Airline Battleground: Why Is Abu Dhabi A Startup Airline Hotspot?

Abu Dhabi has seen the launch of not one but two airlines this year. Although Wizz Air Abu Dhabi is yet to begin revenue service, all the pieces of the puzzle are already in place. Air Arabia Abu Dhabi has been flying for a couple of months now and is already looking to expand its network. We take a look at what makes Abu Dhabi such a hotspot for startup airlines right now.

Air Arabia Abu Dhabi
What makes Abu Dhabi such a top choice for startups? Photo: Air Arabia Abu Dhabi

Going head to head

The announcement that Wizz Air was expanding into Abu Dhabi came hot on the heels of a similar announcement from Middle East giant Etihad. While Etihad buddied up with local low-cost Air Arabia to launch a new airline, Wizz worked in partnership with the Abu Dhabi government to get their wheels off the ground.

Less than a year later, and both airlines are taking flight. Air Arabia Abu Dhabi started flying in mid-July, launching with a modest network of just two destinations in Egypt. On Monday this week, the airline announced the addition of one more destination – Cairo – which will be added later this month.

Wizz Air Abu Dhabi hasn’t got quite so far. Its launch has been pushed back to mid-October, due to COVID related travel restrictions. However, the airline already has its planes in place, its crew assigned and its destinations announced. It will begin operations with routes to six destinations in Egypt, Greece, Georgia, Cyprus, Ukraine and Armenia.

Airbus, Boeing, August Deliveries
Wizz Air Abu Dhabi is ready to go in October. Photo: Wizz Air

Despite this, the two low-costs are already battling it out on ticket prices. Gulf News reports today that local travel agents expect to see bookings pouring in for the ultra-low-priced Wizz services, which will undoubtedly force Air Arabia Abu Dhabi to price match, at least on those routes where they directly compete.

And all this is happening amid the worst crisis ever to hit the aviation industry. How are these airlines so confident about launching services mid-pandemic, and why is Abu Dhabi proving to be such a popular starting point?

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There are a number of key reasons that Abu Dhabi is proving an attractive proposition for these startup airlines, and particularly for the two detailed above.

For a start, there is a distinct lack of low-cost carriers operating out of the region. For Abu Dhabi, Air Arabia Abu Dhabi and Wizz Air Abu Dhabi will be the first to be based at the airport. The UAE overall supports four other airlines – full-service Emirates and Etihad, as well as hybrid flydubai and low-cost Air Arabia.

Air Arabia
A lack of low-cost competition makes it an attractive market for airlines. Photo: Air Arabia

In terms of local population, that’s quite a lot of airlines. But in terms of the number of passengers passing through the region, it’s barely any at all. The airport handles over 20 million passengers a year and has plans to expand that to 45 million by the end of the decade. Not all of those passengers will be full-service fliers and having a cheaper option to travel onwards from the hub will sustain the competition between the two new airlines.

The geographical position of Abu Dhabi doesn’t hurt either. Nestled in the heart of Eurasia, its location opens doors to more destinations than any airline could wish for. Flying an A321LR, as Wizz Air Abu Dhabi is, puts locations as far away as Indonesia, South Africa and northern China within reach. The A321XLR, which is on its way for Air Arabia Abu Dhabi, will be able to go even further.

Range of A321LR at AUH
From AUH, the A321LR can reach millions of people. Image: GCMap

The third and final reason for this city being such a big focus is undoubtedly down to the financial support both airlines are getting from the authorities there. Air Arabia Abu Dhabi is a joint venture between Abu Dhabi-owned Etihad and Sharjah-owned Air Arabia. Plenty of Middle Eastern money was sunk into this carrier.

Wizz Air Abu Dhabi is less clear cut. Wizz Air itself it’s a public company, although its lead investor is US private equity firm Indigo Partners. However, the new Abu Dhabi airline is a joint venture with Abu Dhabi Development Holding, ADDH, which owns 51 % of the airline. ADDH is, you guessed it, state-owned.

So, with an unsaturated market, excellent geographical location and strong support from local governments, the question really should be, who wouldn’t want to start an airline here. It remains to be seen if any other air transport company is brave enough to try it.