Etihad Airways Response to the Qatar Diplomatic Crisis Analysis

This report provides a comprehensive analysis of Etihad Airways, focusing on its response to the Qatar diplomatic crisis. It begins with a justification for choosing Etihad Airways and proceeds to analyze current trends in the aviation sector based on provided data sets. The report includes a definitional analysis of 'geopolitical' using multiple sources and a media analysis to determine the crisis's impact on the organization. Further, it examines Etihad Airways' performance over the last three years, assessing key metrics such as passenger numbers, revenue, and profitability, and concludes by evaluating the effectiveness of the organization's response to the Qatar diplomatic crisis. The analysis incorporates data from various sources, including financial reports, media coverage, and industry publications to provide a holistic view of Etihad Airways' operations and challenges during the specified period.

Etihad Airways

TASK A...........................................................................................................................................2
Choose one airline/airport affected by the crisis and provide a brief justification for your
choice...........................................................................................................................................2
TASK B...........................................................................................................................................2
Based on the given data sets, determine the nature of current trends in the aviation sector.......2
TASK C...........................................................................................................................................3
Carry out a definitional analysis of the term ‘geopolitical’ using 3 appropriate sources............3
TASK D...........................................................................................................................................4
Carry out a media analysis of the organisation using a range of suitable sources to determine
how it has been affected by the crisis..........................................................................................4
TASK E...........................................................................................................................................6
Analyse the performance of the organisation chosen over the last 3 years.................................6
TASK F............................................................................................................................................8
Determine the effectiveness of the organisation in response to the Qatar diplomatic crisis.......8
REFERENCES..............................................................................................................................10
1

TASK A
Choose one airline/airport affected by the crisis and provide a brief justification for your choice
Chosen organisation
The second UAE flag carrier is Etihad Airways. Its headquarters are located in Khalifa District,
Abu Dhabi, near the International Airport in Abu Dhabi. In November 2003, Etihad started
operations (Bomba, 2019). Etihad Airways said it was cutting jobs in many areas of business
operations, following global airlines in understanding the requirement cost-cutting steps as the
coronavirus pandemic (COVID-19) brought international air travel to a near-stop.
The COVID-19 has presented companies around the world with unparalleled obstacles, and
Etihad will be no exception. It is clear that the market for travel will be drastically reduced in the
coming years.
TASK B
Based on the given data sets, determine the nature of current trends in the aviation sector
Current Trend in Aviation
As per the given data on Table 1 it has been concluded that higher number of passengers
throughout the years such as 2016 to 2018 was increases fort Dubai Airport. On the other hand,
in relation to lowest passenger in 2016 were found in Riyadh Airport. Dubai, Hamad and King
Abdulaziz, these three airports are the top among the key airports across Middle East. In 2018 as
well. Dubai is on top of the list and Abu Dhabi is the lowest Airport in terms of number of
passenger.
In order to analyse the Traffic results for key airports of Middle East of the basis of Table 2, the
% change in the RPK figure for Emirates is given as 2.7 %. It means that RPKs grew between
2017 and 2018 by 2.7 %. On the other hand, higher percentage changes in RPKs across the
Middle East airline from 2017 to 2018 of Oman that is 14 % (Bose and Mugambi, 2018). In
context of Etihad Airways, its traffic result from 2017 to 2018 shows negative change that is -6.7
%. it means airport RPKs decline throughout the period.
Analysis of Table 3 shows the profitability and traffic of Airline industry by region and for the
period of 2018 to 2020. RPK growth for the Latin America in 2018 was 8.0 % and in Europe is
just 6.0 %. It shows the growth of RPK by region between 2017 and 2018.
2

TASK C
Carry out a definitional analysis of the term ‘geopolitical’ using 3 appropriate sources
Definitional Analysis
Source 1:
<https://www.merriam-webster.com/dictionary/geopolitics>
Source 2:
<https://study.com/academy/lesson/geopolitics-definition-foundations-example.html>
Source 3:
<https://www.sciencedirect.com/topics/earth-and-planetary-sciences/geopolitics>
Author (Year) Definition Key Points
Merriam-Webster,
(2020)
An analysis of the effect of geographic
location, economy, and demography on
geopolitical affairs and, in particular, on a
state's international policy. It is a mixture
of factors linked to something (such as a
state or specific resources) that are political
and geographic.
 Economic
 Geographic area
 Political affairs
 Foreign policy
Anthony Jordan,
(2020)
Geopolitics is at work as actors including
such political leaders, nations,
organisations, and companies decide how
other government leaders, nations, entities,
and corporations will be influenced by
their actions. In politics, geopolitics is not
by any way a modern phenomenon. For
thousands of years, trying to predict the
response of others in various regions of the
globe has been part of politics, however
since the start of the 20th century, it has
grown.
 Political leaders
 Influence of
entity
 Predict response
of global region
 It started from
20th Centaury
3

