Last year there was a report that Emirates and Etihad were considering merging. Then in the fall Emirates CEO Tim Clark said he was open to working with Etihad, and offered a non-denial denial about a likely merger. Then in January we got an agreement signed by the CEOs of both airlines to collaborate on security information and for Emirates to provide training programs to Etihad.
Etihad’s CEO says they plan to remain a global player rather than shrinking to become a premium boutique airline, even as he spurs further speculation about a merger or other close cooperation deal with UAE rival Emirates which is based just over an hour away.
[Etihad CEO Tony] Douglas held out the prospect of closer cooperation with one-time rival Emirates, touted for a possible merger since Etihad fell on hard times. “I do admire what I observe from our great friends in Dubai,” he said. “We will continue to consider where appropriate the things that we could do together.”
The CEO of Emirates generally offers non-denial denials about merger possibilities, citing anti-trust laws which are hard to imagine stopping a deal between airlines backed by the ruling families of Dubai and of Abu Dhabi.
Emirates faces some rocky roads. Etihad has been hemorrhaging largely from investments in basket case airlines air berlin and Alitalia that they walked away from. The CEO who was the architect of this strategy was let go. Seat capacity out of Abu Dhabi is down about 10% year-over-year.
Meanwhile the region is now also starting to see increased competition from ultra low cost carriers. Emirates is adapting by working more closely with government-owned flyDubai.
While speculation of a merger has been a parlor game dating back a decade, it’s not clear that it makes any sense for any airline to operate major hubs a mere hour’s drive away from each other. Bringing the two airlines together would almost certainly mean a de-emphasizing of Abu Dhabi.
Indeed it was the de-emphasizing of Gulf Air’s Abu Dhabi hub in the first place that led the Al Nahyans to start their own airline in the first place.
Yet Dubai’s new Al Maktoum International Airport is even closer to Abu Dhabi and could make a single hub more palatable.
Doing something makes sense, it’s just a question of whether the two ruling families can get together on what something looks like — that can be made to look like something other than failure for the Al Nahyans after so much time and investment.