Etihad partners up to launch new low-cost airline

East Hills, NY, USA - February 18, 2017: Etihad Airways A380 aircraft approaching JFK International Airport in New York City.

Etihad Aviation Group and Air Arabia have announced the signing of an agreement to launch ‘Air Arabia Abu Dhabi’ – the UAE capital’s first low-cost carrier.

Etihad and Air Arabia will establish an independent joint venture company that will operate as a low-cost passenger airline with its hub in Abu Dhabi International Airport.

The new carrier will complement Etihad Airways’ services from Abu Dhabi and will cater to the low-cost travel market segment in the region.

Air Arabia Abu Dhabi’s board of directors, consisting of members nominated by Etihad and Air Arabia, will steer the company’s independent strategy and business mandate.

Tony Douglas, group CEO at Etihad, said: “Abu Dhabi is a thriving cultural hub with a clear economic vision built on sustainability and diversification.

“With the emirates’ diverse attractions and hospitality offerings, travel and tourism play a vital role in the economic growth of the capital and the UAE. By partnering with Air Arabia and launching Abu Dhabi’s first low-cost carrier, we are serving this long-term vision.

“This exciting partnership supports our transformation program 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.”

Adel Al Ali, group CEO at Air Arabia, said: “Home to the first low-cost carrier in the MENA region, the UAE has developed over the years to become a world-leading travel and tourism hub.

“We are thrilled to partner with Etihad to establish Air Arabia Abu Dhabi that will further serve the growing low-cost travel segment locally and regionally, while capitalising on the expertise that Air Arabia and Etihad will be providing.

“This step demonstrates the strength of the UAE aviation sector and serves the vision driving its growth. We look forward to a successful partnership and the launch of the new carrier.”

Clin Foreman, deputy editor at GlobalData, believes the new joint venture will rekindle talk of Etihad merging with rival Emirates.

“In the past, the UAE’s aviation sector has grown with different emirates and companies replicating each other’s efforts,” he said.

“This approach was justified when the market was forecast to grow strongly. With the UAE airlines’ profits under pressure, that is no longer the case, and as a result, existing players are becoming more open to working together.

“The bigger question that arises from talk of cooperation and consolidation in the UAE’s aviation sector is a merger of Etihad Airways and Emirates.

“In September 2018, it was reported that talks between the two UAE airlines are at a preliminary stage, and the potential merger would involve Emirates acquiring the main business of Etihad while Etihad would retain its maintenance arm.

“Speculation about a merger has moved on little since, but with cooperation, rather than competition, looking set to dominate the agenda for UAE aviation in the years to come, it is a story that is unlikely to disappear.”

Travel Weekly has contacted both Etihad and Emirates for comment.

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