Energy prices are down, meaning that travel to the Gulf region is down. At the same time, there’s less of an appetite to absorb losses.
The region is now also starting to see increased competition from ultra low cost carriers. The CEO of Lufthansa, in announcing an enhanced partnership with Etihad, noted he sees “more rationalization among the Gulf Airlines” coming.
Amidst these challenges, there are reports out that the sheikhs who control these airlines are discussing a possible merger. (HT: David H.)
The ruling familes of the United Arab Emirates, which control the Emirates and Etihad airlines, have held talks about possibly merging the two airlines, Handelsblatt has learnt from several sources.
Whenever times are tough in the Gulf, there are rumors of Emirates and Etihad merging, for instance this Centre for Aviation report from 2008. And Tim Clark, CEO of Emirates, describes these new reports as “nonsense.”
And it’s difficult to see how two airlines with hubs a mere 75 minutes’ drive from each other can co-exist. Any merger would mean drawing down capacity at Abu Dhabi. It would mean the Al Nahyan family taking a buyout and scaling back ambitions for the capital of the UAE as global aviation hub.
Dubai, after all, is the stronger destination and home to Emirates. And Emirates is the more consistently profitable airline.