Sample Case Study Paper on Etihad Airways Supply Chain


Supply chain is an important function in organizations as it contributes to efficiency that affects the financial gain made by the company; if any. An efficient supply chain increases the amount of money that a company earns, and improves the company’s relationships with its stakeholders. For a company to have an efficient supply chain, it should create a reliable network with its stakeholders in terms of exchange of information, knowledge, contacts, services and products. The organization should be aware of its stakeholder’s needs and changing preferences and be on top of industry changes so as to stay ahead of competition especially when benchmarked with other industry players. Assessment of the level of performance of a supply chain should touch on three key areas which include; virtual supply chains, superiority in supply chain operations and amalgamation and alliances that enhance supply chain performance. One would assume that most organizations have efficient supply chains in place to increase efficiency and performance.

However, there are still many organizations all over the world that do not have clearly established supply chains which could be saving them a lot of money and other resources such as labor. Companies that have embraced efficient supply chains have been able to benefit from the collaborative relationships that they have formed with partners and stakeholders in the industry. In order to take advantage of efficiency in a supply chain, it is important for a company to be able to get the right information technology applications such as procurement and supply software that also integrates the clients systems into theirs. A good information system with modern technology is the backbone of an efficient supply chain in an organization.

New supply chain models and systems keep on coming up, with changes being proposed and being effected in the manner in which outsourcing is conducted and some parameters of the supply chain are realigned so as to make customized changes that promote delivery and minimize costs. This paper will conduct a case study of Etihad Airways on its supply chain, its impact on e-commerce and organizational performance.

Company Background

Etihad Airways is the representative airline for the United Arab Emirates nation. The airline is based in Abu Dhabi, after its establishment in 2003; with its operations spreading to Europe, Asia, Australia, U.S.A and Africa. Etihad Airways operations are spread to over 1,000 destinations in the different continents with both passenger and cargo flights. Etihad Airways is in fourth position in the Middle East region, and second in the United Arab Emirates, with first position being Emirates Airlines. Etihad Airways is headquartered in the city of Khalifa in Abu Dhabi and operates out of the Abu Dhabi International Airport. In the year 2012, Etihad recorded an over 20% increase in the number of passengers that it carried; leading to net profits of over $ 40 million. The company has also been purchasing equity in different airline companies all over the world which has served to strengthen its network. In 2011, Etihad acquired a 29% stake in Air Berlin, 10 % at Virgin Australia and 40 % Air Seychelles. In 2006, Etihad Airways had announced a 5 year strategic plan that would result in increased profits

This year, Etihad Airways is meant to close up a deal that it had made with Italian airline Alitalia. The deal with Alitalia was meant to get Etihad major decision rights since the Italian airline company was highly troubled and Etihad would get 49 % of the company’s share. This corporate deals and owning of stock in different airlines is sure to improve the company’s operations and networks; increasing efficiency in delivery of services and reducing the costs that are incurred. However, this deal is still on hold since Etihad is not sure that the joint partnership between the two airlines would be profitable. Economic analysts have warned that this deal could lead to losses for Etihad since Alitalia has incurred major losses this year (2014) which is the third uninterrupted year for the company to incur losses (Diaa, 2014).

Corporate Social Responsibility

Corporate social responsibilities assist in enhancing the image of a company and making it an appealing brand. Consumers like to feel that the company that they conduct business with gives back to the community. The company has given back to the community through several ways.

The Care by Air initiative by Etihad Airways was initiated with the goal of ensuring that humanitarian aid meant for needy individuals got to its destination from its origin in Dubai. Etihad Airways acknowledged there are many unfortunate people in the world who need assistance in any available way because their situation is such that they might go hungry or without other necessities that would assist them to get by. If the company can be able to make a positive difference in such individuals’ lives, they felt that they were obligated to ensure that they got the help that they required. Through the care by Air initiative by Etihad Airways, the supply chain department reduces the lead time through which relief supplies are delivered to areas where they are needed. According to Sales (2013) most cargo planes use only up to 65% of their capacity, and the rest could be used for humanitarian initiatives.

