Etihad Airways and Air Arabia announced a new partnership on Wednesday to create an airline called Air Arabia Abu Dhabi – the city’s first low-cost carrier. Air Arabia is a privately owned low-cost airline which is based in Sharjah and already operates out of several key hubs across the MENA region. The only other homegrown low-cost airline in the UAE is flydubai which is owned by the Dubai government.
The two airlines will form an independent joint venture company to run the new entity. It’s believed that the Air Arabia brand is being used because it is well known throughout the region and is closely associated with low-cost air travel. It’s understood that Air Arabia was previously blocked from entering the Abu Dhabi market to ensure Etihad’s success.
“This exciting partnership supports our transformation programme and will offer our guests a new option for low-cost travel to and from Abu Dhabi, supplementing our own services. We look forward to the launch of the new airline in due course,” explained Tony Douglas, the chief executive of Etihad Airways.
Douglas has been pursuing a bold transformation plan for the multi-billion dollar loss-making national airline of the UAE. The airline recently announced that it hopes to start turning a profit in 2023. The five-year transformation programme implemented by Douglas has seen the carrier take a number of tough decisions including drastic cost reductions across nearly every area of the business.
Today’s announcement would appear to be a way to mimic the same partnership that was formed between Emirates and flydubai in late 2017. Emirates has said the partnership has been a huge success and both airlines are codesharing on an increasing number of flights.
The new airline has yet to be given an official launch date, although we do know that it will be based in Abu Dhabi and that its board members will be nominated by both Etihad and Air Arabia. Etihad is also at pains to stress that the new carrier will definitely be adopting the low-cost airline business model – although, given the likes of flydubai, that can look very different in the UAE compared to say Europe or South East Asia.
According to Etihad’s own figures, this decision is a way to capitalise on the growing low-cost market in the UAE and across the region. Where this puts rumours of a possible Etihad-Emirates tie-up, however, is anyone’s guess. The two carriers have previously dismissed talk of a merger but have been partnering on more and more back-office functions.