Etihad Airways carried a total of 3.2 million passengers during the first quarter of 2014, an increase of 14% on last year, and has reported $1.4 billion total revenue for the same period.
At the same time, the Abu Dhabi flag carrier has announced the creation of the Etihad Aviation Group, a natural process in the development of the airline, according to its current chief commercial officer, Peter Baumgartner. The Swiss national is about to step up to the plate to lead the newly formed Hala Group, bringing together the commercial operations of the business.
Swiss-born Peter Baumgartner’s love for the aviation industry didn’t begin as a young boy yearning to fly the skies, it stemmed from a less romantic passion, a passion for brand and image.
“I was fascinated by the brand Swissair and what it means for the country, how it proudly carries the national flag on the tail fin and what a cool brand it was,” he explains. Baumgartner admits that he could have joined any industry at that stage, providing the company had the same public image, however “combining a great brand with the fascination for travelling and flying, that is a very
powerful proposition”.
It was not an easy start to his career; within the first year of joining Swissair the airline faced one of its largest crises when one of its aircraft crashed off of the coast of Halifax killing all 229 on board.
“It was real life teaching. It was enormously rich and powerful for the continuation of my career with what I learnt during that short period of time,” he reflects.
Almost 16 years on and Baumgartner is now heading up the commercial arm of one of the largest global aviation players. Etihad Airways. “It is my tenth year now. The company turned 10 in November last year. For me personally it was an emotional moment because it was a big milestone for the company, but also a moment to reflect back and realise what has been achieved in a decade.
“If you look at what you have done in these last 10 years, then it feels much longer because it is almost impossible to accomplish all of that in that short span of time,” he notes.
There is not one key highlight or moment during the past 10 years that for Baumgartner stands out or he is most proud of, for him it is a combination of factors that have led to where he and
the airline is today.
“To be the fastest growing [airline] in history, and on top of it create something that is considered the best and profitable. That, as a combination, is an enormous achievement,” he reflects.
Looking ahead, Baumgartner notes: “It is important to understand that the whole 10 years, and the entire next 10 years, have always been and will continue to be a permanent kind of transition.”
He adds that being flexible with change has kept the organisation agile and ready to adapt to the demands of the market, giving it a “distinct competitive advantage”.
“We live with the reality, and the fact, that we constantly reinvent ourselves and constantly develop ourselves,” he says.
From this transitional mindset, the formation of the Etihad Aviation Group was a “very natural step”, Baumgartner suggests. “Many areas of our business, that have been managed out of an airline department, with an airline structure, have become businesses in their own right. In order to focus on the opportunities of these areas the group structure is the right solution,” he adds.
While the group entity is still in the early stages of transition, Baumgartner believes it will provide the overall organisation with better opportunities to drive revenues and maximise on each individual company’s potential contribution. A key element of this being the commercial aspects of the airline, such as Etihad Holidays, Hala Abu Dhabi and its loyalty programme.
“No airline in the world of our size could turn a blind eye and not try to maximise the fortunes. So it is a very natural step for us and at the very right point in time.”
However, Baumgartner notes that it is not an immediate solution and that it is a process: “You don’t just flip a switch and you are sitting in the new structure.”
Within the next couple of months Baumgartner will be taking up his role as chief operating officer of the newly created Hala Group, a move that will see him overseeing all commercial aspects and businesses of the airline, and one that he believes is “enormously important” for Etihad’s future revenue and that of its airline partners.
Hala Group will form the “engine room” of the companies already in existence as well as exploring other potential avenues.
“The stronger your footprint in distribution is, the more control and influence you have on market share and shifting business to the airline, to Etihad, to our partners and via Abu Dhabi,” he adds.
The airline’s international tour operator, Etihad Holidays, has been focusing on the domestic market, however Baumgartner notes that it has been fast expanding internationally also. “Etihad Holidays has established a company already in the UK, branched out into Germany, and is looking now on implementing Australia.”
The UK and German operations are already live, with Australia expected to be operating within the next couple of months. The next step, he notes, will be for a further roll out in the GCC to complement its UAE operations in Abu Dhabi, Dubai and Al Ain.
