Etihad Airways and Air Arabia are jointly setting up a low cost carrier in Abu Dhabi to tap into growing demand for budget travel from the United Arab Emirates' capital, they said on Wednesday.
It is the first investment by Etihad in another airline since its 'equity alliance' strategy, which once saw it hold stakes in as many as eight other carriers, unravelled.
Air Arabia Abu Dhabi will be an independent joint venture based at Abu Dhabi International, the hub of Abu Dhabi state-owned Etihad, the two carriers said in a statement.
It will be the capital's first budget carrier.
"This exciting partnership supports our transformation programme and will offer our guests a new option for low-cost travel to and from Abu Dhabi, supplementing our own services. We look forward to the launch of the new airline in due course," said Etihad Group CEO Tony Douglas.
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