Dubai's Emirates Airline has announced an " extensive partnership " agreement with its sister low-cost airline Flydubai, opening up a combined network of 216 unique destinations.
As Gulf airlines face economic headwinds amid a regional slowdown, the two Dubai state-owned carrier said the tie-up would give Flydubai customers " seamless connectivity " to Emirates worldwide destinations.
Emirates said the partnership would be rolled out over the coming months, with the first enhanced code-sharing arrangements launching in the last quarter of this year.
The two airlines, which will continue to operate independently, plan to align systems and operations at their Dubai hub, the world's busiest international passenger airport.
They said optimising networks and schedules would allow the airlines to feed more traffic on to each other's networks.
Emirates operates 259 widebody aircraft to 157 destinations; Flydubai operates 58 Boeing 737s to 95 destinations.
"Both airlines have grown independently and successfully over the years, and this new partnership will unlock the immense value that the complementary models of both companies can bring to consumers, each airline, and to Dubai," said Sheikh Ahmad bin Saeed Al Maktoum, chief executive of Emirates Group and chairman of Flydubai.
By 2022, the combined network of Emirates and Flydubai is expected to reach 240 destinations with a combined fleet of 380 aircraft.
The closer partnership comes after months of rumours about a potential merger between the two airlines, both of which are owned by the Investment Corporation of Dubai, the emirate's state holding company.
They are operated independently under separate management teams.
The move comes after Emirates reported an 82 per cent slump in profits in the last financial year. Over the past year, the airline has sought to cut costs by reducing headcount in some back-office positions.
The US has since lifted security restrictions on carrying large electronic devices in the cabin from some Muslim-majority states, including the United Arab
Employees have for months been speculating that combining operations with Flydubai could enhance Emirates business.
The two airlines have overlapped on many regional routes since Flydubai was founded in 2008, but insiders have bemoaned the limited amount of passenger cross-traffic between them.
Emirates and Flydubai operate out of different terminals at opposite side of Dubai International Airport.
Emirates, the region's largest carrier, has in recent years faced stiffer competition from rival Qatar Airways on long-haul routes linking Asia with Europe and the US.
The regional spat pitting the UAE and three allies against Qatar - amid accusations that Doha sponsors terrorism - has closed regional air space to Qatar Airways. Source : Financial Times