One of the main areas of focus for Baumgartner is the airline’s loyalty programme, Etihad Guest, which last month was made a legally independent entity, while remaining fully integrated within the Etihad Aviation Group.
Launched in August 2006, Etihad Guest boasts more than 2.3 million global members today. “There are huge revenue opportunities and when you add the loyalty programmes that we have acquired from our partners, or have major stakes in, like topbonus from airberlin, like Jet Airways’ JetPrivilege, and you add these member bases together, that is already a major player.”
He adds there is the ambition to develop it into a leading global lifestyle loyalty programme. Work is still being carried out on various scenarios for its structure moving forward, however plans are in place to strengthen the relevance and value to the consumer.
“The industry has realised that a traditional [loyalty] programme is just a marketing wrapping of how you communicate a brand and a proposition to the consumer, but more important and relevant for the consumer is what is the value of that currency and how flexibly can it be spent.”
Baumgartner continues by saying that for a loyalty programme to be successful in today’s market it needs to diversify and become a global currency as valuable and important as the US dollar.
He adds that a loyalty programme has become more than just gaining members, it was now part of a company’s marketing tool, as long as the collected data is used correctly and you don’t spam.
“It has a very far reaching scope. Far beyond the boundaries of traditional programmes,” he adds.
Etihad, and its affiliated businesses, has been providing travel services into Abu Dhabi since its foundation 10 years ago, and soon after the tour operator arm, Hala Abu Dhabi, was established.
“Hala Abu Dhabi offers a very wide range of services that goes from visa services for inbound costumers on Etihad Airways flights, to the other end of the spectrum of staging some of the biggest and most complex events and exhibitions here in Abu Dhabi and the UAE,” Baumgartner explains.
He adds that Hala Abu Dhabi has been working closely with Abu Dhabi Tourism and Culture Authority (TCA Abu Dhabi) in its efforts not only to bring visitors to the UAE capital, but also bidding for big events and functions.
“It’s an important entity, not just for Etihad and the Hala Group, it is a very important entity to help implement the 2030 vision of the master plan where tourism, travel, events, exhibitions and MICE is an important pillar. There are expectations we have committed to to turn this vision into a reality. When we have committed to something, we have never failed on our committment otherwise we would never have reached where we have reached in these last 10 years,” he says.
The Hala Group not only features a major DMC in Abu Dhabi, but has spread its routes into the neighbouring emirate, Dubai, through its joint venture in travel management with BCD Travel in HTM (Hala Travel Management). Together the two companies offer a full range of corporate management services and solutions in Abu Dhabi and Al Ain.
He notes that HTM has seen “enormous” year-on-year growth, with the ambition to take the company internationally.
One of the key areas of triumph for the airline has been its contribution to the success of the destination it calls home.
“When Etihad started to fly to the world, Abu Dhabi was not yet placed on the global map, it was hardly known. With the ambition of Abu Dhabi, the national airline had no other choice but to immediately be considered as a great airline, as a great brand, delivering great services,” he says.
However, Baumgartner adds that while Hala Abu Dhabi is one of the leading players in the emirate’s tourism landscape, it is not the only entity making its mark and contributing its success.
He explains that a number of tourism service providers, along with TCA Abu Dhabi, have come together under Abu Dhabi Inc, and through its collaboration have seen great success.
He notes that the main success in promoting the UAE capital’s offerings has been the Access Abu Dhabi programme that targets trade partners.
Led by Hala Group, with close cooperation with TCA Abu Dhabi, Baumgartner says they have been able to package experiences, attractions, and function facilities, and have supplier and incentive deals in place to attract the business to Abu Dhabi.
They have seen similar success on the consumer front through the Essential Abu Dhabi programme, drawing attention to all that the emirate provides to the international market. “Together we can achieve more than when we try and work the market in isolation. This is a catalysts for cooperation. A catalyst for partnership and collective commitment. That is very key and integral in the current success of how Abu Dhabi delivers these growth rates,” he adds.