P. Reuber, (2009) Geopolitics is a social concept, a type of
social activity, based on what analytical
viewpoint people take on this topic, a
discursive creation. No surprise that in this
regard, geopolitics seems to have been
fluid, runs through the fingertips, there is a
firm centre of understanding.
 Social concept
 Based on
analytical
viewpoint
 Discursive
creation
Own definition of ‘geopolitical’:
Geopolitics is the examination of the geographical area from human to physical impact of the
Planet on politics and foreign relations (Heiets, Spivakovskyy and Spivakovska, 2019). While
geopolitics usually applied to countries and ties among them, two certain kinds of states could
also be the subject.
TASK D
Carry out a media analysis of the organisation using a range of suitable sources to determine how
it has been affected by the crisis
Media Analysis
Source
& Year
Type
of
Media
Headline Coverage Evidence
of bias?
By Lora
Jones,
Daniele
Palumbo
& David
Brown,
(2020). <
https://w
ww.bbc.
Internet
Media
Coronavirus
: A visual
guide to the
economic
impact
Due to the coronavirus pandemic around
188 nations affected, which was first
identified in China, has affected citizens.
Its distribution has left corporations across
the world calculating costs and asking what
kind of turnaround could look like. The
valuation of pensions or individual savings
accounts (ISAs) may be influenced by
major changes in capital markets, where
Internal
News
4

com/new
s/busines
s-
5170622
5 >
stocks of companies are purchased and
sold. Even as numbers of Covid-19 cases
raised, the FTSE, Dow Jones Industrial
Average and the Nikkei all saw massive
falls.
<
https://w
ww.bbc.
com/new
s/uk-
5176827
4>
Internet
Media
Covid-19 in
the UK:
How many
coronavirus
cases are
there in
your area?
Upwards of a million reported COVID-19
cases have occurred in the UK and
approximately 47,000 people have already
died, government data shows. These
estimates only include individuals who died
inside 28 days after testing positive for
coronavirus, as well as other metrics
indicate that the number of deaths is
greater.
On Monday, the government reported
18,950 confirmed cases. After such a steady
decline since the first peak in April,
reported cases began to rise again in July,
with development in September and
October increasing sharply.
Internet
post
Postponed or cancelled events may lead to a drop in profit for the promoters of the events as well
as for media broadcasting them. Cable TV networks are partially dependent on ads, which ensure
their profits would be affected by any drop in sales. It has already been heavily influenced by the
sports industry. The National Basketball Association (NBA) and National Hockey League
(NHL) in the US have also immediately suspended their seasons due to COVID-19 pandemic.
Many football games are now being played in Europe without crowds and leagues are beginning
to run. It appears that the Premier League is poised to postpone its season. In India, the IPL is
also postponing the tremendous loss to the media firms and their sponsors have to bear.
Not only planned coverage, but also advertisement contracts, sponsorship agreements and
promotional activities may be impacted by the delay or cancellation. As per the New York
5

