Emirates and Etihad to merge

In a mega deal for the airline industry, Emirates is to takeover Etihad Airways PJSC. The two carriers are in preliminary talks over a deal. The two carriers are in many ways duplicates, of Etihad’s  88 passenger destinations, all but 11 are also served by Emirates and that the group destination is a three-tier bunch, consisting of Amritsar, Astana, Chengdu, Edinburgh, Jaipur, Kathmandu, Kozhikode, Minsk, Nagoya, Rabat and Riga. The routes flown by both the airlines accounts for about 96 per cent of Etihad’s  total outbound flights and 74 per cent of Emirates.

For several destinations in the Middle East, India, Australia, Emirates is already dominant. On routes between Australia and Europe, Africa and the Middle East, it had a 43 per cent share of passenger capacity over the past year, and adding Etihad  to that total is likely to be unacceptable without the carriers agreeing to drop routes at major hubs.

Tim Clark, Emirates President has grown used to operating the company with a ruthlessly free hand. The sensible thing to do would be to close Etihad down and cherry pick the best employees, best aircraft and routes blot them onto Emirate’s much larger business and dispose off the remainder.

Both airlines are essentially state enterprises owned by the royal families of their respective emirates. Abu Dhabi has about 90 per cent of the oil reserve that keep the whole show on the road for UAE.When Dubai’s debt fuelled growth path spiralled out of control during the 2008 financial crisis, its was Abu Dhabi who stepped in with a $20bn bail out money. This is the reason Emirates was established in the first place.

The combined group will somehow maintain service levels to Abu Dhabi to please the Al Nahyan family the final arbiter of economic and political power in the UAE, while doing its best to  build up its core hub in Dubai.