Etihad Airways and Saudi Arabian Airlines announced deals covering codeshares and maintenance and said the agreements will pave the way for broader commercial cooperation.
Abu Dhabi-based Etihad Airways and Saudia, as the carrier is known, signed a codeshare agreement covering 41 international and domestic routes, the airlines said in a joint statement on Monday.
The regional airlines are planning further tie-ups in cargo, frequent flyer programmes and maintenance.
Travel on the codeshare destinations "will be highly popular with business and leisure travellers, especially those looking to fly to secondary city destinations," Tony Douglas, chief executive of Etihad Aviation Group, said.
The broader alliance comes after Etihad said it was open to forge new codeshare agreements worldwide as it seeks sustainable growth. The Abu Dhabi carrier is undergoing a structural and strategy change amid a company-wide review as it backs away from a growth policy of buying minority stakes in global airlines. Last year it withdrew from troubled Air Berlin and Alitalia, who filed for insolvency. Halving the number of its equity holdings, it has overhauled the business by appointing a new CEO, scrapping unprofitable routes and slashing costs after it made a loss of almost $2 billion in 2016.
The codeshare pact will allow Etihad to place its code on Saudia flights to domestic routes such Dammam, Madinah, Jeddah, Riyadh and Abha plus international destinations including Alexandria, Tunis and Peshawar.
Saudia will add its code to Etihad flights to Baku, Chengdu, Ahmedabad, Nagoya, Tokyo-Narita, Dammam, Jeddah, Madinah, Riyadh, Belgrade, Seychelles, Chicago-O'Hare, and Abu Dhabi.
Under the deal, Etihad's engineering unit will provide certain maintenance, repair and overhaul services to Saudia jets at its MRO facility in Abu Dhabi.
The airlines are also "finalising discussions" on cooperation between their frequent flyer programmes whereby passengers flying on either airline can earn and redeem points with both carriers, they said.
The two airlines are also in talks for "greater cooperation" for cargo operations that will leverage the increased freighter volumes between the UAE and Saudi Arabia, they said without providing details.
Last year, Etihad Cargo carried more than 28,000 tons of cargo between the two countries. In 2017, Etihad Airways operated 7,578 passenger flights and carried 1.3 million passengers between Saudi Arabia and the UAE.
Saudi Arabia said separately on Monday it will establish a so-called Special Economic Zone, to be located in King Khalid International Airport in Riyadh, which will focus on integrated logistics as part of plans to become a regional trade hub.
The Integrated Logistics Bonded Zone will aim to attract more multinationals to the kingdom and will have investor-friendly regulations, Saudi's Ministry of Media said in an email.
"The establishment of ILBZ is part of a broad plan to establish special economic zones in competitive locations for promising sectors, including ICT, logistics, tourism, industrial and financial services," the ministry said.