HR

Etihad Airways: reputation management – an example of the Eyjafjallajökull Iceland volcano

Melodena Stephens Balakrishnan

Etihad Airways is the national airline of United Arab Emirates (UAE). From its formation in 2003 to

2011, Etihad has grown its fleet size to 62 aircraft that serve 72 destinations in 47 countries.

Like all international airlines, Etihad is no stranger to unpredictable crises, and has had to deal

with successive challenges arising from the SARS pandemic in 2003; the global recession from

2008-2011; the H1N1 pandemic in 2010; the Iceland volcanic eruption and resulting ash cloud in

2010; the extreme weather in the United Kingdom in late 2010; and more recently the earthquake

and tsunami affecting Japan in March 2011.

The 9/11 attacks in the USA and SARS the following year, were estimated to have cost the airline

industry over US$ 25 billion (www.iata.org/pressroom/speeches/Pages/2003-10-07-04.aspx).

According to former International Air Transport Association (IATA) chief executive, Giovanni

Bisignani, the industry lost US$ 9.4 billion in 2009 as a result of the global recession

(www.canada.com/story_print.html?id¼2634e836-695e-4769-99d6-ad03d59bf5ab&sponsor¼).

Still more recently in 2010, the first three days of Eyjafjallajökull volcanic eruption in Iceland

resulted in revenue losses of US$ 400 million each day for airlines. At one stage during the crisis,

it was estimated that 29 percent of global aviation and 1.2 million passengers a day were affected

by the airspace closure ordered by European governments (www.huffingtonpost.com/2010/04/

21/iceland-volcano-costs-air_n_545649.html). The entire event, which lasted over a week, led to

over 100,000 flights being grounded and caused an estimated loss of more than US$ 1.7 billion

for the aviation industry (www.theepochtimes.com/n2/content/view/36015/).

The Iceland volcano took the aviation industry by surprise when the main eruption on April 14

2010 sent pulverized volcanic rock, ash and glass shards as high as 11,000 meters (over 30,000

feet) into the atmosphere. Iceland can be avoided on most flight paths but what complicated

matters was that Eyjafjallajökull lay under a jet stream. A jet stream is a narrow stream of strong

concentrated winds extending from 10,000 to 40,000 feet above the ground. This resulted in a

plume of volcanic ash being blown towards Europe at strong speeds of about 400 km/hour

expanding at a width of 50 to 100 kilometers (Figure 1). This scattered ash reduced visibility.

Volcanic ash in the past was known to cause jet engines to stall, could affect sensitive electronics

and scratch glass[1]. This case documents how Etihad as an organization successfully managed

a crisis that took the whole aviation industry by surprise.

1.1. Etihad Airways: reputation management

Corporate reputation can be defined as:

[. . .] a collective representation of a firm’s past actions and results that describes the firm’s ability

to deliver valued outcomes to multiple stakeholders. It gauges an organization’s relative standing

both internally with employees and externally with its stakeholders, in both its competitive and

institutional environments (Fombrun and Rindova, 1996).

The reputation of a company is largely driven by successful management of the brand and

service (which includes operational reputation); and the congruence of brand elements with

brand identity components (de Chernatony, 1999; Figure 2). There is a strong relationship

between reputation and financial performance of a firm (Roberts and Dowling, 2002).

Reputation is managed collectively by all departments that directly interact with passengers,

including cabin crew; catering; and the network and operational safety team; and the

This case was written by Dr Melodena Stephens Balakrishnan. It was prepared using company information and interviews and its intention was to provide material for class discussion through publication. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. Copyrightq Balakrishnan 2011; Case Courtesy of UOWD Business Case Study Centre and AIB-MENA.

Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names; financial and other recognizable information to protect confidentiality.

DOI 10.1108/20450621111192753 VOL. 1 NO. 4 2011, pp. 1-17, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1

Melodena Stephens Balakrishnan is an Associate Professor of Marketing in the Faculty of Business and Management, University of Wollongong, Dubai, UAE.

marketing department, which also manages product and service development, marketing

communications and sponsorship.

1.1.1. Strong service and product

Etihad was set up by Royal (Amiri) Decree in July 2003 and commenced commercial

operations in November 2003 with Abu Dhabi (the capital of UAE) as its hub. In seven short

years, Etihad has established itself as one of the world’s fastest growing airlines. In 2010,

Etihad saw passenger numbers top seven million for the first time and revenue passenger

kilometres rise 20.1 percent. Etihad’s revenue exceeded US$3 billion in 2010. As part of its

long-term growth strategy, Etihad plans to operate to up to 100 major business and leisure

destinations around the world by 2020 (Figure 3).

As of July 2011, Etihad’s fleet of 62 aircraft and five fleet types; was operating over 1,000

flights per week and serving an international network of 72 destinations in 47 countries.

