ADDF: Etihad will offset loss of Gulf Air

Dermot Davitt

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Abu Dhabi Duty Free (ADDF) expects 20% increase in revenues in 2006

Gulf Air will close its remaining Abu Dhabi routes by March 27, the carrier announced today. It will move 90% of its Gulf traffic to Oman and Bahrain, the two states that own the business. Last year the United Arab Emirates withdrew from its stake in the airline, prompting a partial withdrawal of Gulf Air from Abu Dhabi.

But the move will not have any long-term impact on duty-free at Abu Dhabi International airport, said Mohamed Mounib, managing director of Abu Dhabi Duty Free (ADDF). Fast-growing airline Etihad, which uses Abu Dhabi as its hub, will replace and eventually surpass Gulf Air's capacity out of the airport, he told ravenfox.com this morning.

"The Gulf Air withdrawal will have a more pronounced effect on our business this summer, particularly with this morning's announcement," said Mounib. "But Etihad has already announced that it will replace all of that lost traffic. With the new orders for aircraft coming into play, Etihad will exceed Gulf Air seat capacity out of Abu Dhabi, and it will open many more routes. We expect 6.6m passengers here in 2006, compared to 5.5m in 2005. And because Etihad uses Abu Dhabi as its hub, it has attracted other airlines, which had previously suspended business. Turkish Airlines is back after a six-year absence, Singapore Airlines is to resume flights on March 1, we'll have the first commercial flight from Moscow on March 3, while China Airlines will fly from Taipei in March too. This will all help us take a huge leap forward."

Work to develop Abu Dhabi airport continues, with the new terminal three scheduled to open in 2007. "T3 will double our retail space at the airport," said Mounib. "We are in the final stages of selecting a consultant to design our new commercial areas, whether that is T3 or the planned remodelling of T1, which should be complete by the end of 2006."

Mounib said the new spaces would freshen up the offer and retail design at the airport. "We need something new. I can promise some new brands and ideas that will keep the offer fresh."

He predicted that sales would rise about 20% in 2006 compared to 2005, following last year's 8% increase. "The increase last year was disappointing but we know that the Gulf Air effect was the main reason. But we are ahead of budget for January and are confident for the rest of the year. Once Etihad is bedded down with its new routes and additional capacity, the future will look very bright."