Etihad Airways has become the latest major airline to thrash out a strategic deal with a foreign carrier as cut-throat competition to lure passengers reaches new heights.
The Abu Dhabi airline is pioneering partnerships in the region with its new agreement with Virgin Blue in Australia, which mirrors similar deals planned between other Middle East carriers.
Next year, Middle East Airlines (MEA) of Lebanon, Saudi Arabian Airlines and Gulf Air of Bahrain hope to join one of the big three airline groupings - Star Alliance, SkyTeam and oneworld - to help feed traffic into their networks. MEA and Saudi Arabian will both join SkyTeam, while Gulf Air is undecided. Oman Air and Royal Air Marochave also been named as likely to go with an international alliance.
"So many airlines join one of the big three alliances because it allows them to reap the benefits of free-flowing traffic without the restrictions of ownership," says Addison Schonland, an aviation analyst with Innovation Analysis Group of the US.
In the past 15 years, carriers worldwide have been involved in a frenzy of deals. The three global alliances, involving 52 members, include some of the biggest names in the business, such as Lufthansa, British Airways and Singapore Airlines. A fourth alliance is being considered by Sir Richard Branson to link his Virgin-branded carriers in the UK, US, Australia and Africa.
One driver of these agreements is cost savings. Alliances have often been a means of survival in an industry where airlines lost an estimated US$50 billion (Dh183.65bn) worldwide during the past decade.
Like a high-stakes game of musical chairs, carriers have banded together to co-ordinate schedules, prices and capacity, share lounges and conduct joint marketing efforts, while offering customers seamless travel from one side of the planet to the other.
But such groupings are largely absent in the Middle East. European airlines preferred to focus on other regions such as the Americas and Asia, while Middle East carriers, in particular the big Gulf players such as Emirates Airline, pursued their own independent growth strategies.
In the Mena region, only EgyptAir and Royal Jordanian are part of airline groups, Star Alliance and OneWorld, respectively, meaning an estimated 95 per cent of regional traffic is served by unaffiliated carriers.
Emirates is a vocal critic of airline alliances, which it believes are anti-competitive. Qatar Airways has also stayed independent. Among the big Gulf carriers, only Etihad has actively sought partnerships.
Although it is not part of an airline alliance, the Abu Dhabi flag carrier has concluded 30 "code-share agreements" with other airlines. These deals involve Etihad and its partners selling tickets on each other's flights, such as its deal with Virgin Blue and its long-haul subsidiary, V Australia.
Etihad's partnership with Virgin Blue "leverages both sides' assets without an alliance", says Mr Schonland. "By doing these code-share deals Etihad can grow faster without buying more planes."
Etihad has declined to comment on whether it would join one of the three global alliances, or the fourth one being considered by the Virgin group of airlines. The carrier says it plans to "increase its scale through key strategic alliances with like-minded airlines".
Emirates, the world's largest airline by international capacity, says alliances are "increasingly stifling consumer choice".
"We see them as anti-competitive, and believe membership would be a brake on our own business plans of increasing choice of services to our customers," the Dubai flag carrier says. "Emirates has never belonged to, nor has any plans to join, an alliance."
In the highlycompetitive world of aviation, strict limits on purchasing foreign airlines are a major reason for carriers to seek partnerships.
The industry is one of the most tightly regulated worldwide. Airlines are often limited to buying minority stakes in foreign carriers, which are often regarded as domestically important and perceived as national icons.
Adding to the complexity, airlines planning to expand their international routes must first negotiate government-level bilateral agreements.
"Unlike other industries, the existence of strict national ownership regulations and bilateral agreements have allowed only a few national or regional success stories, such as Emirates, but no true global brands," says Diogenis Papiomytis, the principal consultant for aerospace and defence at Frost & Sullivan in the UK.
"This is the main driver for the growth in global alliances, as airlines are pressured to expand and achieve economies of scale in such a difficult regulatory environment."
As countries reduce these restriction to encourage foreign investment, analysts expect airlines in the Gulf to take a more active role in investing in carriers worldwide.
"It is quite likely they will purchase stakes in other airlines," says Chris Logan, the travel and leisure analyst at Echelon, a UK consultancy. "For airlines with very large medium-term growth plans, consolidation may provide an opportunity to gain airport access outside of the Gulf region."
Etihad has been reported to have expressed interest in pending asset sales including the German carrier airberlin.com, Montenegro Airlines, Olympic Air and most recently Virgin Atlantic. Regarding acquisitions, the Abu Dhabi airline says it talks frequently to other airlines "about business issues and opportunities".