Etihad has 30 codeshare partners which increase its global reach and offer its passengers

more choice and convenience. Over the next ten years as part of its expansion strategy,

Figure 1 Spreading of the Ash Plumes

Sources: April 15, 2010; NASA’s Earth Observatory (available: http://earthobservatory.nasa.gov/NaturalHazards/view.php?id=44068)

PAGE 2jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

Etihad will take delivery of: three A330s by the end of 2011; 20 A320s between 2011 and

2015; 10 Airbus A380s from 2014; 25 A350s between 2017 and 2020; 35 Boeing 787s

between 2014 and 2020; and 10 Boeing 777s between 2011 and 2013.

Etihad offers exceptional service both on the ground and in the air. Ground services include

chauffer pick-up for premium passengers in 27 global destinations, and premium lounges in

Abu Dhabi, London, Frankfurt, Dublin and Manchester. In the air, Etihad offers a choice of

Diamond First Class, Pearl Business Class and Coral Economy Class; Onboard Chefs, a Food

Figure 2 Managing reputation

Figure 3 Etihad Airways – projected growth

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 3

and Beverage Manager delivers fine a la carte dining in premium cabins and all passengers

have access to a state-of-the-art, on-demand in-flight entertainment system which includes

over 600-hours of movies, TV shows, music and interactive games. Etihad has tied up with

Swarovski to create new amenity kits for male and female passengers travelling in First Class

to reflect its premium image. Etihad’s Loyalty program, Etihad Guest, which was launched in

August 2006, has in just four years attracted more than one million members. Etihad’s superior

service has also been recognized through a wide range of awards that reflect its position as

one of the leading premium airline brands in the world, including the ‘‘World’s Leading Airline’’

at the World Travel Awards twice in 2009 and 2010[2].

1.1.2. Strong operational reliability

The airline today enjoys a significant share of business in key markets across its network. The

geographical spread of this network, and the geographical spread of its network means a

crisis in one part of the world is very likely to affect its operations and impact upon logistics,

in another. For a deeper perspective; on average, Etihad currently operates around 150 flights

per day; 1,050 flights per week; 4,200 flights per month; and 50,400 flights per year (current

estimates) (see Figure 4 to get an idea of global reach). Etihad’s on-time performance (OTP) in

2010 was 72 percent for zero minutes, and 87 percent for below 15 minutes[3].

Safety is the most critical factor in operational reputation, followed by reliability and OTP.

Etihad has one of the youngest fleets in the world. Its commitment to using latest technology,

safety and customer comfort are evident in the fact that Etihad had announced what was at

the time the largest aircraft order in commercial aviation history at Farnborough International

Air Show in 2008, for up to 205 aircraft – 100 firm orders – 55 options (guaranteeing the price

of the aircraft and the delivery date) and 50 purchase rights.

1.1.3. Brand associations and sponsorships and promotions

Etihad means ‘‘Union’’ in Arabic. The Etihad brand value demonstrates the innate Arabian

Emirati qualities of respect, generosity and hospitality. Etihad’s mandate from the Abu Dhabi

Government has three main objectives: to be sustainably profitable; to be best in class; and

to support the economic diversification of the Emirate through the development of travel and

tourism and the provision of aviation links to key commercial centres.

Figure 4 Etihad destinations – route map

PAGE 4jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

According to a study conducted by Oxford Economics, a leading UK think tank and a world

leader in economic impact analysis; Etihad is playing an increasingly important role in

contributing to the economic growth of the UAE. In 2010, Etihad contributed US$5.5 billion to

the Abu Dhabi economy.

Besides the brand association with Abu Dhabi and the UAE, Etihad is associated with and

sponsors a number of premium sports brands and events including, Manchester City

Football Club, Harlequins, Etihad Stadiums in Melbourne and Manchester, the Sport

Australia Hall of Fame, and the Etihad Airways Abu Dhabi F1 Grand Prix that takes place in

November each year and is broadcast to a television viewership of over 80 million people.

Etihad also sponsors and engages with a number of regional and global celebrity brand

ambassadors including names like Danni Minogue from Australia; Katrina Kaif, internationally

acclaimed, multi-award winning actress from India; and the popular Pakistani rock band

strings.

1.1.4. CSR and philanthropy

Etihad Airways is fully committed to sustainability and has a partnership with the Masdar

Future Energy initiative to create a more fuel efficient fleet, and abide by the internationally

recognized environmental principles of ‘‘reduce, reuse and recycle’’. Two of Etihad’s

employees who are also the airline’s sustainability ambassadors took part in an once-in-

a-lifetime expedition to Antarctica with polar explorer and sustainability pioneer Robert Swan

in 2011.

