Every single time I’ve been to Dubai, I’ve heard that Emirates is bankrupt and the state of Abu Dhabi has bought the airline. But I always dismissed them as baseless rumors. Then, the Dubai World crises happened around Thanksgiving/Eid. And that made me think again. That the Abu Dhabi government could ask for Emirates, the airline, as collateral in bailing out Dubai, the state.

So, let’s imagine that if this does happen, that Abu Dhabi takes over Emirates and by default it merges with Etihad. What will that mean for the airline brands?

1. Emirates and Etihad merge to form a mega-airline with over 250 planes connecting almost any major city in the world with any other – one-stop.
2. Emirates and Etihad move operations to the Jebel Ali Airport – DWC from their respctive hubs to centralize operations
3. Ultimately, effectively managing the scale of the new airline’s operations can determine its chances of success

However, I feel that this is unlikely to happen, because:

1. Emirates is much larger than Etihad, and much more profitable too (Etihad is yet to turn a profit)
2. Emirates is a much better known brand than Etihad
3. They have very different fleet compositions – Emirates all-widebodies, Etihad a mix
4. Chances of integrating two hubs that close to each other (Dubai-Abu Dhabi is a 2hr drive) is not practical
5. Abu Dhabi Airport has already invested huge amounts in developing the airport as a future hub and Jebel Ali airport is far from being completed – so a hub merger is not on the cards
6. Especially because a Jebel Ali airport which is 1.5 hours from either Dubai or Abu Dhabi, connected by trains, is impractical

Hence, the my conclusion is that no, the crises will not lead to an Emirates and Etihad merger. What may very well happen is this:

1. Etihad takes a large stake in Emirates, just like Lufthansa has a stake in Austrian or Swiss
2. Both brands should be kept intact
3. Etihad and Emirates optimize their route networks such that they complement each other and don’t bleed each other on major route. For example, instead of offering flight from Sydney to London 20 mins apart from each other, they can be more even spread out throughout the day. And I don’t think an Aussie is concerned whether he would transit in Abu Dhabi or Dubai on his way to London
4. Both Emirates and Etihad should optimize capacity on certain routes. For example, an Etihad A320 can be sent to Cochin or Peshawar, instead of an Emirates B777.
5. They save money through join procurement and technology implementation

And I think we’ll have a strong pair of airlines, just like AirFrance-KLM, which have the might to take on any other major carriers.

So, what do you think about the prospects of Emirates after the Dubai crises? Is mine a fair analysis? I’d love to hear your thoughts here and on Twitter.

• The future of Middle East Super-Airlines: Emirates and Etihad to merge, and Qatar to join an alliance
• What does 2010 have in store for Middle East airline brands like Emirates, Etihad, Qatar Airways and others?
• Etihad Airways video trip report – Business Class: Athens to Delhi, via Abu Dhabi
• How will Emirates ensure high levels of service across its A380 fleet? VP Nigel Page explains
• Why Indians need to get over Air India and recognize Emirates as the national carrier