Etihad Draws Closer To Gulf Air, In Sign Of Warming Abu Dhabi-Bahrain Ties

Two struggling carriers in the Gulf are moving closer together, with Abu Dhabi-based Etihad Airways and Bahrain’s national carrier Gulf Air saying they will coordinate their schedules and may also cooperate in areas such as training and maintenance.

The airlines announced today they had signed a strategic commercial cooperation agreement, building on a previous memorandum of understanding from 2018. It also represents a further sign of the fast-improving relationship between Bahrain and the UAE – a link which appears to be blossoming at the expense of Bahrain-Saudi ties.

The extent of future coordination between Gulf Air and Etihad is not entirely clear, but the airlines say they are going to take “a phased approach to closer collaboration.” The first step will see an expansion of a 2019 codeshare agreement to cover an additional 30 destinations. That should be in place by June, although they have not said what routes will be covered.

They also plan to optimise their operations on the Bahrain-Abu Dhabi route, and improve network connectivity at their respective hubs. There will be reciprocal lounge access for premium cabin customers and the two airlines say they are going to take a closer look at the potential to cooperate in areas such as pilot and crew training, cargo services and aircraft maintenance and repair.

The UAE has already made a large investment in Bahrain’s aviation sector, with the Abu Dhabi Fund for Development providing $1 billion to build a new passenger terminal which opened late last month.

Struggling businesses

Gulf Air and Etihad are, like their peers around the world, struggling amid a sharp downturn in passenger numbers as a result of the Covid-19 pandemic.

However, even before that crisis emerged Etihad was scaling back its operations, following a failed strategy of investing in other smaller carriers. It has reportedly received at least $22 billion in government support since starting up in 2003.

There are no recent financial results for Gulf Air but its owner, the Mumtalakat sovereign wealth fund, said in its 2017 annual report the airline lost $248m that year, which followed at least three previous years of losses. According to Mumtalakat’s own financial statements, Gulf Air received BD30 million ($80 million) in government assistance in 2018 and a further BD20 million ($53 million) in 2019, suggesting it was still loss-making in those years.

All this comes amid growing signs of the warming ties between the Bahrain and Abu Dhabi governments. Bahrain’s King Hamad bin Isa Al-Khalifa is currently in the Al-Dhafra region of Abu Dhabi on what his country’s official news agency described as a private visit.

Last year, Bahrain followed the UAE’s lead in formally recognising Israel – a move that has yet to be taken by Saudi Arabia, the country Bahrain was previously seen as most closely aligned to in the region.

Bahrain also appears to have been a reluctant signatory to an agreement signed in Saudi Arabia in January, which ended a three-and-a-half-year boycott of Qatar by Bahrain, Egypt, Saudi Arabia and the UAE. Since then, there have been regular complaints from Bahrain and Qatar about each other’s behaviour. The UAE has also been viewed by many analysts as less enthusiastic than Saudi Arabia about burying its differences with Qatar.