Etihad receives public recognition for its support towards philanthropic activities. In 2004,

Etihad sent 18 flights full of humanitarian aid to Colombo, Mumbai, Bangkok and New Delhi

following the Tsunami on 27 December 2004. In January 2010 Etihad Crystal Cargo operated

a special Red Crescent and Khalifa Welfare Foundation charter flight to Haiti, carrying over

80 tonnes of medical and humanitarian supplies. In February 2010 Etihad Airways and its

employees made a combined donation of US$6,800 and shipped more than 6,700 kg of aid

to victims of the earthquake in Haiti. On 28 August 2010 Crystal Cargo provided a freighter

aircraft to carry 59 tonnes of medical and humanitarian supplies to Pakistan following

extensive flooding. Etihad staff collected money which was donated to the Emirates

International Mobile Humanitarian Hospital for Children, which has been operating mobile

clinics in flood ravaged areas and has treated 3,500 children. Etihad set up a program to

allow its Etihad Guest Loyalty members to donate their Etihad Guest Miles to a number of key

charitable organizations assisting with relief efforts and the results show a strong level of

engagement with the Etihad customer.

1.1.5. Corporate communications

A key element of Reputation Management to be greater emphasized is the ‘‘sword and

shield’’ approach adopted by the Corporate Communications department:

B The Sword approach actively promotes and publicises the brand qualities in a highly

credible way, beyond plain marketing communications, ensuring that it is engaged in

regularly communicating the latest news and developments to all internal and external

stakeholders across a variety of channels (intranet, newsletters, social media platforms,

figureions and events and a comprehensive local, regional and international media

relations program.

B The Shield approach provides rapid rebuttal on issues and topics that may negatively

impact and affect the airline and/or the industry, and that it has a tried and tested Crisis

Communications plan and trained personnel in place, should it ever be required.

Etihad’s goal is to ensure that external stakeholders and the local community are constantly

updated on its activities with a regular flow of news announcements appearing in the local

media. In 2008, Etihad issued 165 media releases; 175 media releases in 2009, and more

than 185 media releases till November 2010.

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 5

Etihad also constantly monitors the media coverage it gains in foreign markets. Etihad’s

Corporate Communications department plays an integral role in the emergency response

plan (ERP) and a robust process exists to manage crisis communications issues

appropriately. This includes a dedicated 24/7 ‘‘on-call’’ media roster, ensuring media can

reach Etihad at any time of the day with their enquiries. It also includes a process for collating

and assessing all the facts on an issue to ensure that the media and customers receive

accurate, relevant and timely information.

1.1.6. Guest affairs department and contact centres

The purpose of both departments is to ensure that all passenger queries are responded to

promptly and appropriately. There are 24-hour contact centres in Abu Dhabi, Australia,

Canada, India, South Africa, and the USA. Our customer care policy is clearly outlined in the

Etihad Guest Charter (www.etihadairways.com/sites/etihad/global/en/aboutetihad/

CustomerCare/customercarepolicy/pages/customercare.aspx).

1.1.7. Organization-wide response

To protect the organization’s reputation and the Abu Dhabi brand from the negative impact of

crises and major operational disruptions, Etihad has established a state-of-the-art corporate

ERP that lists the emergency role and responsibilities for each of the key departments across

the organization. The plan is extensive, and regular exercises take place internally and jointly

with external stakeholders to test the system and to ensure familiarity. During a crisis, Etihad

has to maintain the highest standard of safety and operational integrity whilst ensuring the

least disruption to the customer. While safety is always the priority, most passengers still

want to know at first instance whether their flights will still operate to the destination as

planned. Etihad is committed to keeping inconvenience to passengers to a minimum. This

takes the form of rerouting, scheduling more flights, and constant communication. To ensure

optimum performance during a crisis, Etihad draws from its skilled management team and a

well-defined organizational structure supported by over 8,000 employees, representing 120

nationalities.

1.2. Emergency response plan (ERP)

The ERP details Etihad Airways’ policies, plans and procedures to assist the company

during a major crisis. This includes all aspects of the investigation of incidents, as well as the

provision of humanitarian support for Etihad customers and employees, and for their

respective families. The Etihad ERP complies with all IATA, International Civil Aviation

Organization and General Civil Aviation Authority recommendations and requirements and

adheres closely to industry best practice for response to an aviation accident or incident.

Etihad regularly engages in disaster simulations internally and with business partners, to test

the system, benchmark and learn from other companies’ crisis management capabilities.

Internal exercises increased in 2010 to a total of seven from the previous three.

The ERP contains the following components:

1. ERP manual/station emergency response manuals. A comprehensive ‘‘master plan’’

publication for use at headquarters is supplemented by customized ‘‘local plan’’ manuals

for use at each airport and city office location across the Etihad network. At present this

includes more than 70 passenger and freight airports on five continents.

2. Emergency Response Centre (ERC). The implementation of the ERP is managed and

supported from the highly specialized ERC at the company’s headquarters. This

state-of-the-art purpose-built facility is operational (mission-ready) 24/7 and contains a

range of emergency applications, equipment and supplies. It is designed to function

independently of main building systems (power, air conditioning, etc.) and can accommodate

up to 35 nominated representatives that may be required to manage and resolve a crisis.

A separate meeting room located across the street from the main headquarters building is

designed as a dual-purpose daily meeting room and as the back-up ERC (should the primary

facility at headquarters become inoperable).