Etihad Airways has partnered with other organizations in the United Arab Emirates such as the Masdar Institute of Science and Technology, Boeing, Total and Oil the oil refining organization referred to as Takreer. The project is meant to lead up to the discovery of more efficient uses of energy so as to get alignment into the millennium development goals of reducing carbon and other green house emissions. The region has also set out a strategic plan to reduce its dependency on oils as to cut back on costs while retaining efficiency. The company has clear policies and guidelines in relation to ensuring and promoting stakeholders while cooperating with the government and stakeholders such as suppliers and financiers.

The contribution to different charities and ventures related to the environment is an initiative meant to ensure that the community and its members grow at the same rate as the company. Etihad has a diverse work force with employees from different nations. This diversity is part of the wider strategic goal to promote harmony and portray an appreciation of people from different parts of the globe regardless of their backgrounds. Etihad Airways realizes that in order to attract to attract employees from different nations, they should be able to portray that they understand the diversity that exists in the world. One of the ways of showing through is through attracting, retaining and appreciating diverse human personnel in terms of their ethnic and cultural backgrounds (Robbins, Bergman & Stagg, 2011).

Organizational Structure and Business Model

Etihad Airways is one of the largest companies in the UAE with its President and CEO as the James Hogan. The company has a chairman and 6 boards of directors who attend regular meetings to decide on the way forward to improve the performance of the company. Next in power are the executives and major departmental directors of the Etihad Airways Company. These are the major decision makers of the company who have the final say on subsidiaries to be acquired, planes to be purchased and major expansion into other countries such as addition of flights. These senior professionals use the information that is supplied to them from the executives on the ground from major departments such as engineering and operations, which encompasses procurement as one of its functions, human resources and administration and finance and project management. The procurement and supply chain department falls under the operations major department.


Mohamed Mubarak Al Mazrouei



1.Dr. Hamed bin Ahmed Al Hamed

2. Mohamed Al Mahmoud

3. Mohamed J. Al Shamsi

4. Hamad A. Al Shamsi


5. Alshamsi A. Al Shamsi

6. Ahmed K. Al Mehairi


Fig 1: Etihad Airways Organizational structure

Etihad Airways business model forms a unique yet workable initiative with a mixture of organic and subsidiaries where it has made investments into. Etihad uses the philosophy that the airline companies that it has bought some shares into are not being “rescued” but services are being shared out. The sharing out of resources between Etihad Airways and its global partners has resulted in an increase in the number of clients that fly with the airline and its partners. It is this “sharing out” of knowledge and resources that contributed to the turnaround positive performance of Air Seychelles and Air Berlin (Balakrishnan, Michael,‎ Moonesar, 2012).

The different airline partners in the different countries allow Etihad to be able to get into new markets in different regions and countries, without the hustle of having to form mergers and expensive mergers that would take a lot of time, money and other resources. Such alliances are important and productive in a market that is saturated with industry players that long term experience in their industries. The alliances also form a cushion against expensive operating costs such as fuel in an economy that has not yet stabilized since the 2008 economic crisis whose effects were experienced all over the world. If Etihad Airways did not have the links to form strong partnerships with other airlines all over the world, they would have to start from the bottom in all the countries where they wanted to establish operations. Starting out would consume a lot of resources especially in terms of forming relationships that would lead to fruitful business. Etihad cited a shared vision and importance of service excellence as the major factors that contributed to partnering with the said airlines in the different countries (Etihad, 2014). Most business operators want to enter into trade and business agreements with partners that have been in the industry and region for a long period of time. It would ensure that they can trust the service providers and have their merchandise delivered in a timely manner.

