MIAMI — Etihad Airways (EY) VP Vincent Frascogna, a seasoned airline executive with a vast background in the commercial sector of both British Airways (BA) and Etihad Airways (EY), sat down with Airways to discuss the airline’s most recent developments, its future post-pandemic plans, and the strategy the airline will pursue to help its customers feel safe when flying on board its planes.
Frascogna reveals the airline’s most recent COVID-19 plans, talks about the opening and closing of some of the airline’s routes, the upcoming opening of the Abu Dhabi International Airport mid-field terminal, and comments on Etihad’s successes and failures with some of its worldwide partners.
Airways: Vincent, thanks for having us. We know you’re an airline guy: an aviation enthusiast, for starters, and then a mature executive with past experiences in British Airways and now Etihad. Tell us about your participation in these two companies.
Yeah, I definitely am. I am an aviation guy. I never started off that way, but I spent nine good years at British Airways. Most of the time in the UK, but then I was given the opportunity to become Managing Director of one of BA subsidiaries based in India. So I did that for the last two years of my career with BA, managing a subsidiary that looked off the call center operations back-office accounting, based just outside New Delhi and India, so that that was a great experience.
I’ve always worked in commercial roles for both airlines. Some of them, in the internal operations side and then, with Etihad. I’m sort of venturing out into the field, if you may. Once I left India with BA, the plan was to take some time off. But it never worked that way!
The opportunity came up to go to Abu Dhabi to work for Etihad, which in 2009 was still a pretty young airline. It had only been operating for six years. Even then, the real growth took place once I arrived working for the organization, so I’ve fulfilled a few different roles.
I spent a number of years based in Abu Dhabi, working in the UAE. Then, I was given the option to take some of my commercial operations and project management expertise and take it out into the field. So I was given the opportunity to move to Australia. I did some of the new Etihad route launches in Australia, including Perth.
That was quickly followed up with a move to the United States, where I did some real launches with San Francisco (SFO) and Dallas/Ft. Worth. And then, I’ve been here [in Chicago] since. So I took on the role of Vice President Americas about three years ago.
AW: What is your role as VP Americas for Etihad Airways?
My role is pretty varied. Working for an airline that is owned by the government enables you to really get involved in a lot more than just airline business because, essentially, we are the destination. The destination is the airline as well.
We work very closely with the Trade and Investment Authority of the UAE. We work very closely with the Ambassador and the Consul Generals across not just the US, but Canada, Mexico, Colombia, and now Cuba. There is an embassy in Cuba now as well.
Really, our goal, first and foremost, is to look at how we promote relationships between the countries we represent, the UAE, and the other countries. Of course, the airline part of it is almost a result of those relationships that we create and mentor.
So if you’re interested in airlines, brilliant, because Etihad has been one of the fastest-growing full-size carriers globally. That obviously comes with its pain points as well. But if you’re interested in aviation, if you are an aviation enthusiast through and through… there actually isn’t a better place to work for an airline.
But then, coupled with that, if you’ve got a strong commercial acumen and a commercial hat that you want to put on… you have these added advantages of being able to be part of what is essentially a growing and a diversifying economy. In the UAE, where they have a plan to diversify from just petrol wealth to all of these other verticals, whether it be investments in sports, medicine, technology, and finance, in which we are working for and end up getting involved in as well.
So it’s a great environment. As you know, working in aviation comes with its emotional support as well. It doesn’t matter what happens globally. Aviation and airlines are impacted by it. Whether it’s pandemics, wars, the political, the geopolitical, the economic impacts… and this current pandemic situation is no different from that.
Aw: Vincent, now that you mention the goods and the bads of working for such a rapid-growing carrier, let’s jump back to 2009 when you joined Etihad. At the time, Alitalia was emerging from one of its many crises. Etihad came in and tried to invest and transform it. That, together with other projects, didn’t produce the desired results. Tell us about those experiences, from your executive viewpoint.
When you make a transition from a very established legacy carrier like British Airways coming to a new starter on the block like Etihad, that also comes with some areas of adjustment. The quickness of decision-making is different. It’s a lot quicker. The ability to be able to implement strategies, which as a legacy carrier may take a lot of negotiation, a lot of discussions, in an airline like Etihad you can almost, at that point, tear up the rulebook.
Then, you say: how do you truly build an airline for today’s consumer? One that actually takes, as we have done, that hospitality and ethos from the ground, from the top boutique hotels on the ground and try to recreate that experience in the air. Then, it also reintroduces a bit of the romanticism of flying again; actually, whether it is first in Business but also in the back of the aircraft in Economy. How do you give everybody those special experiences?