PAGE 6jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

A large call center capacity (supported by both the Etihad Global Call Centre and a specialized

emergency vendor) exists to handle the potentially thousands of emergency enquiries after a

major incident. Special toll-free telephone numbers are kept in reserve, ready to be published

immediately should the need arise.

3. Special Assistance Team (SAT) (family assistance) for humanitarian support. The SAT is a

standby group of volunteers from across the organization that is available to provide

humanitarian support after an accident, major incident or during a crisis impacting airline

operations. In-depth training provides the volunteers with the tools and knowledge

necessary to assist accident survivors and friends/family members of accident victims. In

2009, Etihad enhanced its emergency response capability by training 45 ERP staff and

500 SAT volunteers and all outstations were provided with online training modules. In

2010, the number of employees provided with ERP training increased to 190 – and the

number of trained SAT volunteers increased to 560 employees. All team members

undergo annual refresher training.

4. Critical incident stress management (CISM). The CISM Team comprises staff volunteers

uniquely trained to provide specialized peer support (in cooperation with the Etihad

Medical Department) for employees involved in critical incident emergencies or other

potentially traumatizing workplace events.

5. iSaturn emergency database application. iSaturn is a state-of-art web-based aviation

emergency information management system, which is interfaced with key resources, to

collect and input critical information for use by the ERC, the Global Call Centre, and for

on-line access throughout the Etihad network.

1.3. The case of the Eyjafjallajökull volcanic eruption

When the Eyjafjallajökull volcanic erupted on April 14, Etihad was operating over 90 services

a week to 12 destinations in Europe. As the volcanic ash cloud spread across Europe it

eventually led to a near-complete shutdown of European airspace between15 and 21 April

2010. For Etihad, the first impact was felt on 15 April, when all airports in London closed,

immediately affecting five of Etihad’s scheduled flights and hundreds of passengers either

going to or departing the UK.

Flight disruptions were at their most extensive from 17 to 19 April, as the crisis progressively

deepened and more airports across Europe were closed down. At one point in the airspace

closure, Etihad had to cancel all flights into Europe except Italy. Airports remained closed for

almost a week causing unavoidable mass flight cancellations (see Table I for Etihad flight

disruptions), precipitating a significant crisis situation for airlines operating within and into

Europe.

An Etihad aircraft was grounded in only one destination, and through successful monitoring

of the situation, the other aircraft were able to return to the airline’s hub in Abu Dhabi,

enabling Etihad to retain its operational capacity. This is critical in an industry where

significant revenue is lost for every hour a plane sits idle on the ground.

1.4. Etihad crisis management response

As soon as Eyjafjallajökull erupted, Etihad began monitoring the situation. By 14 April, as the

volcanic ash drifted over European airspace, the ERP went into action. The key focus for

Etihad was to manage the evolving situation by predicting the potential impact to its global

operations; finding collaborations and opportunities to mitigate reputational risk; and make

sure that customer inconvenience was minimized with no impact on safety and security of

passengers, crew and cargo.

To manage the crisis Etihad implemented some of the following steps which highlight the

extremely difficult and complex process embedded in reputation management and crisis

recovery:

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 7

T a b le

I F lig h t c a n c e lla ti o n s

Y e a r o f c o m m e n c e m e n t

D e s ti n a ti o n

S e rv ic e p e r w e e k

A ir c ra ft a

A ir p o rt s h u td o w n A p ri l 2 0 1 0 d a te s

A ir p o rt o p e n in g

2 8

M a rc

h 2 0 0 4

L o n d

o n ,

U K

, H

e a th

ro w

b 2 1

A 3 3 0 -3

0 0 ;

A 3 4 0 -5

0 0 ;

A 3 4 0 -6

0 0 ;

A 3 3 0 -2

0 0

1 5 ,

1 6 ,

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

2 7

M a rc

h 2 0 0 6

M a n c h e s te

r, U

K b

D a ily

A 3 3 0 -2

0 0

1 5 ,

1 6 ,

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

2 J u ly

2 0 0 7

D u b

lin ,

U K

1 0

A 3 3 0 -2

0 0

1 6 ,

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

1 J u n e

2 0 0 6

F ra

n k fu

rt b ,

G e rm

a n y

D o u b

le d

a ily

A 3 3 0 -2

0 0

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

5 J u n e

2 0 0 4

M u n ic

h ,

G e rm

a n y

6 A

3 3 0 -2

0 0

1 7 ,

1 8

2 1

2 S

e p

te m

b e r

2 0 0 7

M ila

n ,

It a ly

5 A

3 3 0 -2

0 0

N o t

c lo

s e d

3 M

a y

2 0 0 6

P a ri s

b ,

F ra

n c e

1 0

A 3 3 0 -2

0 0

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

3 1

O c to

b e r

2 0 0 5

B ru

s s e ls

, B

e lg

iu m

6 A

3 3 0 -2

0 0

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

5 J u n e

2 0 0 4

G e n e v a ,

S w

it z e rl a n d

5 A

3 2 0 -2

0 0

1 7 ,

1 8 ,

1 9 ,

2 0

2 1

2 J u n e

2 0 0 9

A th

e n s ,

G re

e c e

D a ily

A 3 2 0 -2

0 0

1 7 ,

1 8

2 1

5 A

u g

u s t

2 0 0 9

M in

s k ,

B e la

ru s

3 A

3 1 9 ;