Etihad Airways decision to purchase equity in other airlines; five of them has assisted in the dramatic cutting down of costs. Etihad Airways has shares in other airlines all over the world: Alitalia, Air Berlin, Air Serbia, Air Seychelles, Aer Lingus, Jet Airways, Virgin Australia and Darwin Airline. When the company is making purchases for products and services, it is in a good bargaining position since it is buying in large quantities. The pilots and cabin crews can also be trained together at the company’s center in Abu Dhabi, contributing to cutting down on expenses. Vendors are bound to sell their products or services at lower costs to businessmen when the purchases are being made in large quantities. Etihad Crystal Cargo has also been a major revenue earner for the airline that has a good number of Boeing and Airbus airplanes (Balakrishnan & Moonesar, 2012).

According to Goetx & Budd, (2014) another reason why Etihad Airways has grown to be a successful business is the integration of high quality information technology services into its business model. The company signed a ten year contract with Sabre Airlines Solutions which allows the company to network its systems across its various departments such as finance, reservations, procurement and marketing. Various parameters in the different departments can be updated without interfering with current statuses of the other’s departments.

To enhance its business model, Etihad Airways offers clients destination holiday offers at subsidized rates in collaboration with different hotels in exotic regions. The company also offers frequent flyer programs that can be redeemed using different items or free flights. Such programs increase loyalty, which is important if the company is to stay ahead of its competition in the industry. Etihad has been able to expand their fleet and network through the use of the available demand in the market. It is through the use of their strategy that the company was able to record increased sales from 2008 four years, later; the company had a 70% increase in the clients that had booked flights with the company. The company increased the number of flights from 50 to over 85 within the four years. According to Thiersteain and Convent (2014), Etihad’s business model has maximized on the feature of offering lower costs incurred on purchasing tickets, allowing prompt flight connections with minimal delays. When the company’s flights experiences delays, individuals are notified immediately. The cargo handling part of the company has ensured that the clients are not adversely affected by changes in currency rates by allowing minimal stopovers and change of flights. This parameter has also been applied to passenger flights. There are nations that have not yet recovered from the global economic crisis, such features have made the airline’s services appear considerate of clients’ plights and helped them gain loyalty in the airline industry market.

Etihad Airways has also been able to take advantage of its strategic geographical location (in Abu Dhabi) and offer traffic diversion so that clients are not inconvenienced and they can be able to connect in between their international flights.  Dubai and Abu Dhabi are located centrally to Europe, Asia, Africa and Australia.

One of the reasons why Etihad has been able to perform well over the last few years has been the establishment of a media center. The company has highly qualified individuals whose work is to monitor the media in terms of the information that might affect the company’s performance. In case there is news that affects the organization, they are managed in a fast and efficient manner through the Emergency Response Plan (ERP) that includes around the clock staff that manages any crisis that might involve the company (Balakrishnan & Moonesar, 2012). The airline industry is very competitive, and one of the ways of ensuring that a company stays ahead of other industry players when benchmarked, is to deal with any publicity as fast as possible, and in a responsible manner since the world is watching. The Emergency Response Plan at Etihad Airways does thorough research on news items which it delivers to clients who might call in or ask for further and clearer information from the company through the various existing media platforms.

Etihad Airways also has a load tracking system through which clients can be able to track cargo planes through their phones. To ensure timely transportation of the cargo, the company has also acquired more buses; about eight of them to ensure increase in the rate at which loads are loaded onto, and off planes (Plunkett, 2009).


Etihad Goals and Objectives

One of the most important objectives of Etihad Airways is to be the best airline companies in terms of the dedication with which they deliver services to clients, and handle client’s cargo. The company also conducts its activities in a manner that is reflective of the friendliness and hospitality that is possessed by the United Arab Emirates nation. The airline does this proudly as a national flag carrier of its country.

It appears as if Etihad Airways was established just recently: 2003; yet it has made so much progress; being one of the United Arab Emirates airline companies that has a high number of international clients especially those that view the region as a tourist destination. Clients can also easily access other countries in which Etihad has partners. Etihad might have taken years to launch its business in different regions in the world, if they have not ventured with other airlines.

Etihad would like to gain global acclaim through offering high quality services which can be seen through the company’s Marketing efforts. The company has gotten involved in sports activities throughout the world which feature the company’s banners and trademarks that form part of the advertising the company needs to stay afloat in a very competitive market worldwide.