For me, as an aviation enthusiast and as an airline guy, it is being able to be part of that decision making and the formation of that, it doesn’t matter that you don’t work in a product or a brand environment. The fact that you’re in a commercial environment gives you the ability to influence some of those decisions, which in most carriers you won’t have that ability to do.
You mentioned the acquiring of other airlines and investments, equity investments in those carriers. Of course, when you’re a network carrier like Etihad, one of the ways of growing your footprint is through partnerships. We did that very successfully and continue to do that very successfully through interline agreements and codeshare partnerships. You know, like some very strong ones that we’ve had here in the US with JetBlue (B6) and American Airlines (AA).
But then, there was an equity investment strategy and other airlines like Air Berlin, Alitalia, Jet Airways… Of course, it’s been very well-publicized that unfortunately, these projects didn’t work out. So we have had to make adjustments to the Etihad Aviation Group strategy going forward.
It’s not always easy to look at different airlines and be able to incorporate one vision for them all because, especially with legacy carriers, they have been around for a long time. They have certain processes in place that take time to adjust and adapt to new ways of working. I don’t really want to get into the whys of why it didn’t work. But, ultimately, the goal now is to take a step back.
“It’s not always easy to look at different airlines and be able to incorporate one vision for them all because, especially with legacy carriers, they have been around for a long time.”
Over the last two years, we’ve reassessed our business. We’ve had well-publicized losses in terms of our financial results. But now, really, have the last two years been what our network should look like. We don’t need to be the biggest airline, but we need to operate where we do operate well and make money. If that means reducing the network coverage, that is OK, but with the right fleet. Operating the right routes is also key to this strategy.
So you look at North America. We’ve reduced our footprint somewhat in North America over the last two years. We’ve stopped flying to San Francisco. We’ve reduced our coverage and our capacity into New York (JFK) by reducing from two flights a day to one a day. We do the same with LAX, where we were daily. We’re now five days a week. Then, we stopped flying into Dallas/Ft. Worth.
So whenever you stop flying to a certain destination, it’s not an easy decision to make because there’s a lot of a cost gone into starting that route up. But ultimately, to be a profitable business, you can’t fly unprofitable routes. Thus, where there is limited demand, especially to the destinations we fly, we’ve made those decisions. I’m glad we have, because it allows you to focus on doing the right things and doing them well.
Now, with our smaller footprint in the US still making full use of the codeshare agreement with JetBlue and the Interline agreement with American, it provides us with the coverage we need for now. Then, there’s an opportunity for sustainable growth in the right way going forward.
Obviously, the pandemic has put a bit of a pause on some of those plans and maybe we have to reassess where we were going. But ultimately, in pre-pandemic times, we’ve made the right decisions that have enabled us during this situation to actually be less affected than some of the other carriers.
Because we’ve already been to the gym, we’ve already been working out, and we’ve shed a lot of the fat. This ultimately places us in a much stronger position. So when things do rebound, we should actually be a stronger airline coming out of this anyway.
Aw: Right on point, Vincent. I’ve seen you say before that the Etihad family has been incredibly resilient even before the pandemic crisis hit the world. And I remember thinking that, perhaps, Etihad was better prepared for this pandemic than other carriers were. Why don’t we go over your fleet strategy pre- and post-pandemic? You now have about 102 planes with an average age of 6 years. What’s going to happen with them? Will we see more joining down the line? Some of them leaving? And the elephant in the room: what will happen to the A380?
If we look at the current situation, we grounded all of our aircraft at the end of March. That was primarily based on the restrictions that different governments had put in place, including the UAE, which restricted any flying into the country for a period of time.
Since then, we’ve looked at what are the right aircraft to operate now in these times of reduced demand that has also allowed us to take some level of cargo in the belly hold of the passenger aircraft as well.
Traditionally, we’ve been operating the Airbus A380 into New York, the Boeing 787 to Washington, and the Triple Sevens into Toronto, Los Angeles, and Chicago. Now, we’re operating the 787-9 into all of our North American routes. This gives us the flexibility in terms of not just having the right number of seats on board based on demand, but also the fuel efficiency that we need over this period as well.
I think, going forward, we still have a commitment to operate the ten A380s that we have in our fleet. There is no discussion about grounding those permanently. But it all depends on when is the right time to bring them back into the network based on borders reopening and demand coming back. Some of that is depending on, as I said, governments reopening borders going forward.
