Executive Summary - Etihad (LHRMEL)
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Incremental Revenue Potential Identified: £603k per annum.
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Market Share Dynamics: The LHRMEL market remains dominated by connecting carriers, with Qatar Airways leading at 15.3%, followed by Qantas at 12.8% and Emirates at 10.9% share of forward bookings for travel in the next 360 days. Etihad Airways holds a market share of 10.1% this week, above its cumulative average of 5.5%, reflecting a stable presence in a competitive environment. While some carriers, like Qantas and China Eastern, have gained ground, others, including Emirates and Cathay Pacific, have seen slight declines, contributing to a dynamic market landscape.
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Pricing Dynamics & Correlation with Market Share: Etihad’s average fare of £1,790 positions it as a competitively priced option between lower fares from Qatar Airways (£1,798) and higher fares from Emirates (£1,875). Despite offering competitive pricing with frequent access to lower fare classes, Etihad’s market share remains below leaders like Qatar Airways. This suggests that factors beyond pricing, such as travel agent relationships and service perception, may play a significant role in customer choices. A modest fare adjustment could help balance affordability with revenue goals, aligning Etihad more closely with market expectations.
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Travel Agency Opportunities: Etihad’s engagement with key agents has shown variability, with underperformance from partners like E Travel Online, which has provided no new bookings recently, and Gold Medal Travel, whose support has also diminished. Re-engaging with these agents, as well as improving alignment with Trailfinders, where Etihad’s share remains below expectations, could strengthen its competitive position. Addressing these gaps is crucial for sustaining market share growth amid competition from airlines with stronger agent support.
Market share dynamics
The LHRMEL route remains firmly in the hands of connecting carriers, as there are no direct flights between London Heathrow and Melbourne. This week, Qatar Airways leads the market with a 15.3% share of 360 day forward bookings, remaining steady compared to last week’s 15.4%, although still trailing its cumulative average of 20.0%. Qantas saw a positive shift, increasing its market share to 12.8% from 10.9% last week, aligning closely with its cumulative average of 13.2%, indicating strengthened demand for its services. Emirates, on the other hand, experienced a decline, dropping to 10.9% from 12.1% last week, which places it below its cumulative average of 12.8%, suggesting a softening in its hold on the market.
Etihad Airways maintained a solid position with a 10.1% share, slightly down from 10.6% last week but remaining well above its cumulative average of 5.5%, reflecting a stable performance. Meanwhile, Cathay Pacific saw its share dip to 8.0% from 9.6%, though it stays above its cumulative average of 7.3%, indicating a more fluctuating presence. Singapore Airlines and China Eastern also experienced market shifts: Singapore Airlines' share decreased to 6.0% from 6.4%, just under its cumulative trend of 7.8%, while China Eastern surged forward to 5.6% from 3.9%, significantly exceeding its cumulative average of 2.6%.
This week’s dynamics reflect a competitive market, with Qantas and China Eastern gaining ground while others, such as Emirates and Cathay Pacific, face slight setbacks. The ongoing competition between key Gulf carriers and other Asian airlines will likely continue shaping the market.
Overall Pricing Dynamics & Correlation with Market Share
This week’s LHR-MEL market presents intriguing correlations between pricing strategies and market share performance, particularly among major connecting carriers. Qatar Airways leads with a 15.3% market share and an average fare of £1,798. Despite being priced slightly higher than Etihad Airways (£1,790), Qatar has maintained a higher market share. This discrepancy may be partially attributed to Qatar's balanced approach, offering competitive prices while not necessarily being the cheapest option most often (9 times). Qatar’s appeal seems to lie in maintaining a consistent presence in the market, balancing price with brand perception.
Emirates, with an average fare of £1,875, has positioned itself in the premium segment, yet its market share of 10.9% indicates that it has managed to attract travelers willing to pay more for its service. Despite being higher priced than both Qatar and Etihad, Emirates' strategy appears to resonate with a segment that values the premium brand and connectivity through Dubai. Its ability to capture 7 instances of the lowest fare reinforces a dynamic where competitive lower fares are strategically used without compromising its premium positioning.
Cathay Pacific holds a market share of 8.0% with an average fare of £1,804.5. Cathay's relatively stable pricing, combined with its ability to offer 12 lowest-fare instances, suggests a strategy focused on maintaining competitive price points to sustain market share. This has allowed Cathay to remain competitive without having to deeply undercut competitors like Qatar or Etihad.
