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Etihad to fly to South America

Abu Dhabi-based Etihad Airways has announced that it will become the latest Gulf carrier to launch flights to South America.

Etihad said it will launch daily flights to Sao Paulo, Brazil from June 2013, marking the carrier’s first foray into the South American market.

“Brazil is a logical next step for us and will mark the sixth continent we serve and our coming of age as a truly global airline,” James Hogan, president and CEO of Etihad Airways, said in a statement.

Brazil is the world’s sixth largest economy, having overtaken the UK in 2011. It is the largest country in South America and has the biggest population, at almost 200 million. Its trade and tourism will be boosted by its hosting of both the FIFA World Cup in 2014 and the Olympic Games in 2016.

Brazil is also currently the UAE’s fourth largest trading partner with bi-lateral trade between the two countries valued at $2.85bn. Authorities hope to lift this to $10bn within five years.

Gulf airlines have been increasingly setting their sights on South America in recent years. Emirates was the first Middle East carrier to launch service to the continent when it began flights from Dubai to Sao Paulo in 2007. Qatar Airways followed suit in 2010, when it launched service to Sao Paulo, with a tag to Buenos Aires.

In January of this year, Emirates boosted its services to South America by offering new non-stop service to Rio de Janeiro and extension to Buenos Aires, Argentina.

“Etihad’s first new route to Sao Paulo puts it head to head with Emirates out of the UAE and will mark the first of perhaps a dozen or more planned new services to Latin America,” said aviation analyst Saj Ahmad. “Customers will benefit from more choice when connecting into the Middle East, especially as there is no direct service by a Brazilian airline to the GCC, so Emirates and Etihad arguably can enjoy a duopoly here if they avoid any cut-throat competition between themselves.”

Ahmad also said there is likely to be pressure on Etihad to quickly move to either double daily frequencies or to replace its planned A340-600 with 777-300ERs, particularly as Emirates’ 777-300ER flights have about 20% more capacity.

“Etihad’s cautious selection of the A340-600 in terms of capacity shows that it may not immediately wean customers away from Emirates or indeed Qatar Airways. And in fairness to both Qatar Airways and Emirates, both have established themselves in Latin America and will not suffer a great deal, if at all, by Etihad’s participation – especially since they won’t start services until June next year.”

Ahmad also noted that he was ‘stumped’ by Etihad’s decision to announce the route so early. “This is the second route they have announced that doesn’t start till next year. They did the same thing a few months ago when announcing service to Washington, DC. Why announce so early? It’s like they are giving a heads up to their rivals. I mean, look at Emirates’ response – they said they too would start Washington and their service commences in September of this year. I have to question Etihad’s strategy here. Rather than play their cards close to their chest, they are rather needlessly airing their laundry for all to see,” he said.