Etihad & China Eastern Launching Intriguing Joint Venture

Etihad & China Eastern Launching Intriguing Joint Venture

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Etihad Airways and China Eastern Airlines have just announced a comprehensive new partnership, which I think will be pretty successful.

Details of the new Etihad & China Eastern partnership

Etihad and China Eastern intend to launch a joint venture, which is the first such partnership that we’ve seen between a Middle Eastern and Chinese airline.

For those not familiar, a joint venture is the closest level of cooperation you’ll find between airlines, short of an outright merger. This isn’t just a loyalty collaboration or codeshare agreement, but rather it allows airlines to coordinate routes, schedules, and more.

With this joint venture, Etihad and China Eastern plan to jointly develop and grow routes between the United Arab Emirates and China, to create a stronger combined network. Currently, China Eastern doesn’t fly to Abu Dhabi (AUH), while Etihad’s only destinations in China include Beijing (PKX) and Shanghai (PVG).

The plan is for the new joint venture to launch in early 2025, after securing all regulatory clearances. Furthermore, both airlines plan to introduce frequent flyer program reciprocity in the fourth quarter of 2024, allowing passengers to earn and redeem points across airlines.

My expectation for this partnership would be that:

  • Etihad will increase its service from Abu Dhabi to China, with China Eastern providing connectivity
  • China Eastern will add considerable service to Abu Dhabi from several cities in China, to create one-stop routings between China and the Middle East, Africa, and beyond
Expect China Eastern to fly to Abu Dhabi

Perhaps the most interesting quote here comes from Mohamed Ali Al Shorafa, Chairman of Etihad Aviation Group, who suggests this is more about close cooperation between the two countries than anything else:

“This Joint Venture signifies a deep commitment to strengthening the bonds between the UAE and China, while fostering deeper cultural and economic ties. We look forward to welcoming a greater number of Chinese tourists to explore the rich cultural heritage and vibrant experiences that the UAE has to offer. This partnership is more than the expansion of routes; it is about creating lasting and meaningful connections between our two nations which will stand for decades to come.”

The Etihad folks look more excited, no?

My take on this new partnership

If you ask me, this new partnership makes a lot of sense, especially from Etihad’s perspective. Etihad is smaller than its two biggest Gulf rivals (though hopes to grow), so a strategic joint ventures make a lot of sense. This is Etihad’s best way to expand its network in China, and on top of that, the airline could be getting quite a bit of extra traffic throughout its regional network, as China Eastern adds service to Abu Dhabi.

Expect China Eastern to fly to Abu Dhabi

Etihad’s current management team is doing a great job with growing the airline sustainably. We haven’t seen the airline launch many new partnerships in Asia, so this is very cool to see.

Now, I’m not saying this is going to happen, but I can’t help but feel like Etihad is inching ever-so-slightly closer to joining SkyTeam and/or partnering with Delta. Admittedly airlines can have strategic partnerships outside of alliances, but there’s definitely a pattern here.

For example, just recently, we saw Etihad expand its partnership with Air France-KLM, in a pretty significant way. Now we’re seeing an even closer partnership with China Eastern. One can’t help but notice the general move in the direction of SkyTeam airlines, and wonder if a Delta partnership could be imminent.

Keep in mind that Qatar Airways is in the oneworld alliance and has a strategic partnership with American (even beyond mutually being in the same alliance), while United and Emirates have a close partnership.

Yes, Etihad and American have a partnership as well, but it’s not nearly as close as American’s partnership with Qatar Airways:

  • You’d think Delta would want more connectivity in the Middle East and India, and currently Delta’s only partner in the region is Saudia
  • Etihad’s US route network is actually very complementary to Delta’s network, especially with Etihad flying to Boston (BOS) and New York (JFK), where Etihad currently largely relies on JetBlue for connectivity

The only challenge here is that Delta often only launches partnerships as part of a joint venture, or if it can get an equity stake, and I’m not sure an investment in Etihad makes a whole lot of sense.

So while I wouldn’t bet money on Etihad joining SkyTeam or partnering with Delta, I do think it’s increasingly likely as time goes on. That’s especially true with the continued closure of Russian airspace to US airlines, which limits the ability to serve India.