Meanwhile, Malaysia Airlines has adopted a more aggressive pricing approach with an average fare of £1,618, the lowest among the major carriers. Despite this, its market share of 5.5% indicates that lower pricing alone has not been sufficient to attract a significantly larger share of the market. The airline’s strong presence in offering cheaper fare classes (20 instances as the lowest fare) suggests that Malaysia Airlines is appealing to budget-conscious travelers, yet its overall market share remains modest, highlighting a challenge in leveraging price leadership into broader market gains.
Singapore Airlines, with the highest average fare at £2,454, has positioned itself clearly in the premium market segment. Despite its high pricing, it holds a market share of 6.0%, which is slightly below its cumulative trend. This suggests that while there is a niche for premium travelers, the overall market leans towards more competitively priced options like Qatar Airways or Etihad, especially on a price-sensitive route like LHR-MEL.
In summary, the data indicates that competitive pricing strategies can contribute to market share gains, but they must be aligned with broader value propositions. Qatar Airways exemplifies this by balancing competitive pricing with brand strength to maintain its market lead. Emirates and Cathay Pacific demonstrate that a premium pricing strategy, combined with a strategic use of competitive fares, can still secure substantial market presence. Conversely, airlines like Etihad and Malaysia Airlines, despite having lower fares more frequently, have not seen proportional market share growth, highlighting the complexity of the relationship between pricing and traveler preferences.
Focus on Etihad Airways
Etihad’s pricing approach is notably geared toward attracting price-sensitive travelers, as seen in its 11 instances of being the cheapest fare and 11 as the second cheapest. Its fare availability and concentration of lower fares position it as an accessible option within the market. Despite these efforts to offer competitive pricing, the market response has not translated into a stronger share gain, indicating that Etihad’s price advantage alone may not be sufficient to shift preferences away from competitors like Qatar Airways, which offers a very similar average fare but holds a 15% market share this week, and Emirates, which maintains a comparable market share despite a higher average fare of £1,875. This disparity suggests that factors beyond pricing are at play, such as greater support from key travel agents to the competitor airlines.
Given these dynamics, there is potentially scope for Etihad to implement a modest fare increase of around 2-3%. This adjustment would align Etihad more closely with competitors like Emirates, which maintains a higher fare level while achieving a similar market share, and be worth around £50k in additional revenue per annum. By slightly raising its fares, Etihad could enhance its revenue potential while retaining its position as a competitively priced yet value-driven choice. This strategic move could help balance affordability with yield, leveraging the stable base it has built in recent weeks.
Travel agent opportunities
Etihad Airways holds a 7.06% share of new bookings through the travel agency community on the LHRMEL route this week, higher than its cumulative average of 6.3% within this community. Across all sales channels, its total market share this week stands at 10.1%, with a cumulative average of 5.5%. These figures indicate a solid engagement with travel agents, though maintaining and growing key relationships remains critical amidst competition from other carriers.
Agents Requiring Attention
Trailfinders
Trailfinders has shown ongoing underperformance in its support for Etihad Airways, with a cumulative average share of 4.83%, below Etihad’s average share with the travel agency community (6.3%). The current week’s share is 5.16%, following a 2.50% share in the previous week. These figures indicate that Trailfinders’ support for Etihad is consistently below the airline’s broader engagement with travel agents. Meanwhile, competitors like Qatar Airways have strengthened their presence with Trailfinders, positioning themselves as preferred options. To improve its performance with this agent, Etihad needs to address the factors that may be influencing Trailfinders' preference for alternative carriers. On doing so, it could be worth around £300k in annual revenue benefit to Etihad.
E Travel Online
Online E Travel Online has proven to be a challenging partner for Etihad, with a cumulative average share of 2.65%, significantly below Etihad’s average of 6.3% in the travel agency community. This week and the previous week, the agent provided no new bookings for Etihad. During this period, Singapore Airlines has seen sustained support from E Travel Online’s customers, reflecting a preference for alternative connections. This complete withdrawal of support underscores the need for a strategic approach to re-engage with E Travel Online and explore opportunities for improving Etihad's position among their customers. This is valued at an additional revenue benefit of £178k per annum.
Gold Medal Travel
Gold Medal Travel Group has also shown persistent underperformance in its support for Etihad, with a cumulative average share of 4.01%, which is below Etihad’s average of 6.3% within the travel agency community. This week, there were no new bookings for Etihad through this agent, down from a previous week’s share of 16.98%. In contrast, Qatar Airways and Singapore Airlines have been able to capture a larger share of bookings from this agent. This shift highlights the competitive environment Etihad faces and the need to address the reasons behind the diminishing support from Gold Medal. Re-engaging with Gold Medal Travel on this O&D would be worth an additional £75k per annum.