“We still have a commitment to operate the ten A380s that we have in our fleet. There is no discussion about grounding those permanently.”
We look at my top 20 routes out of North America. The vast majority of those are within Pakistan and the Indian subcontinent. Right now, the Indian borders are closed to anyone who’s not a resident of India, which means that it limits my ability to sell in North America.
As soon as that border reopens for a broader consumer, that’s when we can ask: OK, can we actually put bigger aircraft back on? Can we actually go from five days a week back to a daily service? Or are there other options that maybe we didn’t consider that now become opportunities?
That’s the thing about Etihad; the fact that because we have been restructuring for the last two years, we’ve put ourselves in a very strong position to be nimble and make changes that reflect the current situation that we’re in.
We also have a number of Airbus A350s on order. They should actually be joining the line. The plan was to have some of those coming towards the end of this year. I’m still to get a full update on essentially when those aircraft will come into the network.
A lot of it is really going to depend on where we end up flying to. What does the network look like as we come out of this pandemic? Are we flying at 60%, 70%, and 80% of our original network? Which are the routes that we continue to operate?
As it stands for North America, my understanding is that we still have a full commitment to operate everything that we were pre-pandemic there.
Aw: Etihad has been operating, as of recently, about 50% of its pre-pandemic schedule. With this number in mind, let’s talk about a much-dreaded subject: forecast. The airline industry runs on forecasting.
Yes! Forecasts! [Chuckles]
Aw: What is your forecast for the remainder of the year? That of the end of 2020 and the first quarter of 2021? And how about the Abu Dhabi International Airport’s mid-field terminal? Is that still scheduled to open next year?
Looking at the forecasts, there are so many different analytical ones that have been taking place from different organizations, different consulting firms. Then, of course, we’ve got our own internal view on what we think is going to rebound.
Again, a lot of it is going to depend on the border closures, the government restrictions in place. But also then, even when borders reopen, what quarantine measures are placed within those countries as well.
If we look currently, the UK is a core market for us, a top-five market within our network. But with a 14-day quarantine period on arrival in the UK, if you’re not part of that corridor country program, which the UK is, it’s going to deter people from flying into these countries that have these quarantine measures in place. Because people don’t want to necessarily spend 14 days stuck in one place.
Especially for business travel, the likelihood it is a business traveler is not traveling into a destination for 14 days. They’re going for a much shorter period of time. So to try and get the segments up and running again, especially corporate travel, is all about what is taking place within each government and the restrictions they’ve imposed.
For North America, rather, I don’t specifically expect a massive rebound this year. I think towards the end of this year, we may see some rebound depending on, again, the ability to fly into certain countries. Then, it will depend on the customer segment within each country.
For me here, the VFR market—friends, relatives, and family members—wanting to travel between the US and the Indian subcontinent is pent up to demand. That’s where I see the biggest segment returning the quickest. Then, I would essentially see some of that medical traffic and repatriation traffic still continue to come through, as we’ve seen already.
The corporate segment, I think, will take slightly longer to rebound. We’ll see some of that coming into 2021 and onwards, especially as some organizations that we’ve been speaking to are taking the time to actually dial back expenditure.
Of course, it’s not just the airline industry that’s going through a situation, so are most companies and most verticals. So they’re also dialing back expenditure, they’re looking at ways to potentially renegotiate travel deals with airlines going forward.
it’s been quite amusing to see organizations that would traditionally have an economy travel policy, looking to us to see how they can incorporate a premium policy. Because they’re looking to see how they can establish a social distancing policy within their travel programs, which our premium cabins, obviously, give.
In some cases, it’s been quite amusing, actually, to see organizations that would traditionally have an economy travel policy, looking to us to see how they can incorporate a premium policy. Because they’re looking to see how they can establish a social distancing policy within their travel programs, which our premium cabins, obviously, give.
So, if I could see more of that coming through, then, fantastic. But, I think there are going to be few and far between in terms of those examples.
I expect definitely for North America that, come Q1 next year, we will see some semblance of returning, not necessarily to normality, but definitely on the leisure side of the business, seeing some of that returning.
But, again, all of this is dependent on whether there is a vaccine that’s coming up. What testing facilities are available? What consistency in terms of approach can all airlines bring to the table?
If we think back to 9/11 as a good example, what came after 9/11 were all of these different new security measures that hadn’t been implemented before. Some countries were implementing them here, some airlines were implementing them in different airports; even within the same country, there were different processes. Eventually, it becomes normal. Everybody has a consistent approach to removing shoes or liquids screening.