Etihad Airways major suppliers and vendors

One of the company’s vendors is Lufthansa Technik which supplies aircrafts and spare parts that Etihad and its subsidiaries such as Jet Airways require. Etihad Airways and its subsidiary airlines have different “classes” for their different clients. The company tries to source for its food supplies so that it gets the best possible prices and cut back on costs. Frankenberg Meals Company has been repeatedly used by emirates Airlines as a food vendor and supplier. Etihad Airways human resources conducts searches for their own qualified employees through advertising on various media platforms.

Supply chain practice
Key elements & Supply Chain Practice role in overall supply chain strategy
The procurement and supply of various materials at Etihad is the responsibility of the procurement and supply department. The company has to get the supply of materials such as fuel, uniforms, food and ensure that there are well established contracts to cater for in flight services, ground operations, information technology services, accommodation and hotel booking for flight crew and passengers that might have flights delayed due to the company’s inefficiencies, and counteracts that are related to other airline operations whose efficiency would be dependent on the smooth flow of set out plans and guidelines. For an airline company to be efficient, clients should be able to make flight bookings and cancellations easily, as long as they adhere to the terms and conditions of the company. The company should have staff members that are committed to their jobs so that they remain keen on areas that would affect the flight bookings, operations and information on delays (Mason, 2012).

A good supply chain would ensure that the information systems services that have been procured by the company are efficient and remain updated on bookings made, timelines within which cancellations can be made, and information on expected and current delays can be obtained. Nowadays, customers are more informed on the choices of what they can be offered by vendors. Almost all the individuals that are able to afford flights also have smart phones or other technology gadgets through which they can access the internet. Therefore, clients can easily be able to see any changes on their phones or devices, without having to call the company, or visiting the customer relationship desk to make enquiries. Therefore, the company that is chosen to provide information technology services to Etihad Airways should be highly efficient to promote high quality customer service; which in turn increases customer satisfaction and retains their loyalty.

The Etihad Airways code of service and ethics is issued to be adhered to by all the potential vendors and current stakeholders. The strict requirements contribute to a convenient supply chain which is one of the company’s strategic goals to enable it compete effectively with other industry players. The vendors are expected to professional in the manner in which they conduct business; through submitting their RFP’s and RFI’s in a timely manner according to the law, and avoiding conflict of interest. If competitors win bids that a particular vendor had applied for, but he/ she/ their organization failed to get, then they are expected to accord respect to that organization (Etihad 2014).

The airline company is also very strict on adherence of rules that have been set on the interaction of the company’s potential suppliers with its vendors. Vendors that might know of a potential conflict of interest in relation to their employees are expected to volunteer the information on time so as to avoid unethical practices that would interfere with smooth running of business in the company.

Due to the usually good benefits that suppliers get in terms of money, there is high likelihood of experiencing corruption such as bribes. Etihad Airways has clear rules on why individuals who plan to take part in the company’s supply chain cannot be involved in giving bribes and “gifts” to the company’s employees or other stakeholders that can influence the supply chain process. Vendors are encouraged to ensure that any payments that they make or receive are done in a transparent manner. The company or suppliers that would be involved in unethical business practice would be embarrassed if such acts came to light. Individuals are encouraged to refrain from such engagements whose major attention would be embarrassment (Etihad 2014).

Vendors have to ensure they do not involved Etihad Airways supply business related entries in what might be false accounting entries. All the communication in relation to payments between vendors and suppliers should be channeled through the right systems such as the RFP and RFI.