A 3 2 0

1 7 ,

1 8 ,

1 9

2 0

1 D

e c e m

b e r

2 0 0 8

M o s c o w

, R

u s s ia

D a ily

A 3 2 0

1 7

1 8

N o te s :

a S

e a ti n g

c a p

a c it y

o f

a ir c ra

ft :

A ir b

u s

A 3 1 9 -1

0 6

p a s s e n g

e rs

; A

ir b

u s

A 3 2 0 -1

3 6

p a s s e n g

e rs

; A

ir b

u s

A 3 3 0 -2

0 0 -2

6 2

p a s s e n g

e rs

; A

ir b

u s

A 3 3 0 -3

0 0 -2

0 3

p a s s e n g

e rs

; A

ir b

u s

A 3 4 0 -5

0 0 -2

4 0

p a s s e n g

e rs

; A

ir b

u s

A 3 4 0 -6

0 0 -2

9 2

p a s s e n g

e rs

; b m

a jo

r h u b

s

PAGE 8jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

B A crisis management team, led by the Chief Operations Officer and Vice President

Airports and Network Operations, was formed with representation from various key

departments. 24-hour monitoring of the event ensued, with regular meetings scheduled

and detailed communications provided frequently, so as to keep all departments

apprised of the latest situation (see Plate 1 of the Crisis Room). Briefings on the status and

security of the event, its impact on airports closed, flights affected, and passengers

stranded, were documented and the impact on each department were discussed.

Key departments or groups involved were the network planning; revenue management;

flight operations; ground services; technical operations; in-flight services; sales, security

operations; call centres, airport management, catering, cabin crew, insurance, corporate

affairs, insurance and legal and respective duty managers. The inclusion of all areas of

the business ensures a composite view of company operations at any point in time.

The focus was to secure, staff, customers and assets while managing the reputation of the

company. All this needed to be done whilst keeping in mind legal and financial costs.

For example, in the Europe Union, any customer booked on a flight with a six-hour delay

has to be compensated by hotel rooms and a penalty payment.

B Second the communications with passengers in general, especially those who had not

yet started their onward journey had to be managed. Customers were regularly updated

through the internet about the volcanic ash situation and flight status. A call centre and

helpline were opened on a 24/7 basis. The Call Centre was extraordinarily taxed by the

unprecedented volume of inbound and outbound calls, and the entire ERC in addition to

other company facilities were used to provide back-up support. All local offices were

prepared to handle Etihad Guests with queries and flight changes. After the UK airport

closures, press releases were distributed to all media and posted on the internet to

update customers on the status of their flights and tickets.

B Etihad aircraft were flown to their scheduled destinations, or diverted to alternate airports,

for as long as possible until ever-diminishing options for landing sites were finally

exhausted as the ash cloud spread across Northern Europe. The various special

arrangements made for specific sectors are listed in Table II.

B Exceptional measures were implemented to care for stranded passengers at outstations

across the network, and especially at the Abu Dhabi hub, where some 2,500 passengers

were accommodated at the expense of Etihad Airways. Such care included first class

Plate 1 Crisis Management Team

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 9

accommodation, meals, transportation, leisure tours, as well as on-site assistance from

Etihad representatives at every hotel assisting with travel enquiries and arrangements.

Visas were organized where possible for all passengers stuck in transit in Abu Dhabi.

Abu Dhabi Airports Company, Abu Dhabi Tourism Authority, and the airport police and

immigration authorities, worked with Etihad during this challenging period. The airline also

worked with embassies around the world to ensure the safety and care of passengers that

had been delayed in outstations. Tours were also organized for passengers stuck in

Frankfurt. Based on information provided by the metrological authorities, Etihad was able

to warn people not to undertake their journeys and promised to revalidate their tickets at no

additional cost. This was preferable to taking the risk of being stranded in transit. Managing

logistics at this time was key to managing passenger flows. The unsolicited testimonials

(see Exhibit) provide highly credible third party endorsements, and go far beyond being

just free publicity (Figure 5), and are key factors in building a positive reputation and

reinforcing, brand loyalty among new and existing customers. The testimonials also show

the effort the Etihad team put into managing the crisis across its international network.

B Tracking customer whereabouts, travel intentions and any possible post-event backlog

within the network proved to be a complex challenge. This task was made increasingly

difficult due to the ever-lengthening duration of the airspace closures and the unpredictable

nature of requests for alternate travel arrangements. Tickets needed to be revalidated or

re-routed, which was covered by the airline. In some destinations on the Etihad network,

passengers holding tickets to their original final destinations were uplifted to Abu Dhabi,

where they were accommodated on later flights to their final destination. Customers who

chose not to travel and cancelled their flights were also fully refunded the cost of their tickets.

