Etihad Airways is one of the leading airlines in the Middle East. The airline is the flag carrier of the UAE and operates from Abu Dhabi. The establishment and success of the Etihad Airways is a good case study in managerial economics. While Etihad started its operations as a government project, the airline is currently one of the fastest growing airlines in the world. This paper examines various aspects of the operations of the Etihad Airways. Ownership and Management of Etihad Airways The Government of Abu Dhabi established the Etihad Airlines via a royal decree. The ruler of Abu Dhabi issued a decree that brought the Etihad Airways into existence in 2003 (IATA, 2012). The current owner of Etihad Airways is the government of Abu Dhabi. This position gives the airline perceived preferential treatment and access to government financing for expansion projects because the government is its main shareholder. The Government of Abu Dhabi appoints the managers of the airline using processes similar to those used to appoint the heads of the business units owned by the government. The ruler of Abu Dhabi appoints the chief executive of the airline who in turn runs the affairs of the airline. Competitive Advantages of Etihad Airways Etihad Airways has several competitive advantages that make it one of the most influential airlines in the Middle East. These competitive advantages are as follows. First, the airline has access to government funding that can aid it in its expansion projects. The government of Abu Dhabi wholly owns the Etihad airways. This makes it relatively easy for the company to implement financial projects such as the acquisition of new aircraft, improvements in service delivery and implementation of quality initiatives. Access to financing makes it relatively easy for the airline to expand its business as well as to undertake commercial projects. The second competitive advantage of Etihad Airways is the preferential treatment the airline receives from the government of the UAE. The airline is the flag carrier of the UAE. As such, the airline enjoys preferential treatment in the country. This treatment does not directly result in a commercial competitive advantage. The airline still has very good performance by itself and is not overly reliant on the government for success. In any case, the local advantages it enjoys do not exist in markets outside the UAE. Etihad Airways is not part of the three major airline alliances. These three largest alliances are Star Alliance, SkyTeam, and OneWorld. Instead, Etihad has a large number of code share agreements with specific airlines in all the three alliances(Cameron, 2012). The result is that the company has arrangements that meet its direct needs. One of the disadvantages of becoming a member of an airline alliance is that the alliance precludes the market options available to individual airlines. On the other hand, it reduces the effort needed to negotiate code share agreements(Shaw, 2004). In this case, Etihad’s ability to negotiate and maintain numerous code share agreements with various airlines is a unique strength the also gives it unique a competitive advantage. The fourth competitive advantage of Etihad Airways is its equity investme