Is Air Arabia-Etihad joint budget airline set to fail from the onset?
Etihad Airways and Air Arabia announced that they will not delay the launch of the joint venture low-cost carrier in Q2 2020, Such move can put the success of joint venture at risk, according to the industry experts.
Not delaying the launch could be setting the low-cost airline up for failure from the onset. In the short term the airline may prove to be an economic challenge due to current low demand that is seeing many airlines grounding fleets and seeking government help.
The future is extremely uncertain as the lengths of all travel restrictions remain very much unclear. COVID-19 has brought international travel to a halt and the decision to not delay the launch is questionable as it could be a long time until the airline industry regains some sort of normality.
Other airlines have delayed launches due to travel restrictions and uncertainty. Qatar Airways announced the launch of new flight routes until July and later said this will be pushed back further. This is sensible considering the current situation in the airline industry, suggesting Air Arabia and Etihad should follow suit.
The budget airline should prove to be a success in the long term if the launch is managed correctly now. A no-frills concept allows affordable travel for travelers and has the potential to dominate the airline market share as seen in Europe. According to the latest consumer survey results, 54% of UAE respondents stated affordability is a major motivator when going on holiday.
The UAE is expected to reach a peak infection rate in four weeks and if this comes to pass, travel restrictions may be lifted sooner than expected. However, the demand for travel will take time to recover as travelers will have doubts and some countries are now recommending to not travel for the rest of the year.
Air Arabia and Etihad must react to evolving news updates and react appropriately to ensure the success of the budget airline. If the UAE aviation sector is still at a standstill closer to the launch, delaying the launch would be beneficial.