Once flights returned to normal, James Hogan announced in a press release:

Bookings for passengers currently in transit, and UAE residents around the world will be priority for the

airline as services are reintroduced. Our staff will be communicating directly with those that are in

accommodation in Abu Dhabi and other cities to advise them of their updated travel plans, once available.

By 21 April, over 1,500 passengers had departed from Abu Dhabi to their final destination.

1.5. Post crisis: event summary

The Eyjafjallajökull volcano tested the worldwide airline industry. For Etihad specifically the

impact was huge as documented below:

B Passengers affected across the Etihad network. More than 22,000 Etihad passengers

were affected by flight cancellations and delays as a result of the airport closures.

Table II Etihad operational response to the crisis

Destination Special arrangements

London Heathrowa

15th – EY19 diverted to Paris 26 and 27 April – two additional flights: AUH-LHR and LHR-AUH Upgrading aircraft to increase additional seats

Dublin 15th: EY41 diverted to Munich 21st: two supplementary flights to Dublin and Milan via Munich, to accommodate additional passengers

Munich 21st: two additional flights Milan 21st: two supplementary flights to Dublin and Milan via Munich, to accommodate

additional passengers Parisa Upgrading aircraft to provide additional seats Sydney Flights diverted via Brisbane, and Melbourne. Passengers on on-board journey

advised not to commence 25th – additional flight Sydney-Abu Dhabi Two flights: Abu-Dhabi-Sydney (25-26 April) Etihad has 11 flights to Sydney per week which led to considerable backlog from European destinations

Note: aMajor hubs

PAGE 10jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

B Hotel accommodation in Abu Dhabi. Over 2,500 displaced passengers were

accommodated in 18 hotels, over a 100-kilometer radius.

B Press releases issued to the media. Etihad issued 12 updated media announcements

over the week long disruption.

B The week long disruption cost Etihad more than US$50 million in revenue (Salama, 2010).

The crisis concluded on 21 April with the reopening of affected airspace, and a widespread

recovery effort commenced. The Etihad network was declared officially clear and fully

normalized by 29 April 2010. The ERC then reverted to stand-by status, and the facility was

returned to normal.

1.6. Lessons learnt – getting the customer recovery right

The unprecedented event of the Iceland Volcanic Ash crisis taught the world’s airlines many

valuable lessons. Etihad Airways was no exception, and the airline’s management quickly

moved to innovate and improve the company’s emergency response capability with a

thorough analysis of all issues that arose from this extraordinary crisis. The event once again

demonstrated that communication and collaboration are key elements in managing a crisis

effectively. This was not just with customers but also with key stakeholders such as the

affected airports, the hotel industry, governments and other airlines. Etihad worked hard to

foster a collaborative spirit with partners to ensure it could be proactive during the crisis.

This volcano experience resulted in better processes being scoped out and the identification

of a number of enhancements required across different aspects of the business including:

travel visa management, large-scale hotel room sourcing and reservation, passenger data

capture and transportation, policy and process development and passenger

communications.

The lessons learnt proved effective when Grimsvitn (another Iceland volcano) erupted at

5.30 pm on 21 May 2011. Etihad Network Operations Control closely monitored the situation

through NOTAM updates from the London Volcanic Ash Advisory Centre; data from the

Figure 5 Publicity

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 11

Eurocontrol Aviation Crisis Cell and the relevant MET authorities in concerned countries. A

total of six updates were sent to all relevant stakeholders. All stakeholders were asked to be

prepared for a worst-case scenario. All high load flights to and from Dublin, Manchester, and

London Heathrow were identified. Diversion airports were identified. All flights with

perishable cargo were identified.

Staff was asked to feedback information from local authorities via e-mail despite the impact on

Etihad on 21 and 22 May being zero. A B777 crew was stationed in Dublin on standby to

facilitate the recovery of grounded flights if the case arose. Media clippings and press

coverage was closely monitored to assess public sentiment in response to the crisis. The

standby crew returned to Abu Dhabi on 26 May. As of 2.00 am on 25 May, the volcano ceased

to erupt though the volcanic ash continued to move over German airspace. Flight plans were

adjusted to avoid high density ash airspace and were to be updated two hours prior to ETA by

Flight Dispatch. As a precautionary measure flights into Europe were given additional fuel.

All aircraft on these routes were inspected for ash, pilots were asked for reports and when

there were no findings, the flight was cleared for further onward journeys.

The lessons learnt in the Iceland airspace closures were put to use again in May 2011 during

the ash cloud crisis in Australia. Qantas and Air New Zealand stopped operations whilst many

international carriers, including Etihad and Emirates, continued to operate into Australia.

Managing reputations in an uncertain environment is a complex process. In the airline

industry, this is compounded by the various possible scenarios that confront it. As a leading

international airline, Etihad needs to be able to predict various scenarios, learn from each

event and gear up the organization-wide response.