Could Etihad join SkyTeam? We’ll see…

Bottom line

Etihad and China Eastern plan to launch a joint venture, to increase service between the United Arab Emirates and China. We’ll see the two airlines coordinate routes and schedules, so I think it’s a given that China Eastern will start flying to Abu Dhabi, and that Etihad will expand service to China.

This seems like a sensible new partnership, especially for Etihad, as it will allow the airline to expand service to one of the biggest aviation markets in the world.

What do you make of the new Etihad and China Eastern joint venture? And do you think we could see Etihad eventually join SkyTeam and/or partner with Delta?

Conversations (20)
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  1. JustinB Diamond

    DL partnership / JV would be huge, especially if EY would fly to one of LAX/SEA/SLC. I'd happily go 'the long way' to Singapore through AUH to avoid KE.

    1. ConcordeBoy Diamond

      Not a chance in hell that EY would fly to SLC, lol.

      But by many accounts, a return to LAX is imminent.

  2. Levi Diamond

    I've posted this before, but I think it's more likely than not that we see El Al, Etihad, and Riyadh Air join SkyTeam as a package deal tying in with the Abraham Accords.

  3. SomeKindofEasyMark New Member

    I have a bias, but it wouldn’t surprise me to see them launch some sort of deal as well as a flight to Detroit. Turkish recently launched IST DTW, and with the large Middle Eastern population in the Detroit area I have heard the route has been very successful. if another Middle Eastern carrier wants to get in on that action, it might make sense to work together with Delta.

  4. Throwawayname Guest

    The focus seems to be on close cooperation between AFKL and Etihad - if EY are exploring Skyteam membership, there's no need for them to develop a special relationship with DL any more than developing a special relationship with Aerolineas Argentinas or GA.

    1. ConcordeBoy Diamond

      Um, of course there's a reason: it starts with "M-" and ends with "-oney."

      A "special relationship" with DL would entail an immunized J/V, which is far and away more lucrative for either carrier, than would be a simple FFP reciprocation as required for SkyTeam.

    2. Throwawayname Guest

      I don't doubt any of that, my point is that forming a special relationship with DL, or any other member airline, is in no way a prerequisite for EY joining the alliance.

      They can talk about such a relationship in parallel with preparing for membership and conclude the bilateral talks before or after joining Skyteam - or indeed freeze them for a period of time while they are busy aligning their policies, IT etc...

      I don't doubt any of that, my point is that forming a special relationship with DL, or any other member airline, is in no way a prerequisite for EY joining the alliance.

      They can talk about such a relationship in parallel with preparing for membership and conclude the bilateral talks before or after joining Skyteam - or indeed freeze them for a period of time while they are busy aligning their policies, IT etc with those of the alliance with a view of simplifying negotiations further down the line.

    3. ConcordeBoy Diamond

      Depends on the airline. You're forgetting that founding members can veto (just as easily as sponsor) a new member.

      Not saying that DL's vindictive enough to do that, if others attempt to move forward before its assessed its own net/benefit of a major new entrant......... but not saying that they aren't, either.

  5. D3kingg Guest

    China is on the verge of economic collapse due to the real estate bubble. Unless the Chinese govt will allow mainland China to join HK and allow bitcoin ETFs into the Shenzhen and Shanghai markets as well they are in for major hurt that will impact the global supply chain.

  6. ConcordeBoy Diamond

    Definitely seems like EY is sliding closer to SkyTeam, but as mentioned, the elephant in the room seems to be the radio-silence on any talks with DL.

    Though there is one thing:

    and currently Delta’s only partner in the region is Saudia

    Technically, DL also has a partnership with MEA, but since neither connects to the other's network, that partnership is about as useful as scuba gear in a desert. Then again, sorta...

    Definitely seems like EY is sliding closer to SkyTeam, but as mentioned, the elephant in the room seems to be the radio-silence on any talks with DL.

    Though there is one thing:

    and currently Delta’s only partner in the region is Saudia

    Technically, DL also has a partnership with MEA, but since neither connects to the other's network, that partnership is about as useful as scuba gear in a desert. Then again, sorta the same for Saudia.

