The choice for passengers wanting to fly to and from the Gulf is set to increase, with at least two new carriers due to be set up in the UAE. Rumors of a third new carrier in Oman have, however, been refuted.
The recent flurry of launches began on October 16, when Etihad Aviation Group announced a deal with Air Arabia to create a new low-cost carrier to be named Air Arabia Abu Dhabi. They said the new airline will be run as an independent joint venture but will be designed to complement rather than compete with Etihad’s services from Abu Dhabi International Airport.
It will also act as a rival to other low-cost carriers in the region, particularly FlyDubai, which has a close relationship with Emirates – the UAE’s other main full-service airline.
An Emirates Airline A380 seen flying over Greece while traveling from Dubai International Airport to … [+]
For now it remains unclear to what extent the new carrier will dovetail with Etihad’s schedules and network. Tony Douglas, chief executive of Etihad Aviation Group, said the new airline “supports our transformation programme” and would be “supplementing our own services”. No launch date has been announced for the new airline, with Douglas saying it would start flying “in due course.”
Since then, there have also been reports that Indian low-cost carrier SpiceJet has signed an agreement with Ras al Khaimah (RAK) International airport, which could see it launch a new airline from the emirate in the future. The first step in the deal will be to use RAK as a hub for SpiceJet’s own services, starting in December, but India’s second largest carrier also plans to apply for a license to operate a new airline from there.
Between those two announcements, there was a report from Reuters that Oman Air was considering launching a new domestic airline, to be called Oman Link. However, Oman Aviation Group issued a swift denial, saying it was instead “developing a promotional and investment programme called Oman Link, which aims to promote and connect regional airports in the Sultanate.”
Crowded skies
Even so, there does appear to be some fresh momentum in the market, which may cause trouble for existing players who are already finding the going harder than it used to be.
The International Air Transport Association (IATA), an industry trade body, says the region’s carriers saw a 2.9% increase in traffic in August, which was better than July but still a long way off the double-digit growth trend of recent years. “Falling business confidence in parts of the region, combined with some key airlines going through a process of structural change and geopolitical tensions are all likely to be contributing factors,” it said in its most recent industry update, released earlier this month.
Smaller airlines in the region have been bucking the overall trend though, as has the budget sector. According to the partners behind Air Arabia Abu Dhabi, low-cost carriers accounted for 17% of seat capacity to and from the Middle East in 2018, compared to only 8% in 2009. The launch of the new no-frills airlines is likely to see that trend continue.
Air Arabia has itself built a profitable business since launching from Sharjah in 2003. It flies from two hubs in the UAE, in Sharjah and RAK, as well from bases in Egypt and Morocco. It made a profit of AED338 million ($92 million) in the first half of this year, up 47% on the same period last year.
In contrast, full-service airlines have been having a tougher time of it. Qatar Airways has been hit by a boycott by neighbouring countries and has been hemorrhaging money, while Etihad has been forced into a restructuring after its previous strategy of investing in struggling airlines around the world fell flat. Emirates, the largest carrier in the region, has also had to deal with some irritations, with delays in the delivery of Boeing 777 aircraft holding back its growth.
