Two Gulf Carriers Working to Link Up With Star Alliance

Etihad once had ambitions of being its own alliance. Etihad Airways Partners included troubled carriers Alitalia and airberlin, and they’ve walked away from billions in losses in those two airlines. Jet Airways may even fall under the ‘troubled’ banner now, and Etihad still owns a 24% stake but hasn’t been nearly as involved in the running of the carrier.

As the Al Nahyan tired of absorbing losses, the airlines’ leadership was changed and given a mandate to scale back and cut costs. It’s long seemed like their best bet would be an Emirates merger but though the carriers have worked more closely with each other over the past year a tie-up could be hard to do in a face-saving way for the two emirates. The new Dubai airport, closer to Abu Dhabi, has long seemed like a good solution to this.

Etihad has talked up a strategy of linking up with several Star Alliance airlines saying that since they are no longer ‘their own alliance’ this isn’t in conflict with Star rules. This seemed like an odd statement since Etihad has already been codesharing with Aegean, ANA, Air Canada, Asiana, Brussels Airlines, Lufthansa, SAS, SWISS, TAP Air Portugal, and Turkish.

Noentheless closer bilateral ties with airlines across the Star Alliance is an officially stated objective of Etihad’s CEO< fueling speculation that a natural extension of these ties could be full alliance membership. One hurdle could be objections from another troubled carrier, Star Alliance member Air India. Etihad isn't the only Gulf carrier pursuing closer ties with the Star Alliance though. Gulf Air says this is their objective as well.

Last month the CEO of the Bahrain-based airline laid out plans involving closer partnerships to bring the carrier to profitability. So far that’s meant codesharing with Star Alliance members Aegean Airlines and Turkish Airlines, and this strategy is expected to grow.

Etihad has already been working closely with Lufthansa, which gives them a bigger leg up in negotiations for full membership if they choose to pursue that route, despite past frictions with European and US airlines. Gulf Air on the other hand comes with less baggage in terms of historical relationships, and indeed Etihad was born out of Gulf pulling out of its Abu Dhabi hub.

It’s unlikely that both could join, though certainly geographically-close airlines have been part of Star (Aegean and Turkish, THAI and Singapore, and in the past United and US Airways).

While not strictly brand new news, these rumors have been swirling for a month, it’s interesting to watch Star carriers cement themselves in the region giving them lift in and out of India, Pakistan, and the vicinity (beyond what they already get from basket case Air India). Delta has a new close partnership with Jet Airways. And American remains out in the cold having lost their Gulf Air partnership and having intentionally severed ties with Qatar and Etihad (more or less falling into Delta’s trap going along with the political attack on Gulf carriers, Delta came out smelling like a rose while American lost its Jet linkup).

The world’s largest carrier, American, slipped behind Delta last quarter in terms of revenue and is on the verge of losing its title — while Delta continues to build its business through investments in airlines in faster-growth areas of the world compared to the mature US market, while Star continues its expansion as well.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Fantastic. Yet another reason to dump Qatar and their recalcitrance in ripping off their Not So Privileged FF’s when on May 27, without warning, without notice, they ripped the heart out of the Not So Privilege Club.

    With EY and GF potentially joining Star Alliance, who would fly QR with their lyes, their stealing, with their CEO. And get this, because they are going broke, out the back door, QR charge even their most loyal Platinums a sector charge for Award tickets. Mongrels.

    Who knows, unless the Big Sheik Mohammed whatever throws a few more billion at them, QR might even go out of business.

    Bring it on Star Alliance.

  2. And now Oman Air has just announced code share agreements with the Lufthansa Group airlines.
    It’s all getting tighter.

  3. I’m confused by the “working closer” language. Is this heading toward a situation where you’d be able to book an Etihad award with (for example) United miles in addition to status quo of using AAdvantage miles (essentially what Aer Lingus has)?

  4. “john says:
    August 8, 2018 at 7:25 am
    The strength of Star Alliance makes flying United tempting.”

    as long as you can avoid flying the extremely substandard international United business class (“Real” polaris excepted)

  5. A state-run airlines of the UAE cozying up to a Canadian Airlines via StarAlliance. What will MBS say to that?

  6. Gary, your analysis on Etihad’s viability as a standalone carrier and whether it makes sense to merge with Emirates is far too simplistic. Yes, the airline loses money, and yes the Abu Dhabi government would like it to be profitable and certainly wishes some of the past investments were never made. But you can’t look at the airline in a vacuum. While it may lose money, it employs tens of thousands of people in Abu Dhabi, generates billions of dollars of economic activity for Abu Dhabi, generates billions in tourism dollars that almost certainly would be lost if Abu Dhabi did not have a major international carrier, and provides critical other support for the Abu Dhabi economy. Given that Etihad is owned by the Abu Dhabi government, it would be absurd for the government to decide to merge it with Emirates if that meant moving its operations out of Abu Dhabi, even if only to the new airport (which still is about an hour away, albeit about 30 minutes closer than DXB). You and others continuously attribute Etihad’s continued existence as a standalone carrier to a matter of ego, which honestly is ethnocentric and bordering on racist (i.e., the view of the rich sheikh who wants to have his own airline more as a toy to play with rather than as an economic driver). In fact, if you study the actions of the Abu Dhabi government since oil prices plunged from $100/bbl to $30/bbl, you’ll see that they’ve been a leader among oil producing nations in diversifying their economy away from oil and gas. Which isn’t to say that they’re not still heavily reliant on oil and gas, but still they’ve taken significant affirmative steps, enough so for Moody’s to have restored their credit rating to pre-oil-price-decline levels. Etihad plays a critical role in this, even while it continues to lose money.

  7. Agree with @nfd ; Oman should join *A. It’s very curious why it hasn’t joined an alliance given it’s disinterest in cultivating JV’s and partnerships.

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