The Abu Dhabi spending spree continues with the announcement that Wizz Air Holdings has reached agreement in principle for the establishment of Wizz Air Abu Dhabi, United Arab Emirates in partnership with Abu Dhabi Development (ADDH). The new airline will be Wizz Air’s first airline established outside of Europe.
Wizz Air Abu Dhabi will be formed via a joint venture, and operations are expected to launch in the second half of 2020.
Speaking to Airline Economics today, József Váradi, chief executive officer, Wizz Air Holdings, said that the Abu Dhabi airline will add a new layer to the airlines growth strategy, which is in line with the shift in the centre of gravity of the aviation market from west to east. “We see more opportunities in the East, which is demonstrated by how we have been expanding: we have bases in Russia, Georgia, Kazakhstan, Azerbaijan; we have started operations in Israel and have started to connect in Dubai. We’ve learned a lot in flying east and we expect the UAE to become a mega city in the world, which over time opens opportunities for airlines, especially since low-cost airline penetration is low.”
The airline will focus on establishing routes to markets in which Wizz Air has existing, high growth operations, namely Central and Eastern and Western Europe, as well as the Indian subcontinent, Middle East and Africa over the long run. Wizz Air Holdings is not yet releasing further information regarding the new airline’s route network. The establishment and start of the new airline is subject to agreement and entry into force of definitive documentation with ADDH, the receipt of all necessary internal and external approvals and consents, and the new airline satisfying all regulatory requirements of the UAE General Civil Aviation Authority to obtain an Air Operator’s Certificate (AOC).
Wizz Air Abu Dhabi will have a fleet composed of Airbus A321neo aircraft, which will come from Wizz Air Holdings. “We have a substantial orderbook – we have 258 aircraft on order to be delivered between now and 2026,” Váradi tells Airline Economics. “We are uniquely differentiated compared to the rest of the industry as we have long-term supply as well as short-term supply. That orderbook gives us the opportunity to establish ventures like Wizz Air Abu Dhabi.”
The airline is still working on the best structure to tip those aircraft from Wizz Air Holdings into the new venture from a financial and tax perspective. Given the growth plans and ambitions of Wizz Air, aircraft supply might be a concern for the airline starting a new venture, but Váradi has plans in place.
“We are somewhat short of aircraft given the delays of deliveries from Airbus, but we have the opportunity to extend our existing leases and still deliver on our growth plans,” confirms Váradi. “We are the highest growth airline in Europe and we are not totally dependent on the aircraft delivery programmes because we also have some existing leases we can extend.”
The governance of Wizz Air Abu Dhabi will echo that of Wizz Air UK in that it will have its own management team in Abu Dhabi and will also hire crews locally.
For the Abu Dhabi government, this transaction is the latest in a series of investments made into the aviation industry. Mohamed Hassan Al Suwaidi, CEO of ADDH, said: “As a trusted government partner with a clear mandate to boost key sectors of Abu Dhabi’s non-oil economy, we are proud to partner with Wizz Air, an airline with strong market presence and brand recognition in key European source markets. Through our partnership with Wizz Air, we aim to capitalise on the growing demand for budget travel and support the continued growth of Abu Dhabi as a world-class cultural and tourist destination.”
The move has also been welcomed by the chairman and CEO of the Abu Dhabi Airports Company.
“As Abu Dhabi International Airport continues its growth as a major gateway to the UAE and the wider region, we welcome contribution airlines, such as this new airline, and the impact this partnership will make to our continued national economic development. We look forward to building a highly successful partnership with them in the years to come,” said H.E. Sheikh Mohammed Bin Hamad Bin Tahnoon Al Nahyan, Chairman of Abu Dhabi Airports.
Bryan Thompson, CEO of Abu Dhabi Airports Company, added: "The launch of the new airline is further testament to the Emirate’s robust aviation infrastructure. In addition to a strong transfer passenger program, Abu Dhabi International Airport (AUH) has also seen an increase in origin and destination traffic this year—remaining one of the fastest-growing airport hubs in the region. New travel offerings continue to inspire visitors from around the world to come to Abu Dhabi. We welcome the world to Abu Dhabi, and look forward to providing an exceptional passenger experience to even more travellers through this venture."
Meanwhile, Abu Dhabi Catalyst Partners has launched a joint venture with Sirius Aviation Capital. The Abu Dhabi firm is investing US$100 million in the new aircraft leasing company, Sirius Aircraft Investments, which will be based in Abu Dhabi Global Market (ADGM). The new venture will invest in mid-life, single-aisle aircraft that are currently on lease to airlines around the globe.
Howard Millar, Chief Executive Officer of Sirius Aviation Capital, said: “Sirius Aviation Capital and Abu Dhabi Catalyst Partners aim to grow Sirius Aviation Investments into a leading mid-life aircraft leaser. Through partnership and collaboration, supported by the first-class business infrastructure in Abu Dhabi, this new partnership is off to a strong start and we look forward to working together to achieve this ambition.”
The investment by Abu Dhabi Catalyst Partners involves a meaningful commitment to a physical presence in Abu Dhabi and under the jurisdiction of Abu Dhabi Global Market (ADGM), the financial centre that gives businesses operating across all sectors access to substantial growth opportunities originating from Abu Dhabi.
Guy Hurley, Chief Executive Officer of Abu Dhabi Catalyst Partners, commented: “The world’s aircraft fleet is expected to double over 20 years from 22,680 in 2019 to 47,680 aircraft by 20381, so we see this as an excellent time to capitalise on the growing aviation market. This opportunity allows us to invest alongside Sirius Aviation Capital’s experienced team, while also diversifying ADGM’s focus across different sectors.”