Yesterday I wrote about the news that Etihad Airways will no longer operate their own lounge at London Heathrow, but rather they’ll be turning it over to No1 Lounges.
While I’ve never fully understood Etihad’s strategy with operating their own lounges at outstations (like Los Angeles and Washington Dulles, where they have no more than one flight a day), it’s perfectly logical for an airline to operate their own lounge at their biggest global destination, where they have three daily A380 flights.
Etihad Lounge Washington Dulles
Etihad Airways has now shared some more details regarding their new lounge concept, and if you read between the lines, it should give us a good sense of the future of their lounge network.
Etihad Airways’ London Heathrow Lounge will be called “The House, home of Etihad Airways and other leading airlines.” The airline says that the scope of the new lounge brand may be expanded to include other lounges.
Outside of Abu Dhabi, Etihad currently operates their own lounges in Dublin, Los Angeles, Melbourne, New York, Paris, Sydney, and Washington. I’d be shocked if any or all of those lounges didn’t eventually transfer over to No1 Lounges under this new brand.
Etihad Lounge Paris
Here’s what Etihad Airways’ VP of Guest Experience and Delivery had to say about this new concept:
“This is an innovative development for Etihad’s international lounge offering. No1 Lounges stood out for their operational skill and expertise, and for their creative approach to Etihad’s lounge needs.
This new venture will enable the airline to maintain its brand presence, and at the same time enhance and improve the overall lounge experience for our premium guests. It will also provide an opportunity for our Economy guests to upgrade their pre-flight experience.”
So by outsourcing lounges, Etihad hopes to “enhance and improve the overall lounge experience for [their] premium guests?” Really?
Etihad acknowledges that this collaboration will “allow better utilization of the lounge and make the experience accessible to a wider market.” I’d say that’s a large motivation behind this change. Presumably Etihad’s goal here is to both cut costs and increase lounge revenue.
No1 Lounges’ CEO had the following to say about the new concept:
“We have worked closely with Etihad Airways over the last year to develop a new brand which complements its world-class in-flight service, to modernise the lounge interiors and to broaden the lounge’s appeal.
We applaud Etihad Airways for breaking new ground, by working so closely with an independent operator like No1. Together, we have found ways of improving the lounge experience for the airline’s guests, while creating a much more effective operating model.”
For Etihad passengers, the lounge entry requirements will remain the same as before. On top of that, Etihad economy passengers can purchase access to the lounge, the lounge will continue to be used by “premium passengers on a small number of other airlines,” and “subject to availability, will be available to purchase by passengers of other airlines.” It hasn’t yet been revealed if the lounge will be open to Priority Pass members, though I wouldn’t count on it.
The airline emphasizes that passengers can actually expect an improved experience from launch, including the following:
From launch, guests will enjoy a new, white-linen dining experience and a more extensive bar service, including freshly squeezed juices and smoothies, world coffees and a more sophisticated wine list.
It’s pretty funny that the airline has actually cut much of their cocktail and wine list over time, while now they’re claiming that they’re going to improve it once again. I’m skeptical of that claim.
It’ll be interesting to see how the food & beverage selection changes
Note also that Etihad will no longer offer any special services in the London lounge for passengers traveling in the Residence.
The Etihad Residence
Bottom line
From the beginning, most Etihad outstation lounges just weren’t run efficiently. For example, at airports with once daily service they’re often just open a few hours before flight departures, meaning the space is otherwise empty. The airline could have easily provided services for other airlines during off-peak periods to help them cover costs.
Now they’re going from one extreme to the other. Presumably No1 Lounges is assuming some of the risk here, and they hope to improve the financial performance of the lounge by reducing costs and increasing revenue. We’ll definitely see this lounge used by more passengers going forward.
I also suspect we’ll see some cost cutting, though Etihad has already cut so many services in their lounge. The claim is that we’ll see improved drinks and a new “white-linen dining experience,” so I’ll be curious to see what that looks like.
I’d be shocked if most of Etihad’s other lounges outside the UAE aren’t rebranded as part of this agreement within the next year.
What do you make of Etihad’s new “The House” concept?
Changeover looks like it happened this morning (Friday). Signage and lounge invites have been changed. Lots of management types wandering around, heavily staffed at 7am. For now, service seems to be at expected premium levels and dining remains unchanged. Certainly the current experience at LHR is way superior to the post security lounge at AUH for US bound pax.
