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ABU DHABIEtihad Airways is starting charter flights, as the airline seeks a new revenue stream to cover the losses caused by the coronavirus pandemic.

The Abu Dhabi-based carrier is preparing to offer options for leisure and business travelers along with its combined freight and passenger flights.

"While the Covid-19 pandemic continues to impact the commercial aviation industry, charter flights provide a convenient alternative to travel, providing customers with the flexibility to choose the departure time, destination, and routing," said Alex Featherstone, vice president of network planning and alliances at Etihad Airways.

Global private jet travel thrived during the Covid-19 pandemic as it allowed well-heeled travelers to avoid commercial flights and minimized the risk of contact in crowded airports. Etihad Airways did not provide further details on its charter flight services.

Introducing charter flights will help the airline to redeploy jets still idled by the pandemic, generate extra income and capitalize on the lucrative air cargo business, analysts said.

"Etihad, in common with other airlines, has substantial spare capacity for the foreseeable future. Charter flights can provide valuable additional revenue," John Strickland, an independent aviation consultant, said. "By tailoring to the needs of a specific customer it can be possible to obtain a revenue premium."

While the new service's overall financial contribution may be "modest" relative to Etihad's total operations, airlines must seek "every opportunity" to generate revenue given market conditions, he said.

Providing a more flexible and customized offering allows airlines to adapt to changing customer behavior and be in a better position to serve pent-up demand during the post-pandemic recovery phase, Linus Bauer, founder and managing director of Bauer Aviation Advisory, said.

"Through the execution of a three-pillared strategy – maintaining liquidity, minimizing cash burn, and readjusting cost structure while activating additional revenue streams – airlines like Etihad with the new product could be positioned to become one of the industry leaders when demand for air travel returns," he said.

Wealthier clients looking to reduce contact with other passengers now have a greater range of options as the price of hiring private flights has become more competitive, Mark Martin, founder of Martin Consulting, said.
"Travel needs have become more bespoke with the economics coming closer to the cost of a first-class ticket on a commercial airline," he said. "A small group of 11 to 15 travelers would find it far more safe, secure and convenient to charter a large business jet and fly at more convenient timings with more exclusivity – a necessity during these times."

Chartered air cargo flights are also in demand with critical medical supplies and Covid-19 vaccines being transported worldwide, he said.

However, when the second wave of vaccines is distributed globally, the spike in demand for charter flights will be "temporary", he said, noting that private jets could return to being a luxury indulgence or means of corporate travel.

Etihad should focus on its low-cost venture with Air Arabia because the spike in private jet travel will normalize in the long term as vaccinations revive confidence in commercial travel, Laila Hareb, president of aviation consultancy Alive Group, said.

The state-owned airline operated more than 500 charters, including passenger, government, and humanitarian flights this year.

It carried more than 3.8 million tonnes of cargo under Abu Dhabi's national aid program using charter services.

The number of business flights around the world dropped by 20 percent from a year ago to 147,353 in the first half of December as renewed lockdowns in North America and Europe hit demand, according to a December 15 report by Wing X, a data research and consulting company.

"Business aviation is navigating turbulent waters with the renewed lockdowns, and – in what is already a fallow period of the year for leisure travel – the hollowed-out corporate travel market is offering little support," said Richard Koe, managing director of Wing X.

While the overall market for chartered flights declined in December, leisure travel is still in demand, the report showed.

"Trending activity hasn't drastically dropped from the post-spring highs in October, and the leisure market, especially to the getaway sun and ski destinations, maybe picking up as we approach Christmas," said Mr. Koe.
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