Etihad Airways To Create A Low Cost Carrier

Therapist: So what do we do when our financial situation is bad because of a lot of investiments in other airlines?
Etihad: Cut costs
Therapist: Yes
Etihad: By creating a low-cost airline
Therapist: NO!

There are lots of rumors about etihad merging with emirates...

There are lots of rumors about etihad merging with emirates...and that christoph mueller is going to join etihad as the advisor

I assume this low cost carrier would take over low yield routes so it wouldn't put pricing pressure on Etihad

Just a thought

Any news on AUH midfield terminal?
Flying via AUH this Christmas and not sure I will have a priority pass lounge in case the terminal is open by then....

Eagerly awaiting Sean M's take on this.

People might be looking at this from the wrong angle though. This may not be AUH-instigated as much as a SHJ initiative (as in, benefits Arabia just as much if not more).

There are actually 4 major aiports (AUH, DWC, DXB, SHJ) in a belt which takes about 1.5 hour by car (approx) from AUH to SHJ (without traffic) + another one (Bateen) which is smaller and located very close to AUH.

The utilisation rates of these airports are all over the place however. AUH (with Midfield) is multiple times the size it needs to be. DWC is frozen as of now (and while it's 10 times smaller than the initial masterplan, still has a lot of headroom in its current form). The other two though (DXB and SHJ) are bursting at their seams. SHJ is currently undergoing an expansion and DXB periodically re-arranges the deck chairs to make room.

Utilising the spare capacity at AUH and DWC and alleviating strain at DXB and SHJ has long been the goal. With SHJ now at capacity, Air Arabia needed to find space (which it absolutely cannot next door at DXB). AUH seems like the logical choice for their secondary hub. Etihad will most likely retreat from low yield short haul routes and cede them to Arabia (and continue to lower their costs on the higher yielding longer strategic routes). Same strategy as Emirates + FlyDubai. Air Arabia is infact looking for planes right now and I wouldn't be surprised if they simply acquired Etihad's narrowbody fleet.

Meanwhile Arabia can use AUH as the new connecting hub and use SHJ more for point to point traffic (for passengers originating or disembarking in Dubai or Sharjah).

AUH tourism growth is still pretty healthy and hasn't levelled off as much as in Dubai. If and when Visa on arrival is implemented for India, it will bring a deluge of business to all routes in and out of UAE and is a low hanging fruit they haven't picked yet. So there is a lot of potential growth in traffic that needs to go somewhere (and absolutely can't be accomodated in DXB or SHJ). AUH especially has shown strong tourism growth in recent years and Etihad may not be willing or able to bring in lower yielding pax from tier 2 destinations. So it's strategically important for AUH that someone else can.

Also, recently Wizz Air announced direct DXB flights starting this month. This opens up Europe daily from as low as 100 USD *Return* from UAE and London from 250 USD return. These aren't promo fares and is a game changer for the market. As a long thin route operated by a European LCC, it would be interesting to watch if this will be sustainable in the long term when no such route has been in the past (though I suspect it will be a success, even if they double the prices!).

Etihad execs huddled in board room: "Let's see, how do we top our previous outcomes from our last attempts with Air Berlin, Alitalia, Jet Airways, and a couple others that we already forgot about?"

Cleaning lady dumping the trash bins: "Hey, my union is looking to expand its membership... you can start a low cost airline that we can help clean the planes!"

Etihad execs: "Brilliant! What can go wrong?!"

I believe Etihad's expertise in this venture is in having a lot of under utilized/ unutilized aircraft.

This seems more like Etihad covering their flank. If they don't create a low cost carrier in Abu Dhabi. Someone else will come in and takeover the market. Therefore this makes sense from a market share point of view more than anything else.

There is a need for a low cost airline to fly from EU to Asia and maybe Ethihad is the airline to do it . They have planes , routes , slots and ''some experience ''.
I hope they start flying Cyprus/Abu Dhabi/Asia again.

I'm glad to see that Lucky has figured it all out. Hint: The exact opposite will play out.