I think it’s smart. Rather then shutting the lounge entirely and diverting passengers to a third party lounge, they are outsourcing the operations to a third party meaning that they can retain some parts of the experience at a viable cost.
Apart from the costs, ultimately this also exposes other customers to Etihad Airways creating an experiential touch point for the brand at virtually no cost. If this is not optimization by innovation then...
I think it’s smart. Rather then shutting the lounge entirely and diverting passengers to a third party lounge, they are outsourcing the operations to a third party meaning that they can retain some parts of the experience at a viable cost.
Apart from the costs, ultimately this also exposes other customers to Etihad Airways creating an experiential touch point for the brand at virtually no cost. If this is not optimization by innovation then what is?
Etihad has approximately 10 residence seats across their network and even considering it in value terms it would amount to no more then 400 economy seats- far too insignificant in the context of its network to restrict a game changing strategy.
Moreover, Etihad can also innovate to enhance its ground experience for Residence passengers. They can provide Residence passengers with Helicopter transfers to the airport and negotiate with airports to provide these guests with VIP fast track meaning they could be in their seats within 10 minutes of reaching the airport. I am sure this would be far more appealing to them versus wasting hours in a private room and being force fed by over-eager staff.
If it's anything like the contract lounge at EY uses in GVA, there's definitely reason to worry. That was the only downside to my F Class experience.
Wow, buy a residence ticket for $30k plus and sit in a contract lounge.....
I’m on an Etihad ride (biz) out of London next week. Should be an experience since the last time I hitched a ride with ‘em. I’m optimistic. This kinda makes sense so long as it ain’t over crowded down there. Their lounge was just fine the last time. Not sure I care that much about a lounge so long as there’s a place to park it.
Do you pronounce it “number one” or “no one?”
Going, going....
Granted it has been a few years since I visited an EY lounge, but how different is this new arrangement than how outstation lounges are currently operated? Furthermore, aren't most outstation lounges for airlines operated similarly? I highly doubt that most of the lounge workers are employed by the airline (aside from a duty manager or two). Since they are just contract workers, they are just going to subcontract the rest of the lounge and...
Granted it has been a few years since I visited an EY lounge, but how different is this new arrangement than how outstation lounges are currently operated? Furthermore, aren't most outstation lounges for airlines operated similarly? I highly doubt that most of the lounge workers are employed by the airline (aside from a duty manager or two). Since they are just contract workers, they are just going to subcontract the rest of the lounge and most likely the lease. Looks like an easy way for Etihad to get out of leases they don't want to pay for and only pay by use for the passengers that they do. Food/drinks may change under new management - but it's not like if EY kept running the lounge themselves, it wouldn't happen. I just see this as a way for them to get out of a longterm lease and monetize an asset they already have, while limiting their future exposure.
This is akin to the White Star Line announcing a new lounge on the Titantic. This will do nothing to address the iceberg that is directly in their path. At some point the SS Etihad is going to have to change direction or suffer the consequences.
I think it's more likely that they will create cash access for $50-$60 than open up to PP
That will bring in revenue while limiting crowding.
Death by a thousand cuts...just surrender to Emirates!
I'm curious how they intend to manage the Etihad brand when you'll have multiple airlines' pax in the lounge simultaneously. What's to make EY pax in F or J feel special when the cubes of cheese and packaged snacks are available to anyone for a small fee? I see this playing out similar to SJC's The Club being utilized for BA F and J pax. While the Galleries Lounges both at LHR and at out-stations...
I'm curious how they intend to manage the Etihad brand when you'll have multiple airlines' pax in the lounge simultaneously. What's to make EY pax in F or J feel special when the cubes of cheese and packaged snacks are available to anyone for a small fee? I see this playing out similar to SJC's The Club being utilized for BA F and J pax. While the Galleries Lounges both at LHR and at out-stations (and even the CCR) are not trend-setting, they certainly put to shame any sort of brand-damaging, contracted out-station lounge.
Gotta love the Enhancements.
Does't "white-linen dining experience" automatically exclude the lounge from the Priority Pass brand? ;-)
Figure it's only a matter of time for IAD. Shame, it's been a great ride.