Everybody knew this all along. Yet, with lines between mainstream media and social media (including blogosphere) getting increasingly blurred, somehow this notion got traction.
Both parties have denied this a few times now. However, this was probably the first outright rejection from a senior official. Tony Douglas, CEO of Etihad, said
“I often fall about laughing because when Bloomberg run that story, quite frankly it was the laziest piece of Thursday afternoon journalism I’ve ever seen. So, the clown who wrote it was probably no more than a clown as anyone could have wrote the story, quite frankly. But, not surprisingly, as a result of said clown writing said clownesque story, I’ve been asked this question ten thousand times.”
Looking back in time, the seeds were probably sown by this Bloomberg article (link). The article was titled “Emirates’ Clark Says Any Etihad Merger Plan Is Up to Shareholders”
Let us just say that the headlines and the content didn’t match. This is what Tim Clark had said
“That (merger) is in the hands of the shareholders, On the short-term, medium-term horizon, I would say no.”
Now, short-term usually means less than a year. Medium-term means anywhere between 1 to 5 years depending on who you are talking to. This is pretty much settled. And, one of the greatest economist ever, John Maynard Keynes said, “In the long run we are all dead”.
The speculations were further fueled with these Bloomberg articles:
- Emirates-Etihad May Be Airline Deal of the Decade. Here’s Why
And the entire world was thrown into a tizzy.
The Deal That Never Was
There were many reasons for the deals to make sense
Creating World’s Largest Airline
UAE loves big, everybody knows it. It has the world’s tallest building, tallest hotel, biggest indoor theme park etc. Why not the world’s biggest airline? Merger between Emirates and Etihad would catapult Emirates from 4th to the 1st position beating Delta, United and American.
While that sounds great, it is worth considering that Emirates is already the largest airline in the world in terms of international kilometers flown (ASK). It has no domestic service. Thus, Emirates’ ASKs are not comparable with the three larger airlines.
One Country, One National Airline
Many outside of gulf countries do not understand why UAE needs two government-owned airlines. The answer is UAE is not a collection of states (or emirates) like USA. While it is a futile exercise to go into further discussion, it is useful to know that UAE structure is closer to EU region than USA.
Hence, the larger emirates – Abu Dhabi, Dubai and Sharjah all have their own airline and hubs.
This was the most talked about rationale. And the one that was the most bewildering.
Sure, Etihad made losses worth billions of dollars in the last three years. However, Etihad’s has a clear role as an enabler of economic growth in the emirate of Abu Dhabi. This is what Tony Douglas said while releasing the 2018 numbers for Etihad:
“As a major enabler of commerce and tourism to and from Abu Dhabi, we are intrinsically linked to the continued success of the emirate.”
Partnership Between Emirates and flydubai
Emirates and flydubai have had a working arrangement since 2016. The flight schedules were aligned in 2017 and the frequent flyer programs were merged in 2018. However, there is a big difference. Emirates and flydubai have the same shareholders, Etihad doesn’t.