. Many airlines went out of business in 2008. This will drive further consolidation in the industry and airlines will have to look at innovative ways to manage costs and streamline the business in order to stay competitive.

While the present climate provides unique opportunities for low cost carriers, there is still a healthy demand for a full service offering as our growth and consistent loads indicate.

We fly to more than 56 destinations after six years of operations. By the end of the year, we will launch one more destination, bringing our total number of destinations to 58.

Apart from that Etihad has won many prestigious industry awards since its inception among them the prestigious Skytrax Award for the best business class and just this month Etihad Airways was honoured with the title of World's Leading Airline at the 2009 World Travel Awards, based on the votes of more than 180,000 industry professionals worldwide.

To win this accolade - the first Middle Eastern airline to do so - in just sixth full year of operations is a tremendous and unprecedented achievement. No other carrier has achieved what we have in such a short space of time and this award is testament to the commitment of our people right across the globe.

PUTTING DUBAI'S HOUSING IN ORDER

More than 5,000 new housing units will be added to Dubai's property market in the next few months by Wasl - the asset management arm of Dubai Real Estate Corporation (Drec), a top official said.

"We already manage about 20,000 housing units. With the new developments, the number of total residential units in our portfolio will rise to 25,000 units," said Hesham Abdullah Al Qasim, chief executive officer of DREC.

"Over the past year of economic downturn, Dubai's property market has moved from freehold to leasehold a natural shift," he said. This could help rents to ease further as supplies mount. Total housing supplies in Dubai this year could range from 27,000 to 30,000, according to the projections made by the Department of Finance in January, which was then predicted to have been less than enough to cool the demand.

However, due to the global economic downturn that impacted the UAE economy, the demand forecast has been revised downward. Some analysts now predict the current deliveries could result in an oversupply that could bring both prices and rents still lower.

Al Qasim feels that the price readjustment has been good for the market. "These new supplies will help the market stabilize further, especially when the demand picks up later," he said. "House rents and freehold prices were skyrocketing at such a rate that made them nearly uneconomical. There has been a 5 to 10 per cent drop in rents in central Dubai. However, in suburban areas, the drop has been in the range of 20 to 35 per cent," he said.

"We have a balanced portfolio of housing units that are 95 per cent occupied, giving us a very good spread." The Dubai government established Drec in June 2007, combining the assets of the Development Board and Dubai Real Estate Department, through Law No 14 that says that the corporation shall be a public commercial institution, affiliated with the Dubai Executive Council.

Drec's activities involve owning and managing its land bank, which includes a sizable amount of properties registered under the name of the Dubai Government as well as others. Its mandate extends to building, investing, and utilisation of commercial and industrial lands and properties. The corporation holds a large chunk of Dubai's land bank. However, it is not planning to enter the freehold property market. "As the leasehold market gains momentum, we are fortunate to have a large rental asset base under our management that will help balance market demand and supply," Al Qasim said.

"Right now, we are focusing on the core business developing properties and restructuring businesses and enhancing shareholder value by efficiently managing the assets under management."

Dubai's late ruler Shaikh Rashid Bin Saeed Al Maktoum had, in the 1970s, invested heavily in establishing settlements in downtown Deira, Karama, Satwa, Qusais popularly known as "Shaikh Colonies" that had helped to provide shelter to thousands of families belonging to government staff. These housing units were managed by the Ruler's Court, Real Estate Department and Development Board. Rents in these colonies remained historically low compared to the market, which helped the growing number of expatriate families live a decent life with low wages.

Dubai's strong economic growth and fast-growing population had, till late last year, put tremendous pressure on its infrastructure and pushed housing prices and rents in recent years. House rents in Dubai skyrocketed between 2005-2008 on rising demand, creating a nightmarish situation that has forced thousands of Dubai residents to move to Sharjah where rents were lower putting pressure on infrastructure. Rising rent and rent-related inflation prompted the government to impose a rent cap to help the middle income group, amid calls for solid investment in low-cost or affordable housing that will help Dubai to tame housing inflation.

Despite the recent hike in rents, Wasl has maintained some of the lowest rents in Dubai. Rent for a two-bedroom flat has remained as low as Dh16,000 in some parts of Dubai even now.

In order to help the market and ease pressure on rents, Drec has undertaken a massive housing scheme to provide affordable homes for the growing population. The new 5,000 supplies are part of the pack. With Drec, the Dubai government has effectively corporatised its rental and leasehold assets under a single entity. However, it looks like they are not 'commercialising' the rental market.

This will help the government to effectively balance the rental market by revising rents periodically upwards or downwards depending on the demand and supply situation and protect residents from rent-related inflationary pressures as the market has become too commercialised.

The entity could soon outshine some of the major developers in Dubai and become the leading player, as it will gradually reshape some of the localities and neighborhoods including Rashidiya, Al Qusais, and even Al Quoz Industrial Area and Jebel Ali Village.

Wasl is developing its businesses in a number of verticals, such as property, hospitality, leisure and industries. "We have 5,000 industrial units spread across 27 industrial zones, such as Al Quoz, Jebel Ali, Rashidiya, etc. On the hospitality side, we have eight hotels under management," Al Qasim said.

Major hotel properties, such as the Hyatt Regency, Grand Hyatt, Westin and Le Meridien chains have been brought under its portfolio from other government-owned entities in a major restructuring plan that will gradually reshape Dubai's real estate landscape.

Al Qasim said it would gradually roll out hospitality commercial and retail project development arms.

Dubai's land bank is currently being shared by six major corporations including Dubai World entities, Nakheel and Limitless, Dubai Holding entities, Dubai Properties Group as well as Emaar Properties, Dubai Investments and Union Properties apart from the direct government departments, while the majority of land used to be managed by departments that have now been brought under the jurisdiction of Drec.

Among these, Dubai World, Dubai Properties and Emaar Properties offer freehold lands and properties while Dubai Investments and Union Properties own lands that are offered to investors on leasehold (90 to 99 years). Drec is mandated to develop and manage rental units.

"The UAE has come a long way in restructuring the economy since the beginning of the crisis a year ago. With the government's capital injection, people are feeling the benefits of the crisis," he said. 'The macro-economic and market fundamentals are good; confidence has come back to the market. The banks are well capitalised and they have not sought additional funding," he said.