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Etihad, Qatar Airways Join Aviation Alliances

by Lorys Charalambous, Tax-News.com, Cyprus

10 October 2012


Middle East carriers, Etihad and Qatar Airways have concluded two landmark deals with members of global airline alliances, securing the Gulf airlines access to new routes in the European marketplace.

Abu Dhabi flag carrier, Etihad announced a code-sharing deal with Air France-KLM on October 8, 2012, which will eliminate competition and allow for collaborative service on routes also operated by the Franco-Dutch company. Outside their existing routes, the agreement will allow Air France-KLM access to five destinations in Asia and Australia, while Etihad will secure the opportunity to operate an additional 10 routes in Europe.

Etihad said the deal would expand the airline's network to 321 destinations - the most of any Middle East carrier, and said the deal was "the first phase of a much larger strategic partnership", which could eventually involve membership of the SkyTeam alliance founded by Air France-KLM. A new code-sharing agreement was also announced between Air France-KLM and Air Berlin, in which Etihad holds a 29.2% stake.

James Hogan, Etihad Airways’s President and Chief Executive Officer, said: “The agreement opens up many new markets for our passengers in Europe and reinforces the importance of strategic commercial partnerships as one of the key enablers for accelerated growth of our network."

The deal is expected to unlock multi-million dollar savings for Etihad, and will be a significant boost also for Air France, which is in the process of considering large scale lay-offs.

The announcement from Etihad came just hours prior to confirmation from Qatar Airways that it had received the necessary approvals to join British Airways and American Airlines under the oneworld alliance, a process that is expected to take 12 to 18 months to finalize. Qatar Airways will be oneworld's second member airline based in the Middle East, alongside Royal Jordanian, which became the first airline from the region to join any of the global alliances in 2007.

Qatar Airways Chief Executive Officer, Akbar Al Baker said: "Alliances are playing an increasingly important role in the airline industry today - and that will continue long into the future. Qatar Airways has carefully reviewed its strategic options and it is very clear that joining oneworld is by far the best way forward for us as we look to strengthen our competitive offering and give passengers what they fully deserve - more choice."

The news is evidence of a change in tactic from Middle East carriers, with the two airlines, and notably also Dubai operator Emirates, previously distancing themselves from membership of one of the three airline alliances. European operators, facing a net loss this year, have found it more beneficial to agree tie-ups with Middle Eastern airlines than face fierce competition on their home soil. The deals are expected to prop up the performance of European carriers in the medium-to-long range segment in particular. Recently, Emirates sought to weaken its allegiance with the oneworld alliance instead opting to cooperate more deeply with Australian carrier Qantas.

TAGS: aviation

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