Why do it?- Etihad's investment in Aer Lingus-and Air Seychelles.

Many found Etihad's commitment of up to $80 million in Air Seychelles difficult to square with an easily understandable strategy. The same people may well be reacting the same way to today's revelation that the company is taking a nearly 3% stake in Aer Lingus. Again, the question is why do it? There doesn't appear to be an obvious need. Not even a defensive one.

Despite being off the eastern coast of Africa, Seychelles isn't well placed as a hub and anyway Etihad is building its own portfolio of destinations direct from Abu Dhabi. Air Seychelles, with its limited operation, was no competitive problem for the airline and it doesn't go on to anywhere particularly useful. Nor even with reinvigoration and new investment is it likely to. Etihad's own flights into Seychelles were doing well in any case on the back of traffic hoovered up from multiple sixth freedom cities so why bother to part with $80 million?

The same question now arises with Aer Lingus.The big Gulf trio, Etihad, Emirates and Qatar are all doing well in both the Irish Republic and Northern Ireland. Not a lot of their business is actually to and from their home airports. It is heading on to points south and east. The big attraction in Ireland is to bypass the much disliked Heathrow with its scattered terminals and laborious, time consuming security proceedures. This sentiment provides a ready market to anyone whose favoured view of the airport is the one from directly above it while heading somewhere else. Aer Lingus can do little to add to the flow. Talk of Etihad possibly flowing Europe destined traffic over Dublin defies a quick look at an atlas. The city is too far west to attract more than a trickle of backtrackers and anyway Ethihad itself flies to most major and some secondary European cities.

So why do these tie-ups? They look like a distraction from Etihad's core business and possibly its recent slowing down of growth. We may be missing something but despite some similarities between the two recent ventures, the hard financial or strategic logic is difficult to discern. Enlightenment and being proved wrong would be welcome but in the meantime we can't see any alarm bells being set off elsewhere.