Notes

1. Pictorial representations of the spread of volcanic ash to be found at: www.Eumetsat.int (available

at: www.eumetsat.int/Home/Main/News/Features/717626 and http://EarthObservatory.Nasa.gov

(available: http://earthobservatory.nasa.gov/NaturalHazards/event.php?id ¼ 43253) which show

how wide spread this potential risk became.

2. See www.etihadairways.com/sites/etihad/ae/en/aboutetihad/Pages/OurAwards.aspx for a list of

Awards Etihad has won.

3. A flight is considered delayed when it arrived 15 or more minutes later than the scheduled.

Keywords:

Crisis management,

Reputation,

Brands,

Stakeholder management,

Corporate communications,

Aviation Industry

References

de Chernatony, L. (1999), ‘‘Brand management through narrowing the gap between brand identity and

brand reputation’’, Journal of Marketing Management, Vol. 15 Nos 1-3, pp. 157-79.

Fombrun, C.J. and Rindova, V. (1996), ‘‘Who’s tops and who decides? The social construction of

corporate reputations’’, working paper, Stern School of Business, New York University, New York, NY.

Roberts, P.W. and Dowling, G.R. (2002), ‘‘Corporate reputation and sustained superior financial

performance’’, Strategic Management Journal, Vol. 23 No. 12, pp. 1077-93.

Salama, V. (2010), ‘‘Etihad unlikely to break even, CEO admits’’, available at: www.arabianbusiness.

com/etihad-unlikely-break-even-ceo-admits-182515.html (accessed 3 May 2010).

Recommended readings

Balakrishnan, M.S. (2011), ‘‘Preventing brand burn during times of crisis: Mumbai 26/11 –

a case of the Taj Mahal Palace and Tower Hotel’’, Management Research Review, Vol. 34

No. 11, pp. 1309-34 (formerly Management Research News).

Coombs, T.W. (2007a), Ongoing Crisis Communication: Planning, Managing and

Responding, Sage, Thousand Oaks, CA.

Coombs, T.W. (2007b), ‘‘Protecting organization reputations during a crisis: the

development and application of situational crisis communication theory’’, Corporate

Reputation Review, Vol. 10, pp. 163-76.

PAGE 12jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

Crandall, W.R., Parnell, J.A., and Spillan, J.E. (2010), Crisis Management in the New

Strategy Landscape, Sage, Thousand Oaks, CA.

Meyer, A.D. (1982), ‘‘Adapting to environmental jolts’’, Administrative Science Quarterly,

Vol. 27 No. 4, pp. 515-37.

Exhibit. Customer testimonials

Dear Peter.

As my best contact with Etihad’s senior management, I wonder if you would be good enough to

pass on to the appropriate department my sincere thanks for the marvelously efficient and

sympathetic way that Etihad staff in London and Sydney dealt with the recent change of plans for

myself and my wife, brought on by the Icelandic volcano.

I travelled from Heathrow to Sydney, via Abu Dhabi, on 7-9 April as planned, and had two excellent

nights, but my wife, who was due to follow on 16-17 April, was grounded by the volcano fall-out.

After two false starts, Etihad staff rearranged her flight for 25-27 April, and she was full of praise for

their efforts, as well as the onboard service.

The delay meant that our planned fortnight’s holiday in Australia started a week later, which has

meant finishing a week later, and I experienced nothing but courtesy and co-operation from your

staff in Sydney, when I called into the office to make new flight arrangements for our return.

The result is that my wife and I will be returning on flight EY455 on Sunday 9 May, changing on to

flight EYl9 at Abu Dhabi on Monday 10 May.

Well done, Etihad.

Best regards,

Howard.

Hi Dan/Sheina

I am sure you probably will won’t remember me but I was a deliriously happy passenger on Etihad

flight EY81 to Milan on Monday 19th April from Abu Dhabi at 0810. The flight was diverted to Rome

after Milan airport closed due to the Icelandic Volcano. I was travelling with a Swiss lady who I had

met up with in Mumbai. I had arrived from Mumbai at 0630 with a connecting flight to Athens which

was about the only flight out of Mumbai to Europe at that time.

Firstly, I would like to say how helpful your staff were at the London office when I phoned to try and

get a flight out of India. Having tried British Airways for hours I got straight through to your London

office where the staff did a great job of getting me on a flight. Having arrived in Abu Dhabi, bound for

Athens, I spotted that there was a flight leaving for Milan, which is obviously a lot closer to the UK

than Athens! I went to the transfer desk, where again, the staff were so helpful and understanding

and they managed to transfer me and my luggage to the Milan flight with only about 20 minutes to

spare. Once I arrived at the departure lounge I was so impressed by yourself and your staff for

keeping us informed of exactly what was happening at a very stressful time. This service continued

on board the flight with your flight attendants and crew also being very attentive and helpful.