    Getting EY, and especially a strategic partnership with EY, would be an incredible boon for DL. And really, a huge catch-up move, compared to what UA and AA have in the region.

  7. Sean M. Diamond

    I just find it interesting to see who is pictured signing the agreement on behalf of Etihad

    Espcially after the fascinating comment section here last week!

    1. Eskimo Guest

      So either it's Ivander or this never happened?

    2. AUH Guest

      Arik basically admitted last week in one of our town halls that he is Ivander (though no one doubted it), and he then encouraged us to ‘take risks’ and ‘not care what the world thinks’.

  8. Euro Gold

    It's like Etihad is slowly sliding to sit closer to the Skyteam partner airlines but to actually come out and say "Please can we join the alliance" is still up in the air.

    As for this JV, in addition to budding up to a Skyteam partner, wouldn't it be a (albeit belated) response to the Emirates/China Southern partnership plus I think Qatar has an equity stake in Cathay Pacific?

  9. Andy Guest

    Also, Etihad has an agreement of sorts with Saudia for earning miles on flights operated by the other carrier, so it makes sense for Etihad to join Skyteam. At the same time, Etihad might value its independence like Emirates, so might decide against joining any alliance

  10. Tim Dunn Diamond

    Ben is correct that Etihad has done a great job of building a sustainable and growing business after some disastrous investments.
    Given the limited amount of service to China from around the world compared to pre-covid, these types of JVs make sense if there really is or can be an equal handling.

    As for the SkyTeam expectations, there is likely reason to believe that is accurate as well. DL might want to invest in...

    Ben is correct that Etihad has done a great job of building a sustainable and growing business after some disastrous investments.
    Given the limited amount of service to China from around the world compared to pre-covid, these types of JVs make sense if there really is or can be an equal handling.

    As for the SkyTeam expectations, there is likely reason to believe that is accurate as well. DL might want to invest in an Etihad IPO but SK is coming into the transatlantic JV via a AF/KL investment; DL is invested in AF/KL.

    DL is not likely to seek a JV with Etihad until they serve AUH on their own metal which is very possible in the coming years as DL takes delivery of dozens of A350s and convers the ex-Latam A350s, creating even more long-haul aircraft.

    It is very likely that DL will start some India service on its own metal; given that SQ overflies India on its way from NYC to SIN w/ "less capable" A350s and fewer seats, the A350 is certainly capable of US to India service even w/ Russian airspace restrictions which SQ respects.

    EY is increasingly being run as a very good business. Doing things that are "smarter" than other ME carriers is certain to yield fruit

  11. Biglaw V10 Partner Guest

    Lol at the caption about Etihad folks looking more excited. The Chinese are like New Yorkers. They don’t smile. This habit is off putting to people from other cultures where smiling is routine to indicate that you’re okay and not a weirdo.

    1. DXBishot Guest

      EY and DL had an informal meeting at IATA in DXB last week (I’ll add that DL did ask for Arik De not to be present in those conversations). Apparently the conversation went well with EY touting CBP pre-clearance in AUH that could drive better connectivity in JFK/BOS and ATL. Interestingly VA and DL also met ex-parte (without VA’s big brother UA).

    2. Arik is a bully Guest

      Amusing on the Arik front. It probably helped EY’s negotiating team as they was lower risk of his superficial knowledge being exposed.

  12. AnishReddi Gold

    There is talk of Etihad IPO and Etihad is working towards it, that could open the door Delta buying a stake.

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Sean M. Diamond

I just find it interesting to see who is pictured signing the agreement on behalf of Etihad Espcially after the fascinating comment section here last week!

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DXBishot Guest

EY and DL had an informal meeting at IATA in DXB last week (I’ll add that DL did ask for Arik De not to be present in those conversations). Apparently the conversation went well with EY touting CBP pre-clearance in AUH that could drive better connectivity in JFK/BOS and ATL. Interestingly VA and DL also met ex-parte (without VA’s big brother UA).

1
Arik is a bully Guest

Amusing on the Arik front. It probably helped EY’s negotiating team as they was lower risk of his superficial knowledge being exposed.

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