Abu Dhabi’s Etihad Airways and Sharjah’s Air Arabia said on Wednesday they had agreed to jointly set up a low-cost airline based in the United Arab Emirates’ capital.

The airline will be called ‘Air Arabia Abu Dhabi’ and operate from Abu Dhabi International airport where state-owned Etihad is based.

Air Arabia, the UAE’s only listed airline, also has operating bases in Egypt, Morocco, and UAE’s Ras Al Khaimah, in addition to its main Sharjah hub.