Etihad Airways and Ethiopian Airlines team up to serve growing Middle East-Africa network

Abu Dhabi's Etihad Airways has signed a joint venture with Ethiopian Airlines as the two carriers aim to develop routes between the UAE and Ethiopia, tapping into the countries' growing aviation markets.

The partnership, signed in Addis Ababa, includes a codeshare arrangement and the launch of new flights between the two capitals, giving passengers links to destinations in the Middle East, Africa and Asia, Etihad said on Wednesday. It added that the partnership is subject to regulatory approval.

Etihad will start daily flights from Zayed International Airport to Addis Ababa Bole International Airport from October 1, while Ethiopian Airlines will begin reciprocal services on July 15 – its third destination in the UAE after Dubai and Sharjah. Ethiopian currently has more than 120 weekly passenger and cargo services to the Gulf and Middle East.

Etihad is slated to start two more African routes in 2025, to Tunis and Algiers, both in November. That is part of Etihad's 10 new destinations this year, which also comprise Atlanta, Taipei, Medan (Indonesia), Phnom Penh, Krabi (Thailand), Chiang Mai, Hanoi and Hong Kong. Budget carrier Wizz Air Abu Dhabi will begin flights to Varna, Bulgaria, on March 31.

Mohammed Ali Al Shorafa, chairman of Etihad Aviation Group, said on Wednesday that the joint venture marks a “monumental moment” in Etihad’s history and is “only the tip of the iceberg”.

“Ethiopian Airlines is considered the gold standard and we believe that this relationship is going to expand the horizons for both Etihad Airways and Ethiopian Airlines,” he said at a press conference in Addis Ababa for the signing of the deal.

Mesfin Tasew, group chief executive of Ethiopian Airlines, said the deal will allow both airlines to expand their networks and contribute to the growth of the aviation industry in the Middle East and Africa region.

Etihad Airways makes its inaugural flight to Bali

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In a separate statement, Mr Al Shorafa said the start of flights between Abu Dhabi and Addis Ababa will give passengers “seamless access to a growing list of destinations via our extensive hubs. It also paves the way for deeper discussions on working together across our respective regions on other co-operation, including frequent-flyer programmes, training and cargo”.

Regional airlines, particularly in the Gulf, had a strong year of profitability in 2024 amid continued demand for air travel, a push to increase international tourist arrivals, investment in airport upgrades and government policies designed to boost the aviation sector's contribution to gross domestic product.

Airlines in the Middle East are forecast to earn $5.9 billion in net profit in 2025, up from $5.3 billion last year, according to the International Air Transport Association. Profit per passenger will soar to $23.90 next year, more than triple the global average of $7 forecast in 2025, the aviation trade body recently said.

Middle East airlines reported a 9.4 per cent traffic jump in 2024, as global air passenger demand reached a record high, with full-year traffic increasing by 10.4 per cent annually, according to Iata.

Etihad continues to boost its portfolio and operations. The airline added 12 aircraft to its fleet last year, taking its total size to 97 aircraft as of December, including six new Airbus A320 NEOs, and the return to service of its fifth A380, it said last month.

Its strategy allowed it to post a record after-tax profit of Dh1.75 billion ($476 million) in 2024, more than three times that of 2023, driven by strong passenger and cargo revenue, on the back of its route network expansions. The airline, which plans to triple passenger numbers to 33 million by the end of the decade, expanded its operations to more than 1,700 weekly flights last year.

Ethiopian, meanwhile, announced the launch of a number of routes in 2025 in an expansion push. The airline said last month it will start services to Hyderabad in India on June 16, and to Porto in Portugal and Hanoi, Vietnam, on July 2 and 10, respectively.

Africa's largest carrier also boosted its fleet this week with the addition of a Boeing 737-800 aircraft, dedicated exclusively to VIP and smaller group charter flights.

The Etihad-Ethiopian partnership also “underscores our dedication to fostering strong bilateral relations and promoting economic growth between Ethiopia and the UAE”, said Mr Tasew.

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Timeline

2012-2015

The company offers payments/bribes to win key contracts in the Middle East

May 2017

The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts

September 2021

Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act

October 2021

Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence

December 2024

Petrofac enters into comprehensive restructuring to strengthen the financial position of the group

May 2025

The High Court of England and Wales approves the company’s restructuring plan

July 2025

The Court of Appeal issues a judgment challenging parts of the restructuring plan

August 2025

Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision

October 2025

Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange

November 2025

180 Petrofac employees laid off in the UAE

Know before you go

Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
If you’re driving, make sure your insurance covers Oman.
By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer