In the Middle East, Emirates is the largest and most famous airline, operating a super-connector hub in Dubai using a mix of Airbus A350s, A380s, and Boeing 777s. Doha-based Qatar Airways is also a fierce competitor in the region, operating a similarly massive network. Etihad Airways is the youngest and smallest of the three carriers. Based out of Abu Dhabi, the carrier attempted to mimic the networks of its competitors while also introducing a three-room suite with a butler on its Airbus A380s, undoubtedly holding the crown as offering the world’s best airline experience.

But despite its incredible onboard product, Etihad couldn’t compete against Emirates and Qatar Airways. The carrier overexpanded in an effort to match the networks offered by its competitors, and it also made a series of investments in struggling airlines that ultimately didn’t pan out. Etihad subsequently divested its investments and contracted rapidly, focusing on profitability rather than market share. Today, however, the carrier is coming back, growing while still offering an excellent onboard experience, and this time, it just might work.

The Rise And Fall Of Etihad Airways

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Etihad Airways was founded in 2003, based in Abu Dhabi, and quickly expanded to join Emirates and Qatar Airways as one of the world’s largest international airlines. Etihad’s flagship would become the Airbus A380, famous for its onboard lounge, single-aisle first class cabin, onboard showers, and, of course, the three-room Residence. In addition, the carrier also built a sizable fleet of Airbus A320 family aircraft, A330s, A340s, Boeing 777s, and 787s.

The real benefit of Etihad Airways from Abu Dhabi’s perspective, which owns the airline, is that this brings visibility to the city, driving tourism and business. Abu Dhabi, like several other Gulf cities, has been looking to diversify its economy away from oil. However, Abu Dhabi also isn’t willing to fund a money-losing carrier like Etihad, which recorded billions in losses towards the end of the decade. Under new leadership, Etihad began contracting, especially during the COVID-19 pandemic.

Etihad’s investments in Air Berlin, Air Serbia, Air Seychelles, Alitalia, and Virgin Australia were the most prominent drag on its finances. However, the carrier also expanded rapidly, despite Abu Dhabi being a smaller business and tourism hub than Dubai or Doha. Etihad’s network was bleeding money, and it was unable to compete against Emirates or Qatar Airways. Prior to the pandemic, Etihad was already shifting focus, divesting its investments and only operating its most profitable routes.

The Role Of The Airbus A380

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Etihad focused on being a boutique airline primarily centered around origin & destination demand, mainly using smaller aircraft. But although Etihad wasn’t short on widebodies coming out of the pandemic, it chose to reactivate its Airbus A380s anyway, planning to operate nine of its ten A380s while one will be dismantled for parts. The A380 is Etihad’s flagship, and its onboard product provides a halo effect on Etihad’s brand, further driving interest. But today, the A380 is being used and marketed differently than before.

The A380 is the only aircraft in Etihad’s fleet with the Residence, a three-room suite that slots above first class. It’s an incredible product, but Etihad made cuts to the soft product after the A380s returned to service in 2023. At the same time, it made the Residence more accessible, pricing it as an upgrade from first class rather than as a separate product. Making the Residence more accessible further boosts the product’s visibility, while the soft product cuts improve the economics of the cabin.

The Residence mainly exists to drive interest in Etihad, but the carrier also benefits from its First Class Apartments on the A380. Etihad is one of only two airlines to install a one-one seat model on the A380, and it far outshines the first class products offered by rivals. Although the Apartments are well-known today, it remains unique, given that only one other airline (Singapore Airlines) operates a similar product. Given Etihad’s revised, more profitable operations, this represents a problem for Emirates.

The Issue Facing Emirates Today

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Similar to Etihad, Emirates relies heavily on the halo effect of its Airbus A380s. These planes are famous for their massive onboard bars and shower suites, and whereas Etihad only flies seven A380s with two more set to be reactivated, Emirates has over 100. The product is available around the world, and award pricing can be lucrative. The issue, however, is that the first class seat on the A380, while well-packed and visually stunning, is fairly small. The business class seat, meanwhile, is hardly cutting-edge today, as most of Emirates’ 777s feature a seven-abreast business class seat.

For these airlines, product is incredibly important, as it’s a major point of differentiation compared to European or other Asian carriers. Through offering excellent economy, business, and first class experiences, this builds an elevated brand that pulls customers away, thereby filling hundreds of widebodies that travel around the world. Qatar Airways is generally considered to offer the best business class experience of the three, but against Etihad, Emirates looks less competitive in business class and first class.

The Business Studios on Etihad’s A380s are similar to Emirates’ A380 business class seats, except that they alternate between forward and rear-facing. The onboard lounge is significantly smaller than the bar on Emirates’ A380s. However, the First Apartments are far more impressive than Emirates’ first class seats, and the Residence is in a league of its own. With this, Emirates’ A380s appear far less impressive, especially as Etihad continues to grow its A380 operations, leading passengers to shift away from Emirates towards Etihad.

The Rise (Again) Of Etihad Airways

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The A380 largely serves the same role in Etihad’s brand as before, although the Residence is now more accessible. Instead, Etihad’s newfound success is coming from cost reductions and its new network. While it’s far smaller than rivals, Etihad is notably trying to find its own niche. The carrier doesn’t fly to the US West Coast, but it does fly to Charlotte. Rather than jump in on Montreal, which is served by rivals, or Vancouver, which is extremely far and therefore costly to serve, Etihad is launching new services to Calgary.

The airline hopes to double its fleet and triple its passenger numbers by 2030, but leadership has also maintained that growth must be sustainable and profitable. Recently, Etihad has been adding new destinations with the use of the Airbus A321LR, while also recently announcing five routes to China with the Boeing 787. It’s looking to capture underserved niches while also targeting the largest markets needed to maintain relevance against Emirates and Qatar Airways.

From a product perspective, Etihad has direct-aisle access business class seats on all widebodies and its A321LRs. The A350s and new 787s feature Collins reverse herringbone suites with sliding doors, which are far more impressive than Emirates’ latest open staggered seats. The A321LRs also feature a first class product, along with some of its Boeing 787-9s. Meanwhile, a new terminal opened in Abu Dhabi in 2023, far larger and more impressive than the airport’s previous terminal. Etihad is growing its network, while the experience it offers passengers is increasingly competitive.

Emirates’ Next Moves In Product

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Given how important product is to the Middle Eastern three, Emirates is not in a strong position. The competition continues to innovate in business class, while Etihad’s first class on the A380 is the pinnacle of commercial aviation. What’s more, Emirates’ A380s are a known quality and the A380s will have to be retired at some point, which is problematic given how central the A380 is to the carrier’s brand. For Emirates, the solution lies with the upcoming Boeing 777-9.

Although the Safran S-Lounge seats being installed on Emirates’ A350s and 777s aren’t impressive, the airline has leaked the seat that will be installed on the 777-9. The seat appears to be based on the Safran Unity, lauded as one of the best business class seats in the industry, and it has been optioned with sliding doors, high privacy walls, along with a tall drinks and storage column. In addition, the 777-9 will also feature an onboard social area, although it’s far smaller than the fully-staffed bar on the A380, and the ‘Game Changer‘ first class suites currently found on select 777-300ERs.

With Emirates planning an industry-leading business class seat, Qatar Airways planning QSuite NextGen, and Etihad already offering excellent premium cabins, competition in the Middle East is about to become as intense as ever. What’s more, all three already offer spacious economy seats and seamless airport transfers. With Etihad also growing its network, it’s becoming a true competitor to Emirates and Qatar Airways.