Etihad Airways is taking the development of its “equity alliance” further by starting to build up a regional feeder network. The scheme, Etihad Regional, is initially intended to provide broader feed to Etihad in Europe, but the airline is considering extending the scheme to other markets over time.

Etihad CEO James Hogan announced the first steps in the process at the Dubai Air Show. The airline will acquire a 33.3% stake in Swiss regional carrier Darwin, pending regulatory approval. The Darwin aircraft will be rebranded into Etihad Regional and its network will be rearranged so that it will provide feeds to various European destinations.

As part of the new setup, Darwin is launching a significant number of new routes in April 2014, including services from Dusseldorf to Berlin, Cambridge and London City, from Berlin to Poznan and Wroclaw, from Geneva to Toulouse, from Zurich to Leipzig and from Rome to Tirana and Zagreb. One month later the airline plans to start flights from Zurich to Geneva, Florence and Turin and from Geneva to Belgrade. Another month later, services from Zurich to Linz, Graz, Verona and Lyon and from Geneva to Bordeaux, Marseille, Nantes and Verona will follow.

The initiative is the first time that a non-European airline is investing into intra-European regional air transport, a sector of the industry that has been contracting for the past few years given a lack of demand and high operating costs caused by the high fuel prices.

Darwin operates a fleet of 10 Saab 2000s. CEO Maurizio Merlo tells Aviation Week that the airline plans to take delivery of three more Saab 2000s to be able to fly the new schedule. A fleet replacement program is considered for a later stage, but not the short term.

Etihad will become a Darwin shareholder through a capital increase. Darwin will continue to operate its routes under its own code, but it will also add the codes of Etihad, Air Berlin and Air Serbia on the services from its European bases. Darwin will also put its code on Etihad, Air Berlin and Air Serbia flights.

Etihad has been building up an international network of subsidiaries that now includes Air Berlin, Air Seychelles, Virgin Australia and Aer Lingus. The company received regulatory approval to buy 24% of Jet Airways and plans to buy a 49% stake in Air Serbia in January.

Darwin started operations in 2004 as an independent regional carrier with its main base in Lugano/Switzerland.