This situation is going to be very similar, though. Right now, the UAE has an expectation and a regulation that everybody entering the UAE or transiting the UAE has to have a negative PCR test within 96 hours of checking in.
So what does that mean? It means that now passengers flying with us or our competitor airlines in Dubai have to add in the cost of a PCR test into their travel process.
“Right now, the UAE has an expectation and a regulation that everybody entering the UAE or transiting the UAE has to have a negative PCR test within 96 hours of checking in.”
Not all airlines are doing that. Not all destinations expect that. But what have we seen? We’ve seen passengers arriving at check-in, and actually, improving load factors to some extent. Because people are saying: okay, price isn’t a determining factor for me now, my wellness is a determining factor for which airline I choose. The fact that I’m getting on an aircraft where all passengers have had to present a negative PCR test certificate makes me feel confident in flying with this airline.
So I think, again, as you start to look a to more consistent approach with PCR testing, potentially with more rapid testing, can it be done at the airport prior to departure? Is it something all airlines do? This is the process we now have to go through and working with the different authorities to actually get to that stage of more consistency.
Aw: And what’s the plan for your new mid-field terminal? I believe that was scheduled to open in Spring 2021, wasn’t it?
The expectation is that there will be some delays, obviously, as a result of having to down tools for a period of time. But it still seems to be on track to open towards the middle of 2021. I’ve had no further updates on a different date at this stage.
Aw: Vincent, another question I must ask is, were there any plans to ever opening up a new route to Miami?
It’s a good question! Like I said at the beginning, I don’t think that just because we operated some routes pre-pandemic those same routes will be on our network post-pandemic. I think there will be opportunities that arise out of all of this, possibly to stop flying to some destinations, but also to operate new ones.
I haven’t heard that Miami is on the list right now. Florida still has good coverage with our competitor airlines into Orlando and Miami as well.
Aw: Well, Emirates announced the immediate closure of its nonstop route to Fort Lauderdale due to the pandemic. There’s an opportunity right there for you!
There you go. But look, it’s all about partnerships as well for us. I mentioned American and JetBlue. Wherever we flight to in the US, it’s not just about that destination but also about the network coverage and the secondary and tertiary cities.
Not just the US, but also looking at Latin America, South America. We don’t serve it directly. But what opportunities are there to connect via one of our gateways in the US, whether it’s existing or new into that area?
So that’s where everything comes to the table in terms of where we operate ourselves, where we have partnerships in place, and where we ultimately see the demand, not just point-to-point, but also transit over that gateway as well.
Aw: Now that we have talked about strategy, let’s switch topics to one where Etihad excels: the passenger experience. Etihad has been widely known as a top player in passenger experience, boosted by your unique Residence, a remarkable First and Business Class product… How will it be affected by the pandemic, new regulations, social distancing? How can you make sure that your standards remain unchanged even when, inevitably, passengers will feel less comfortable to fly due to enhanced screening and potential fear of being infected with COVID-19?
This is one of the things that we’ve deliberated over time and time again since this all began. Primarily, because what we didn’t want to do is to come out like a lot of other airlines, hotels, and other organizations have done. We need to keep promoting ourselves as the safest or the cleanest or the most sanitized.
What we’ve looked at doing is to say: what does this situation actually mean for our guests, for the consumers? What are they looking for from us? So, of course, they expect safety and they should always expect safety.
As always, as an airline, the number one priority before anything else, whether it’s operational safety, is the wellness of the guest on board, the wellness of the guests through their travel experience at the airport.
That’s why we introduced the Etihad Wellness program. That’s actually not just about being safe on board the aircraft. Actually, we’ve set up a team of individuals in Abu Dhabi who’ve been specially trained on all of the new protocols that we’ve put in place. They’re available 24/7 and they’re a multilingual staff covering most of the languages that we need. They’re there to support not just the consumer, but also our travel partners, our travel agencies to answer questions in advance of the booking and provide a level of confidence.
If customers book with Etihad and things change, they will be looked after in terms of ticket flexibility and conditions of booking. But we will also explain to them what protocols we’ve put in place, whether it’s temperature testing, social distancing measures, hygiene measures, sanitization.
That’s free travel. Working with Abu Dhabi Airport and being part of Abu Dhabi, Inc. really provides a huge benefit to us in the fact that what we do, Abu Dhabi Airport will replicate it. Then, the Department of Culture and Tourism wants to engage with us on it. It all becomes a very seamless approach, not just in terms of the airline, but in terms of the destination and the airport as well.
