Dubai: Who can even think of launching a new airline in the current economic climate? Well, Abu Dhabi’s Etihad and Sharjah’s Air Arabia just proved that they did.
In a move rated as audacious by many in the industry, the two carriers confirmed they will launch a low-cost carrier, with the hub being in Abu Dhabi and using the established branding of ‘Air Arabia’ to reach for the skies. And they can do so without much of the time consuming processes new carriers have to go through.
“The launch of “Air Arabia Abu Dhabi” falls well short of a full-scale merger, but there are so many cost and time efficiencies that can be generated,” said a consultant with an M&A advisory firm in London. “Etihad could assign even more focus on those routes that serve its status as a premium airline from the Middle East.
“It also has landing rights to several destinations where a budget/low-cost service could have served it better in the past. Now, it has the right sort vehicle to make it happen. Premium and low-cost services require two different mindsets.”
It is in this context that the word “re-purpose” is being thrown about, with Etihad in a position to place some of its existing fleet or new jet orders at the service of the new airline. “Put simply, there’s no need to reinvent the wheel - what they already have can be deployed at Air Arabia Abu Dhabi and at much less cost than is the case for most new airlines,” the source added.
With the announcement of Air Arabia Abu Dhabi, Etihad could also have come up with the best alternative to pursue possibilities into India. And not have to be perpetually distracted by whatever is happening at Jet Airways, the grounded Indian carrier in which the Abu Dhabi entity has a 24 per cent stake. (Jet’s future is still clouded, with only one bidder - Synergy Group - taking formal steps to acquire it, base don media reports last month.) Jet had been operating services into the UAE, and “The loss of capacity following its folding up led to a significant increase in prices of international flight tickets from India,” said Ranvir Nayar, Managing Editor at Paris-based Media India Group. “The Gulf accounted for more than half of all the international flights operated by Jet.
“As ticket prices had already begun to harden in the Gulf-India sector, any further consolidation would have led to a sharp increase in the prices, hurting consumers, especially those Indians who earn their livelihood in the Gulf.
“The arrival of a new low-cost airline to focus on the Gulf-India sector is a development that would be welcomed by practically all consumers… as well as gain support of the Indian government.”
17/10/19 Manoj Nair/Gulf News
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In a move rated as audacious by many in the industry, the two carriers confirmed they will launch a low-cost carrier, with the hub being in Abu Dhabi and using the established branding of ‘Air Arabia’ to reach for the skies. And they can do so without much of the time consuming processes new carriers have to go through.
“The launch of “Air Arabia Abu Dhabi” falls well short of a full-scale merger, but there are so many cost and time efficiencies that can be generated,” said a consultant with an M&A advisory firm in London. “Etihad could assign even more focus on those routes that serve its status as a premium airline from the Middle East.
“It also has landing rights to several destinations where a budget/low-cost service could have served it better in the past. Now, it has the right sort vehicle to make it happen. Premium and low-cost services require two different mindsets.”
It is in this context that the word “re-purpose” is being thrown about, with Etihad in a position to place some of its existing fleet or new jet orders at the service of the new airline. “Put simply, there’s no need to reinvent the wheel - what they already have can be deployed at Air Arabia Abu Dhabi and at much less cost than is the case for most new airlines,” the source added.
With the announcement of Air Arabia Abu Dhabi, Etihad could also have come up with the best alternative to pursue possibilities into India. And not have to be perpetually distracted by whatever is happening at Jet Airways, the grounded Indian carrier in which the Abu Dhabi entity has a 24 per cent stake. (Jet’s future is still clouded, with only one bidder - Synergy Group - taking formal steps to acquire it, base don media reports last month.) Jet had been operating services into the UAE, and “The loss of capacity following its folding up led to a significant increase in prices of international flight tickets from India,” said Ranvir Nayar, Managing Editor at Paris-based Media India Group. “The Gulf accounted for more than half of all the international flights operated by Jet.
“As ticket prices had already begun to harden in the Gulf-India sector, any further consolidation would have led to a sharp increase in the prices, hurting consumers, especially those Indians who earn their livelihood in the Gulf.
“The arrival of a new low-cost airline to focus on the Gulf-India sector is a development that would be welcomed by practically all consumers… as well as gain support of the Indian government.”
17/10/19 Manoj Nair/Gulf News
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