Travelers have reason to smile as Etihad Airlines and Air Arabia announced in October that they have signed an agreement to launch a low cost carrier – Air Arabia Abu Dhabi. This will be the first low-cost carrier based out of the UAE capital. The joint venture will serve as a budget airline with Abu Dhabi International Airport as its base.
The Board of directs will have nominated members. Each airline will recommend its members. The members will drive the company’s mandate. It will be independent from its parent companies.
Despite being based in Sharja, Air Arabia has two other hubs including Egypt and Morocco; this will not serve as a new hub for the airline. Etihad Airways will continue its operations as usual from its respective hubs.
The carrier will complement Etihad’s services from Abu Dhabi. It will cater to the growing low-cost travel market segment in UAE.
Etihad Aviation Group CEO Tony Douglas, “Abu Dhabi is a thriving cultural hub with a clear economic vision built on sustainability and diversification. By partnering with Air Arabia and launching Abu Dhabi’s first low-cost carrier, we are serving this long-term vision. We look forward to the launch of the new airline in due course.”
UAE has 4 local carriers namely Etihad, Emirates, FlyDubai and Air Arabia. The latter two are low cost airlines. In 2018, low cost carriers accounted for 17% of seat capacity to and from the Middle East. The Sharja based airline is meant to supplement Etihad’s existing services and help in the Etihad transformation programme.
In spite of new measures to cut costs, doing away with certain routes and appointment of a new chief executive officer in 2017, the airline does not expect to make any profits until 2023.
The current deal between Etihad and Air Arabia is reminiscent of the previous codeshare deals and schedule alignment between Emirates and Fly Dubai.