Etihad Cutbacks: San Francisco Route Axed Due To Low Profitability, Effective October 29th 2017

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Etihad Airways is the latest of the Gulf Carriers that is reconsidering their strategy for U.S. routes amid a slowed demand and decided to cut their San Francisco route from late October onward.

The airline cites low profitability of the route as the reason for the withdrawal from San Francisco which is one of several U.S. gateways and their second in California (Etihad will continue flights to Los Angeles).

Competitor Emirates already announced in April that they would cut capacity to the U.S. by roughly 20% (see the article we had back then) and now Etihad is following suit.

There was a Bloomberg news piece (access here) about the Etihad decision this week.

Etihad Airways will scrap flights to San Francisco as stiffer competition in the U.S. hit the route’s profitability.

The Abu Dhabi-based airline will suspend the service starting Oct. 29 because fares and passenger levels were lower than planned, the state-owned company said Wednesday in an emailed statement. The company will re-deploy the Boeing 777 jets, which served the route, to unidentified destinations across its network. …

The Abu Dhabi-San Francisco route, which started in November 2014, was reduced from daily service to three times a week earlier this year as Persian Gulf carriers grapple with U.S. challenges. …

Etihad will offer refunds or re-book passengers with tickets on the San Francisco flight after Oct. 29. The airline will continue to serve five U.S. destinations including Chicago, Dallas and New York.

The middle eastern carriers have added large capacity over the past few years which is now strategically rolled back, likely indeed due to lower than expected profits.

Keeping in mind that April was a different time altogether with all the crazy things that happened since then such as Laptop bans, Qatar isolation and the political climate overall I wouldn’t be surprised if we see further cutbacks from the ME3 airlines (Etihad, Emirates and Qatar Airways).

Indeed Etihad is facing a profitability issue overall having burned through plenty of money with their involvement in certain European carriers such as Air Berlin and Alitalia which just went into liquidation. These investments turned out to be rather more than less money burning machines. Etihad has since reevaluated their strategies and even entered into a strategic partnership with former arch-rival Lufthansa.

Conclusion

I don’t think there is really a tough competition going on with any other carrier on these routes except maybe the ME3 with each other. They serve their own hubs directly which no local U.S. carrier flies to (DXB/DOH/AUH) and beyond that it’s all connections that make very little sense for travelers time wise unless the flight is dirt cheap which lowers profitability.

Some friends were booking flights on Etihad to the U.S. earlier this year (in Economy no less) departing from Asia and I couldn’t help but wonder why someone would book such an insanely long trip wasn’t it for the super low price. The Middle East is far even from the U.S. East Coast and then transiting following by another long haul flight… no thanks!

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