Etihad Is Pulling Out Of South America

With oil prices having plummeted over the past couple of years, it’s no surprise that the Gulf carriers are having to cut costs. Their respective governments aren’t willing to throw quite as much money at them as before, so in many cases they’re having to cut costs while focusing on optimizing their route network.

Of the “big three” Gulf carriers, Etihad is the smallest. At least that’s true in terms of their actual fleet size. Rather than growing their own fleet too much, the airline has been investing in other airlines, including airberlin, Air Serbia, Alitalia, Jet Airways, Virgin Australia, etc.

As of now, Etihad’s only route to South America is between Abu Dhabi and Sao Paulo, which they presently operate daily using an Airbus A340-600 aircraft.

Etihad-A340-600

At ~7,500 miles it’s a rather long flight, though not their longest (that title belongs to Abu Dhabi to Los Angeles, which is ~8,400 miles).

auh-gru

Given that it’s their only route to South America, I’m a bit surprised to see that they seem to be pulling out of Sao Paulo, and therefore pulling out of the entire continent. Per @airlineroute, Etihad has closed reservations for their Abu Dhabi to Sao Paulo flight as of March 26, 2017.

It’s possible that they’ll bring the route back at some point, though it must be performing really poorly for them to pull out of the market altogether. Etihad does have a partnership with American, so in theory passengers can continue to route from Abu Dhabi to Sao Paulo via the US. However, in practice the selling point of the Gulf carriers is that they let passengers travel between most parts of the world with just one stop, so that benefit is lost if adding a connection on American. Furthermore, transiting in the US is a less than ideal situation.

As far as Gulf carriers in South America go, Emirates continues to fly to Sao Paulo, as well as to Buenos Aires via Rio de Janeiro, while Qatar Airways operates a single flight to Buenos Aires via Sao Paulo.

With the Gulf carriers clearly under as much pressure as they are, I’ll be curious to see what other route cuts we see in the near future…

Are you surprised to see Etihad pull out of Sao Paulo?

Comments

  1. Well…
    They could fly people to Milan or Romebajd from there Alitalia could take them to the South America. Alitalia currently flies to Sao Paolo, Rio de Janeiro, Santiago and Buenos Aires. So Etihad could rely on that.

  2. Unless you love flying for the sake of it (!), going from the Middle East to South America via the US is pretty mad. Apart from the extra distance, US immigration is never fun and sometimes is just unpleasant.

    The obvious route is via Madrid, which has great links to South America, or maybe Lisbon. Though clearly that wouldn’t fit comfortably with Etihad’s partnerships.

    LHR is my local hub but even from here there are surprisingly few South American direct flights, beyond the obvious. A trip to Montevideo next week involves a change at either GRU or MAD.

  3. Over the last few months, Brazil has seen several other route cancellations and capacity decreases.

    Korean (GRU-LAX-ICN) and Singapore (GRU-BCN-SIN) left Brazil altogether. Now it is Etihad.

    AA cut some routes and reduced frequencies (and downgraded aircraft). LH cancelled the daily GRU-MUC, keeping the daily GRU-FRA (and GIG-FRA).

    Being based in GRU, this is all very sad for me, of course.

    The falling oil prices are probably not the main reason for Etihad’s exit. It is the low yields, resulting from (i) BRL’s devaluation against the USD; and (ii) Brazil’s severe economic crisis. Etihad has probably been suffering as much as the other airlines with low yields. The part played by the falling oil prices is probably that Etihad no longer can bear with the losses in the route.

    My hope is that other airlines will manage to hang on for a few more months, as Brazil is (slowly) starting to bounce back. Some airlines made a lot of money in Brazil in the 2000’s. This could come back in a couple of years.

    I don’t see Qatar and Emirates pulling out of Brazil. Especially Emirates, which could still cut one of the routes (GIG) before pulling out altogether (I could see Emirates pulling out of Rio and having the route to Sao Paulo continuing to Buenos Aires).

