A tie-up is mooted between Emirates and Etihad

AVIATION geeks have few more enjoyable hobbies than speculating which airlines will merge next. But last week brought news of one potential deal worth taking seriously. On September 20th Bloomberg, a news service, reported that Emirates of Dubai is looking into taking over Etihad Airways, the flag carrier of neighbouring Abu Dhabi, a merger which would create the world’s largest airline group (see chart). Both carriers denied that talks were under way, but some sort of tie-up may nonetheless be on the cards.

The two have plenty in common. Both have “super-connector” business models, whereby they connect passengers on flights to and from other cities via their hubs in Abu Dhabi and Dubai, which are only 130km apart. They fight over much the same market. Etihad competes directly on the same routes as Emirates on 96% of its capacity, reckons OAG, a data firm.

In other respects the differences are stark. Etihad’s financial woes explain the motive behind a deal. In 2003 Abu Dhabi...



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