On arrival at Rome the airport was chaotic but, one of your staff, who I believe was travelling back to

Italy for a break took over (unfortunately, I didn’t get his name) and gathered all the Etihad

passengers together and coach transfers to Milan. I have to say I was extremely impressed,

particularly after the lack of assistance from AA. My assistance from AA consisted of a text saying

my flight was cancelled. When I finally got through to them they offered me a flight leaving 10 days

after the original flight which I declined. I was then promised a phone call to arrange flights and

other travel options which I never received.

On longhaul flights I have pretty much always travelled with AA as the ‘‘home carrier’’, but after this

trip I would always look to book with Etihad and will have no hesitation in recommending you. Once

again many thanks for your excellent service at such a stressful time. I actually managed to get

home only 48 hours after I was due to all thanks to Etihad!

Karen

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 13

Hi again!

I have to thank you all for the good support! Everything went well!

Since the flight to Jakarta was 2 hours delayed, we where picked up by your colleagues in Jakarta

and brought to the gate (they retagged the baggage, etc.).

We needed to retag the baggage all the way to Munich, but where told that Etihad in Abu Dhabi

would be able to retag the baggage again if we where to take another flight. We were seated

perfectly together and in very good seats (just after the business class). The family (not least the

kids, loved the flight – entertainment, food, etc.).

In Abu Dhabi, I went (as you advised, directly to the transfer desk). The service was excellent again,

and they were able to reroute us to a London flight the next morning (8:30). We where given 3 rooms

at a hotel to get some sleep. This was really good, and made the total trip much less stressful then it

could have been.

We arrived London 13:15 and the connecting flight to Stavanger left 16:50 (booked it from the hotel

in Abu Dhabi). We arrived Stavanger Saturday at 22:15 local time. We where tired, but we all agreed

that due to your help we got a very fine return travel.

I am now at work and the kids are at school. Thanks again!

Regards,

Jan

Khalifa,

I want to share with you my very positive experience with Etihad during the Icelandic ash ‘‘crisis’’. I

was travelling back from Jakarta and arrived in Abu Dhabi on Friday on my way home to Paris. My

Paris flight was cancelled and I was immediately taken care of by the Etihad staff at the airport and

accommodated in a good hotel with 3 meals a day (all at Etihad’s expense). I spent 4 days in Abu

Dhabi and during this time, Etihad communicated with me providing updates and also placed

someone at a desk in the hotel lobby 24 hours a day. I subsequently left on the first plane to Paris.

What Etihad did was commendable and went well beyond what would have been expected of an

international airline. Besides being extremely professional, all the Etihad staff that I met or spoke to

on the phone were highly sympathetic and very kind, clearly recognizing that people were stressed

at not being able to get home to their loved ones.

Thank you – truly excellent management of a huge crisis – commendable!

Dear Lisa,

Apologies for late mail, I would like to take this opportunity to thank yourself and your ground staff for

the kind; courteous and excellent service afforded to us prior to our recent trip to South Africa to visit

my father.

We were booked to fly ex Dublin via Abu Dhabi to Johannesburg on the 16th of April past; and were

delayed by the Icelandic Ash Cloud disaster. Although we lost a week of our holiday in South Africa;

we were very fortunate to be in the hands of such a caring Airline; and staff as yourselves.

We were put up initially at the Marriott Hotel outside of Dublin; and then on to the Carlton; where the

service given to us; as directed by the Airline; at both establishments; was both courteous and

exception under the circumstances. Customer service of this nature is a pleasure to experience and

we thank you.

This was our first flight experience with Etihad Airlines and it certainly won’t be our last. We

subsequently went on to have a most enjoyable stay in South Africa.

On our return journey on the 8th of May last; we chose to fly ex Johannesburg via Heathrow to home;

once again due to the ash cloud present over Ireland; where the service in Johannesburg and

Heathrow by the Etihad staff was first class.

Yours sincerely,

Ian and Glynis

PAGE 14jEMERALD EMERGING MARKETS CASE STUDIESj VOL. 1 NO. 4 2011

About the author

Dr Melodena Stephens Balakrishnan, is an Associate Professor (Marketing) and the MBA Program Director in the Faculty of Business and Administration, University of Wollongong in Dubai. Her areas of research are place branding and development (multimarket studies), crisis management, service marketing and customer relationship management. She has published and received multiple research grants in these areas. She has 16 years of corporate and industry experience and has lived in India, USA, Taiwan and UAE. She is the Founder and Chair of the Academy of International Business – Middle East North Africa Chapter. She is a Regional Editor for Emerald’s Emerging Markets Case Study Collection and the Editor for the book series – Actions and Insights. The first book: Actions and Insights: Business Cases from UAE was published in December 2010. Dr Stephens Balakrishnan won the UOWD Teaching Excellence Award in 2009 and she was a finalist in the ITC Staff Awards – Australia (2010): Exceptional Leadership by a Female Staff Member. Melodena Stephens Balakrishnan can be contacted at: [email protected]

VOL. 1 NO. 4 2011 jEMERALD EMERGING MARKETS CASE STUDIESj PAGE 15