Times, when the US boycotted the Moscow Olympics, while having insurance, broadcaster NBC
also lost $34 million.
On channel group stage, BARB public information for March 9-15, 2020, compared with Feb.
24-March 1, 2020, shows only 2 groups increasing viewing time, "BBC Total," up 0.1 percent,
and "Channel 4 Total," up 2.8 percent, while "ITV Total" fell 5.1 percent, "Sky Total" 1.7
percent and "Channel 5 Total" 0.3 percent (Jory and et.al., 2019). Non-linear exposure on TV
sets by Comcast Corp.-owned Sky Ltd. rose by 28.6 percent, with British Broadcasting Corp.
(BBC) also seeing a substantial improvement in this group, up 14.9 percent. BBC News (UK)
raised viewing time the most on a channel-by-channel basis, up 44.4 percent, while Sky News
(UK) rose by 30.5 percent. U.K. Top ITV PLC, a commercial broadcaster, suffered declines of
9.8 percent across all its networks except ITV3 (UK). In a reply to MPs mostly on Digital,
Entertainment, Media and Sport (DCMS) Committee, only hours after the deadlines to submit
for role of his successor closed, BBC director-general Lords Tony Hall said that the BBC would
keep services running or could drastically reduce its performance.
TASK E
Analyse the performance of the organisation chosen over the last 3 years
Performance of the organisation
In 2018, Etihad Airways posted a 15 percent increase in core operating performance, 7 percent
higher than expected, on revenues of US$ 5.86 billion (2017: US$ 6.0 billion). For the year, the
airline announced a loss of US$ 1.28 billion (2017: -1.52 billion US$). The airline reports that it
has increased its core operating efficiency by 34 percent since the start of its five-year
transformation programme in 2017, amid competitive market conditions and the impact of a rise
in fuel prices. In 2018, Etihad carried 17.8 million passengers (2017: 18.6 m), with a seat factor
of 76.4 percent (2017: 78.5 percent) and a drop in passenger capacity.
In H1, Etihad carried 3.5 million international tourists (H1 2019: 8.2 million), a 58 percent
decline from same duration of previous year (Lebel, 2018). 71 percent was the equal to the
average load factor. For this time, core operating losses rose by US$ 172 million to US$ 758
million (H1 2019: US$ 586 million), led by a sales decline of 38 percent, that stood at US$ 1.7
billion (H1 2019: US$ 2.7 billion). This was partially driven by a decrease in direct operating
expenses by 27 percent to US$ 1.9 billion (H1 2019: US$ 2.7 billion) and a decrease of overall
6

and administrative costs by 21 percent to US$ 0.40 billion (H1 2019: US$ 0.50), both guided by
cost savings and reduced business management measures. Seat kilometres available (ASK)
decreased by 53 percent to 23.69 billion (H1 2019: 50.35 billion).
Cargo sales were US$ 0.49 billion, an increase of US$ 130 million (37 percent) with 254,345 leg
tonnes of cargo carried relative to the very same duration in 2019. This was motivated by a rise
in demand and an increase in freight fares.
Following the onset of COVID-19, the key business result for the very first three months of each
year increased by 34 percent, with a 12 percent reduction in passenger numbers and a 9.5 percent
reduction in ASK (O’Connell and Bueno, 2018). The seat load factor in Q1 was 74 percent (the
result in January was slightly higher than the same month in 2019, with such a seat load factor of
81.9 percent), as well as the yield was US$ 5.92 cents. Unit sales decreased by 3.3% to US$ 4.14
cents in Q1 (Q1 2019: US$ 4.28 cents), offset by an ongoing focus on bringing down production
costs, which decreased by 2.4% to US$ 7.01 cents (Q1 US$ 7.18 cents).
In 2018, 15 percent growth in core operating performance, US$ 5.86 billion in sales, 4 percent
rise in passenger yields, powered by capacity discipline, infrastructure and fleet optimization,
and rising market share in luxury and point-to - point markets. Unit cost reduction of 3%, amid
31% higher fuel prices. 17.8 million Travellers and 682,100 metric tonnes of freight were
carried. Passenger revenue in US$ billion in 2017 was 5.0, 5.0 in 2018 and in 2020 was 1.01.
However, following COVID-19 flight suspensions, the carrier saw a substantial drop in Q2
operating profits, with 70 percent of its aircraft being grounded (Sani and Gernowo, 2018). In
comparison with Q2 2019, this period recorded a 99 percent drop in traffic volumes and a 95
percent drop in ASK. For this time, the seats load factor was 16 per cent, mainly driven by the
activity of special (repatriation) flights and the resumption at the beginning of June of a limited
network of money transfers through Abu Dhabi. Below mentioned graph provide better
understanding:
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"Tony Douglas, Group Chief Executive Officer, Etihad Aviation Group, stated:" during the first
6 months of the year, Etihad faced a series of immense and unpredictable challenges. As part of
our ongoing reform plan, they began strongly in 2020 and posted promising results. When
COVID-19 struck, this left us in a reasonably stable role, allowing everyone to act with
flexibility, and to mobilise all resources available as the situation deepened, undertaking
important steps across a wide-ranging set of initiatives to reduce costs.
Starting of this year is very strong, based on the favourable momentum gained in 2019, and the
airline was also on target to accomplish an EBITDA of US$ 900 million in 2020 by the end of
the 1st quarter (2019: US$ 453 million). Despite a substantial drop in revenues, Etihad managed
to sustain a satisfactory level of liquidity, whilst continuing to increase new liquidity services
funded by domestic and international financial firms (Solanki, 2020). This was helped in April,
at the height of the pandemic, by retaining a 'A with a positive outlook' Fitch rating. To retain its
pre-COVID-19 credit rating, Etihad was among a limited number of airlines.
TASK F
Determine the effectiveness of the organisation in response to the Qatar diplomatic crisis
Response of the organisation to the crisis
In relation to Etihad Airways, the announcement comes just after governments of Saudi Arabia,
Bahrain, Yemen, Egypt and the United Arab Emirates cut off connections with Qatar, accusing it
of promoting terrorism (Spring, 2019). The only Gulf Cooperation Council members who have
8

