Etihad Aviation and Air Arabia recently signed an agreement to create a low-cost airline joint venture in the UAE. The proposed airline Air Arabia Abu Dhabi is the first low-cost airline based out of Abu Dhabi, the local media reported. 

Under the terms of the agreement, Etihad Aviation and Air Arabia will establish a budget airline joint venture. Air Arabia Abu Dhabi will operate out of Abu Dhabi International Airport. 

Tony Douglas, group chief executive officer of Etihad Aviation, told the media that, “With the emirate’s diverse attractions and hospitality offerings, travel and tourism plays a vital role in the economic growth of the capital and the UAE. By partnering with Air Arabia and launching Abu Dhabi’s first low-cost carrier, we are serving this long-term vision.” 

Air Arabia Abu Dhabi ’s board of directors will be nominated by Etihad and Air Arabia. The venture will develop an independent strategy—and the legal framework for its operations is yet to be developed. 

Air Arabia Abu Dhabi is part of Etihad’s transformation programme. The airline has been planning transformation strategies since 2017. Low cost travel is becoming important in the Middle East and North Africa. In 2018, low budget carriers accounted for 17 percent of  seat capacity to and from the Middle East, the media reported. 

Air Arabia has already established hubs in Egypt and Morocco. 

Currently, the UAE has four local carriers Emirates, Etihad, flydubai, and Air Arabia. flydubai, and Air Arabia are the only two low budget carriers from that list. The new venture will contribute to the expanding low cost travel market in the region.