The UAE Cabinet approved low-cost Air Arabia Abu Dhabi as a national airline in a move that will boost the civil aviation sector in the country, according to a statement on state news agency Wam.
The Cabinet took the decision in its first meeting for the year on Monday, chaired by Sheikh Mohammed bin Rashid, UAE Vice President and Ruler of Dubai.
“The resolution reflects the importance the government attaches to the aviation sector. The UAE government invested considerable efforts to improve this sector and support all the businesses working in it,” the statement said.
Lat year, Etihad Airways and Air Arabia agreed to jointly set up Abu Dhabi's first low-cost airline to capitalise on growing demand for budget travel and back the capital's tourism ambitions.
It will operate out of Abu Dhabi International Airport and is expected to bolster Etihad’s turnaround plans, which began in 2017 through a reduction in its cost base and a restructure of plane orders with Boeing and Airbus.
"This exciting partnership supports our transformation programme and will offer our guests a new option for low-cost travel to and from Abu Dhabi, supplementing our own services," Tony Douglas, group chief executive of Etihad Aviation Group said last year.
The airline is expected to start operations by the second quarter of this year, according to Mr Douglas.
Air Arabia Abu Dhabi's board of directors, consisting of members nominated by Etihad and Air Arabia, will steer the company's independent strategy and business mandate.
Low-cost airlines accounted for 17 per cent share of seat capacity to and from the Middle East in 2018, compared to only 8 per cent in 2009.
Air Arabia and flydubai are the other two budget airlines currently operating in the country.