Etihad Airways signs $700 million deal with IBM

On Tuesday 13 October Etihad signed a deal with IBM for services that include security and infrastructure. The agreement is signed for 10 years. IBM will deliver these services to enable Etihad Airways to transform the IT infrastructure to have a better service level for customers and employees.  One of the most important plan in this agreement is the usage of cloud-based platforms.

This is a good example of Porters view on IT: “Companies should not have internet as a strategy, but integrate it into their strategy.” The core value activities should not be affected by IT. This is the case at Etihad as their strategy is based on giving quality to customers. There is an alignment between Information Strategy and Business Strategy.

Why is Etihad so successful?

There are a few reasons that Etihad is successful. The most important reason is the partnerships they have made. Where there is usually an alliance (there are three major alliances: SkyTeam, Oneworld and Star Alliance), Etihad codeshares(same flight with different flightnumbers) with any airline that makes financial sense. As Etihad is not involved in an alliance, it is free to do this with any airline it wants. Etihad codeshares with AirBerlin (Oneworld) and Air France/KLM(SkyTeam) which are in the same region.

This is not the only thing Etihad does so well, they unique strategy they have is taking financial stakes in close partners. For example: Jet Airways, Aer Lingus, Air Seychelles, AirBerlin. According to Hogan (CEO Etihad) these equity investments allow partners to achieve a scale that has cost benefits, not just revenue benefits which are not found in codesharing partnerships or alliances.

Back to the deal, there are a lot of things that are being covered. For example the airline’s infrastructure will go to the cloud with a data centre in Abu Dhabi. Another part of the deal is a joint technology and innovation council which will take care of development of more personalized travel solutions.



One response to “Etihad Airways signs $700 million deal with IBM”

  1. gauravk2145 says :

    Great article and linkage with theory. I feel more and more airlines should focus on introducing better information strategy in their business strategy. The main reason why airlines from the middle east (eg. Etihad) succeed is because they are financially very strongly supported by their respective oil rich governments. This is one of the biggest reasons why the airlines from middle east are among the best performing in the world. If European airlines (eg. Lufthansa, KLM) have to compete with the middle eastern airlines, I think ‘the way they will use IT in their business strategy’ in future will be the deciding factor for their success.

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