Etihad Aviation Group, the owner of Abu Dhabi’s Etihad Airways, and Sharjah-based low-cost carrier Air Arabia have signed of an agreement to launch Abu Dhabi’s first low-cost airline.
The Deputy Editor at GlobalData, Colin Foreman, offered his view on the matter and its potential implications:
“This decision is the latest sign of growing cooperation between the UAE’s airlines. The new carrier, Air Arabia Abu Dhabi, complements Etihad Airways’ services and will cater to the growing low-cost travel market segment in the region.
“In the past, the UAE’s aviation sector has grown with different emirates and companies replicating each other’s efforts. 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.”