  4. Not really surprised. Real (brazilian money) as the brazilian market in general, had a major devaluation in the last couple years, lot´s of airlines lowered their fligh frequency there. Tickets there are very expensive at this point, considering Real, and very cheap, considering US$. No good for no one. Let´s see who´s next.

  5. @Andrey, this is exactly what Etihad is proposing. In their press release, they say that they will offer to those who bought tickets for flights after March either (i) full refund; or (ii) reroute with Alitalia.

  6. Just take a look at the exchange rate between BRL and USD when they started this route and now. Brazilians are not flying as they used to because the prices in local currency are prohibitive.

  7. This is far more a Brazil issue than a Gulf States issue. The Brazilian O&D market has dried up, thanks to the collapse of their currency and the incredible softening of business opportunity in the country.

  8. Etihad was by far the least known airlines of the ME. EK and QR are more popular here.
    And since you have to compete with the likes of TK and even ET to connect to Asia with low prices, it comes as expected.

    On the other hand, you guys should check the prices for the direct DL flight, MCO-GRU.
    They have upgauged the plane ( 767-300 to 767-400) , but prices are still around US1500,00

  9. Wonder if it’s now time to bring back service to PTY and find a way to connect to COPA with their extensive Central/South American network

  10. I flew this route in June and they had used a Jet Airways livery 777 to operate that route. Not sure if that has anything to do with the decision.

  11. “Their respective governments aren’t willing to throw quite as much money at them as before, so in many cases they’re having to cut costs while focusing on optimizing their route network.”

    Wait i thought the overwhelming consensus was that middle eastern carriers are not subsidized and the big-3 are just crying foul because “they suck”

  12. In my opinion as a subject matter expert in this region If the route is underperforming is due to a poor commercial management with the product and market development in the region, considering Sao Paulo metropolitan area is greater in population than NYC with over 20 million inhabit, is easy to fill an aircraft with 300 seats on a daily frequency, despite there’s no much to do in Abu dhabi, 95 % are transit passengers connecting to cities in China, southeast Asia and the Middle east, Despite a strong and healthy competence from Emirates, Qatar and turkish airlines here there’s room for everyone and much more.

  13. @ Lucky – I have a revenue ticket purchased in First Class (return flight from/to Brazil) and EY is refusing me to reroute on another company that offers First. Keep pushing me to take Alitalia in Business or a refund. Isn’t that against the conditions of carriage? I understand it is my right to be rerouted on the same class of service in an alternative flight, isn’t that so? And I am not interested ina refund as I have non refundable plans at my destination and cannot buy an equivalent ticket with another airline for the price I paid on EY First. Thoughts on how to fight this?

  14. This makes no sense. I flew twice this year between São Paulo and Abu Dhabi, once in April and then in October. Both times, the flights were completely packed with no unoccupied seats. Same thing happened in 2015.
    On top of this, the cost of an economy seat went up more than US$300 in August. How can they make up a lie about something like this?

  15. I´m surprised with the creative capacity to find reasons for EY leaving Brazil. Some spoke about YELD and Financial crisis in Brazil…
    non sense from outsiders.
    First of all, ETIHAD is not leaving Brazil… they are leaving South America.
    Second, Brazilian economy is not even close to be a reason… ETIHAD financial situation is.
    Third, a huge change in ETIHAD top management is coming.
    ETIHAD flights to and from GRU are all fully booked, and EY prices are similar to EK and QR. As soon as EY announced its route cancelation, QR announced its new route to Brazil.
    So there is nothing to do with Brazilian local economy, or currency rates. Yes there is a market in South America. and Brazil is the major destination there.
    ETIHAD is loosing a huge bucket of money with its investments in european airlines, that´s why there will be a CEO replacement soon. The oil prices affects all middle easter airlines the same way…
    It is a matter of strategy, the leaving CEO announces the bad news… New blood will bring the truth soon..

  16. Yesterday EK announced that it will start operating the A380 in the DXB-GRU route as of March 26, exactly the same date in which EY will stop operating in GRU.

Leave a Reply

Your email address will not be published. Required fields are marked *