Procurement procedures for suppliers at Etihad Airways



RFT                                                                 Procurement


Management of the procured inventory

Distribution of procured inventory (within departments)

Management of the different distribution channel

Payment of the different vendors

Ensuring customer service management of vendors and suppliers

Fig 2. Etihad Airways supply chain diagram

To be a supplier at Etihad Airways, an organization has to register with Etihad based on certain minimal requirements. It is only after one is a registered member that they can be able to log into the company’s portal and gain access to information on current tenders and proceed to apply for the available tenders. The company (Etihad) issues several documents such as the Request For Proposal (RFP), Request for Quotation (RFQ) and Request For Tender (RFT). The Request For Proposal (RFP) is a platform used by the organization to ask the potential suppliers to stimulate their bids on the needed products or services. The Request For Quotation (RFQ) is the document that Etihad Airways (or any other company) issues when it is in need of knowing the level of possibility it has in acquiring a certain product or service. A Request For Tender document that is used by the organization to find out the costs of the different items that it would get for the products and services that it needs for a particular initiative at the company.

The Etihad airways sourcing portal is highly advanced, and is only accessible to registered users. From the first day that an organization/ vendor does business with Etihad, they are assured that they are dealing with serious buyers whose terms and conditions are clearly stated, and are of international standards. This system of only allowing registered users is efficient in ensuring that only serious vendors would apply to be able to supply products and / or services to their clients. The interactive Etihad vendor online system allows serious suppliers to be able to view the current prospects that they can take advantage of, and past projects which can assist them in planning for their future supplies. For listings on current opportunities, vendors give information on parameters such as specific project being applied to, vendor organization, currency they are dealing with, the number of attachments, and the deadline for application and supplying the materials at hand (Cole 2013).

Operational strategies

Operation strategies are used as the guides to how a company should translate its corporate strategy into actual execution on the ground. Etihad’s operational strategies are based on the company’s goals and objectives; both short and long run. The operational strategies also take into account the company’s mission, vision, and the competition level in the industry so as to emerge on top among other industry players. Most big organizations have a corporate strategy though they rarely follow it. Etihad has been able to execute its corporate strategy in the way that it runs its operations strategy by ensuring a smooth networking between its different departments which are all treated as being essential and bringing significant and positive change to the company.

Linkage of different Etihad Airways departments using Sabre Airlines Solutions ensures that the supply and procurement department are aware of times when they have hit reorder levels and need to order or issue notification for tenders. This system is in addition to the usage levels that have been forecasted for use by the company. The company uses past records to determine how different products are used in the company so as to forecast when they should be replenished. The employees also give feedback on the quality of the supplied materials and products that they have used so as to know whether it is of the right quantity and any other compliments or challenges that the clients or staff members might be complaining about. The company places a lot of emphasis on quality at the best possible price (Dittman, 2012).

In order to ensure operational efficiency, the supply and procurement staff members consult the highly experienced and even new technical staff members such as engineers, pilots and aeronautical engineers when making purchases of technical items such as aircrafts and other technical airplane and airport related items. The purchase of such items is quite sensitive as it involves very expensive machinery and equipment, which has to be used for many years, and whose safety and technical usage, is of paramount importance to the company’s performance; in both the short and long run sessions.

Importance of efficient Etihad Airways Global supply chain

It is future oriented as it takes into account challenges that it has come across, and implements the solutions into the procurement and supply process that it plans to undertake in both the immediate and near future. The use of an updated information system ensures that the company can be able to track the usage of products and services, and can remedy cases of wastage. The information system program also ensures that there are high levels of responsibility and accountability since all the issued materials can be tracked to the different departments who can also track it to the different individuals or client destinations.

It is closely linked to the company’s strategy evaluation since it requires for timely checks on the current inventory so as to recognize the reorder levels and start the procurement process. The procurement and supply staff members also interact with their colleagues so that they acquire information on the quality and quantity of supplied products and services. If the current inventory is unsatisfactory on issues such as quality, then the company can decide to get a different vendor who would offer better quality for convenient prices. The supply chain department has to be able to justify the vendor that has been chosen using the different important parameters such as quality, delivery time and price. Only through offering transparent and fair means of choosing the vendors can the company be able to gain credibility as a legitimate organization through which competitive bids can be placed. All companies want the best vendors in the market to volunteer to offer their services through tender systems or other supply systems that would be advertised by the company.

