A Low-Cost Carrier (LCC) from Europe plans to start a new airline based in Abu Dhabi? You heard it right! The Hungarian LCC, Wizz Air, has reached an outline deal with Abu Dhabi Development Holding Co. (ADDH) to commence a new airline in AUH. This startup is planned to serve cities in Russia and Europe in its adolescence, and later to target Africa, the Middle East, and the Indian subcontinent. Apparently, the move will boost connectivity in and through Abu Dhabi where the aviation market shrank by almost 20% in 2018, as flag-carrier Etihad Airways cut numerous routes after reporting billions of dollars in losses.
The airline, named Wizz Air Abu Dhabi, which shall be owned 51% by ADDH, is planned to start operations in the latter half of 2020 with three brand new Airbus A321neo aircraft, with further plans to expand to 50 aircraft over the next 10 years. Interestingly, just two months ago, Air Arabia, the LCC based out of Sharjah, announced its plans to partner with Etihad Airways to start a budget carrier based out of AUH, named, Air Arabia Abu Dhabi (Talk of creativity in naming airlines!).
“We believe the new airline has the potential to be a significant player in the region. ADDH’s deep-rooted knowledge of the local market, support and navigation in a new market for Wizz is invaluable and will boost the successful development of this low-cost airline” Wizz Air Chief Executive, Jozsef Varadi said in a statement.
Wizz Air has expanded far and wide in Europe, with eyes now on Asian market. Image credits: L’Agenzia Di Viaggi
So why has Abu Dhabi suddenly become such a lucrative market for new low-cost ventures? In pursuit of the answer, let’s dig a bit in the geo-economics of the middle eastern city. The United Arab Emirates (UAE) is known for its oil and gas industry, which is responsible for almost 30% of UAE’s Gross Domestic Product (GDP). The local government has been focusing on diversifying its income and stimulating demand by targeting a large range of travellers, which includes consumers from price-sensitive regions that typically refrain from travelling to Abu Dhabi, as connections on full-service carriers like Emirates and Etihad are considerably expensive. Hence, the introduction of LCCs based in AUH will most definitely attract a large audience to the city.
After a lackluster show by Etihad in recent years, the government was bound to facilitate something new in the aviation market. The Gulf region is, however, not known for its LCCs baring a few like FlyDubai. So will the market be kind enough to accept LCCs into its ecosystem, is something to watch out for!