Last month, Etihad Aviation Group and Air Arabia announced the signing of an agreement to launch ‘Air Arabia Abu Dhabi’, the UAE capital’s first low-cost carrier.

Etihad and Air Arabia will establish an independent joint venture company that will operate as a low-cost passenger airline with its hub in Abu Dhabi International Airport. The new carrier will complement Etihad Airways’ services from Abu Dhabi and will cater to the growing low-cost travel market segment in the region.

Based in Abu Dhabi, the new company will adopt the low-cost business model. Its board of directors, consisting of members nominated by Etihad and Air Arabia, will steer the company’s independent strategy and business mandate.

Today, the Middle East market enjoys the third highest gains in intra-regional low-cost carrier penetration rate. Low-cost carriers accounted for 17 per cent share of seat capacity to and from the Middle East in 2018, compared to only 8 per cent in 2009.