It is simple to operate and understand with clear instructions availed on the company’s website. The documents that the vendors can fill in order to be able to supply Etihad Airways with products or services are available online with clear specifications on the information that the company should provide. There are also clear guidelines on what vendors should not do such as giving of gifts to Etihad Airways staff members. The vendors are also warned that they would minimize their chances of conducting business with the company if they made false accounting entries that would be seen as implicating Etihad Airways.  Such associations would place Etihad Airways in bad light, which is not the true nature of the company. Etihad Airways is ethical in the manner in which it acquires and uses its funds for business.

It can easily be used to balance the short term needs of the organization, to the long term goals. Etihad Airways global supply chain can be used by the managers of the organization to learn, and they can use the knowledge in making decisions that have a major impact on the performance of the company. The technical team members of the organization such as engineers and pilots are included in the decision making of procuring for technical equipment, machinery and planes. Such a move makes the professionals feel appreciated and they get to give their input on what affects their performance. Generally, when employees fell appreciated, their productivity improves; which has a positive impact on the performance of the company.

Road map ahead & Recommendations
Improvement of network through which Etihad supply chain works

The supply chain network is fundamental since it affects all other operations in the company such as sales and delivery of products to different departments that require the commodities. The software that is used by the company should work well with the software that is used in delivery. The software should not bring any form of confusion to the warehouse or sales manager especially where a high level of accountability is required. If the distribution network is not up to par, areas that need changes should be identified and made within the necessary timelines to maintain efficiency and avoid losses (Goetx & Budd, 2014: Jonnes, 2010).

The positive effect of an effective distribution network cannot be underestimated and its overall effect on organizational performance. A distribution strategy that is effective ensures that the procurement staff department and other important departments are aware of the essential parameters such as the expiry times of the available products. Good management of the supply chain and establishing a good blueprint of the function in a company ensures that the finances of a company are used effectively not just in the short run; but in the long run as well. Etihad Airways should enroll for procurement and supply award competition so that all the professionals involved such as warehouse supervisors and production managers initiate best practices that would be recognized internationally. Etihad Airways corporate management should also offer incentives and bonuses to supervisors and key employees whose efforts directly lead to earning of international recognition in supply chain management (Kropff, 2009).

The supply management payment options that are adopted by the company should also be clear on parameters such as when payments are made; the best available payment options and the expenses if any that should be incurred by the vendors. This would give a clear picture of what the company is spending on the supply chain, and areas that can be improved on so as to cut back on costs (Jones, 2010).


The paper has successfully looked at Etihad Airways global supply chain and business model which have contributed to propelling the organization to be one of the industry players in the Middle Eastern region. Etihad Airways was established in 2003, yet ten years later, it has emerged third in position in terms of performance in the airline industry in the Middle East. Etihad Airways has been able to execute its corporate strategy in an efficient manner to a workable operational strategy especially in the supply chain and procurement department. Etihad has managed to grow in a short span of years owing to its collaboration with different airlines from different countries and regions. The airlines have given Etihad Airways a means through which it can venture into business in new regions. Without the collaborations with other airlines, Etihad would have had to invest a lot of money and resources so as to get new clients and networks. The relationships are especially important for the procurement and supply chain since Etihad can take advantage of available economies of scale to cut down of costs since it takes up products for the various subsidiary airlines, and gets service contracts at lower rates since the volume needed is high. Cabin crew, pilots and other staff members can also be trained under one program at the Abu Dhabi headquarters of the company.

The Etihad Airways Company has established strict codes of conduct and ethics that all vendors should abide with if they are to continue doing business with the company. This rules and guidelines offer maximum respect requirements and guide vendors as to what is expected of them. The vendors are also required to log into the company’s website where they are supposed to get a requirement of filling the necessary documents depending on current needs of the organization. The interactive system is efficient since it does not require potential vendors to make endless trips back and forth to the company. They can instead make enquiries and have their queries attended to within the shortest time possible.

Etihad Airways has used its supply chain effectively to promote business growth which should lead to even better performance in future. Maximizing on the potential that is offered by a supply chain is one of the best strong points for international companies especially if they want to stay ahead of their competitors in the industry


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