So Abu Dhabi Airport has social distancing measures, plexiglass at check-in desks, sanitization stations everywhere. Also, there are social distancing measures within our lounges and our limo service with sanitization after every passenger leaves the vehicle. Then, when you board an aircraft, you’re greeted by an Etihad Wellness Ambassador.
This is one of our current Cabin Crew complements who, again, has gone through some additional training on all of our protocols, and who is wearing specific PPE. So they are designated as Wellness Ambassadors. As such, they’re not just the point of contact for the guest on board, but also for our Crew and our staff on board as well.
A good example: If there is a passenger who’s displaying some signs of being unwell, we have quarantine procedures onboard the aircraft where we designate the rear of the plane as a quarantined area. Actually, that Wellness Ambassador takes full responsibility for all of those procedures on board.
“If there is a passenger who’s displaying some signs of being unwell, we have quarantine procedures onboard the aircraft where we designate the rear of the plane as a quarantined area.”
In answer to your question about how we are a full-service airline: it’s not just about improvements, it’s also about or Economy offering. People fly with us in Economy class because they expect a level of accessible luxury that they wouldn’t get in Economy on other carriers. So we are doing all that’s possible to maintain those levels of service.
But this comes with some sort of compromise. We have spent a vast amount of time over the last few years in terms of our sustainability approach and what we’re doing to be a more sustainable organization.
We operated our first flight last year with no single-use plastics on board, and we’re making inroads to make that be just part of the way we function going forward.
But as soon as something like this happens and you have to start weighing things up to say: OK, when passengers are spending the money in Business or First or in the Residence, they’re expecting a certain level of service, the soft furnishings, the duvets, and the pillows. But now, with the added protection comes added plastics.
So we’re weighing up the pros and cons, and this is where it comes into play to say safety, first and foremost. Number-one priority. Number-two and a close third are, obviously, our sustainability approach versus still being able to supply the level of service that people expect when flying with us.
So, again, there’s the thought process. Yes, now we need more plastic around our duvets, now pillows. But can we now put everything into one plastic bag? Can we actually source plastics that have a higher biodegradable rate than what we have been using?
Then, the thought process is on how you sanitize an aircraft and how you hand out a face mask. There’s a lot more that goes into this to ensure the safety is there and that the customer experience isn’t impacted as much as it ultimately could be.
Aw: You should know a very close friend of mine works for Etihad as a Flight Attendant. He’s been constantly keeping me in the loop, showing off his new protective uniforms and all the new measures he’s been trained to use to keep him and his colleagues safe. And the bottom line is that he feels safe. I believe that keeping your crew feeling safe is almost as important than keeping your passengers feeling safe. In the end, if you have a Flight Attendant feeling insecure, you might have a serious service problem unfolding.
You’re quite right. It’s not just about the safety of our guests, it’s also about us. It’s about the staff and making sure that we’re keeping them safe and secure.
Ultimately, aircraft don’t make money if they’re sitting on the ground. So, yes, we want to get aircraft up and running, but we have to do it in the right way, in the safest way, and also in the most authentic way.
There’s no point in us communicating all these wonderful messages out to guests and then, when they get on board, it’s schizophrenic. They see something completely different from what has been promised.
So that was the key for us, is we communicate in this way and we demonstrate it in exactly the same way that we simply were.
Aw: Thanks, Vincent. These unprecedented times have either taken out lots of institutions or made others stronger, not necessarily from a financial standpoint, but from an organizational and procedures perspective. And having Etihad go in-line with Abu Dhabi’s procedures, hand-by-hand surely will result in very positive outcomes.
Well, I think, just speaking about Abu Dhabi. The one thing that they’re doing very well is actually putting measures in place that are not just great for residents but are great for people when they visit it when it opens.
For the UFC event that they did over the last couple of weeks where they quarantined a whole island in Abu Dhabi, we did operate 14 charters from the US, Brazil, Russia, and the UK to bring in fighters and production teams. There were championship fights two weeks ago and all in a safe environment.
It just goes to show what Abu Dhabi can actually bring to the table in terms of safety, with it being able to put global events back home in a safe and sustainable way as well.
So we’re very fortunate to have a destination that works in this way. As I said, we are the destination; the destination is the airline. I think that will be one of the ways that we come out of this winning.
Aw: Thanks for having us today, Vincent.