not joined the boycott are Kuwait and Oman. Beginning on Tuesday, Saudi Arabia prohibited
Qatar Airways for flying to the kingdom and using its airflow. All Saudi carriers were barred
from flying to Doha, with immediate effect. The UAE said that it was shutting Qatar's airspace
and seaports and "banning all Qatari modes of transport."
There are about 40 flights per day from the UAE to Doha, as well as the sudden halt in Qatar's
air transport seems to be the latest blow to the continent's airlines.
Amongst these 10 airlines upon which Trump administration placed tough legal limits in March
were Emirates, Qatar Airways and Etihad Airways. Carriers are also obligated to prohibit
passengers travelling to the United States from their Middle East hubs from carrying virtually all
forms of electronic devices in the cabin. The restriction on flights on Monday is part of a wider
range of travel restrictions affecting Qatar and its residents. For precautionary security purposes,
the UAE government would give Qatari diplomats 48 hours and Qatari residents and tourists 14
days to exit the UAE. "UAE citizens also are forbidden from travelling or transiting through
Qatar."
In the response, Qatar Airways seems "slow" since Etihad Airways first replied. Given that more
was at stake with Qatar Airways, they might have anticipated a response from all of this first
(Sri, 2019). The response seems sluggish since it was not at the period of the crisis’s declaration.
That is a little unreasonable, but in the digital world timing is critical.
The impact of the political decision will be felt in the region. Etihad Airways for example,
announced that on June 6th, 2017 it would stop flight services to Doha (the capital of Qatar). In
addition, the six nations are shutting their airports to Qatar Airways. As it looks for ways to
redirect more of its current services, the airline will sacrifice routes and see higher operational
costs and disruption. Restricted airspace poses challenges for Qatar, which promotes itself as a
link among Europe and Asia. The opening picture shows a tweet by Etihad, but on the morning
of June 5th, 2017 Qatar Airways still had to make a public announcement.
9

REFERENCES
Books & Journals
Bomba, K., 2019. Rozwój bliskowschodnich linii lotniczych na przykładzie Emirates, Etihad
Airways i Qatar Airways.
Bose, I. and Mugambi, P., 2018. Strategic Effectiveness of Selected organizations in UAE: Cases
of Etihad Airways and Emirates NBD Bank. Globsyn Management Journal, 12.
Heiets, I., Spivakovskyy, S. and Spivakovska, T., 2019. Innovative business models for full cycle
operating airlines. International Journal of Business Performance Management, 20(4),
pp.356-377.
Jory, S. and et.al., 2019. A Critical Examination of Etihad Airways Equity Alliance Strategy
using a Case Study Approach. Available at SSRN 3328520.
Lebel, J., 2018. Le contrôle de la connectivité aérienne, un outil de puissance sur la scène
internationale: les stratégies de développement d’Emirates Airline, Etihad Airways,
Qatar Airways et Turkish Airlines (Doctoral dissertation, Paris 8).
O’Connell, J. F. and Bueno, O. E., 2018. A study into the hub performance Emirates, Etihad
Airways and Qatar Airways and their competitive position against the major European
hubbing airlines. Journal of Air Transport Management, 69, pp.257-268.
Sani, N. M. and Gernowo, R., 2018. Analisis turbulensi pada pesawat Etihad Airways EY-474
tanggal 4 Mei 2016 dengan metode Weather Research and Forecasting. YOUNGSTER
PHYSICS JOURNAL, 7(1), pp.34-39.
Solanki, K., 2020. Analysis of Etihad Airlines Human Resources Management Practices &
Factors That Lead to Employee's Motivation. International Journal of
Entrepreneurship, 24(1), pp.1-14.
Spring, J. C., 2019. Pilots out of Uniform: How the Sixth Circuit's Etihad Decision Undermines
the Purpose of the Montreal Convention. J. Air L. & Com., 84, p.153.
Sri, B. P., 2019. An assignment on A study on cash flow statement analysis with special
reference to jet airways. International Journal of Management, IT and
Engineering, 7(11), pp.127-143.
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