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KLM and Etihad have indeed signed a 10 year agreement of co-operation.
Etihad have now started (so far), with just one flight in the eve AMS – AUH, KLM flight in the morning.
Skyteam, KLM and AF especially are planning to pass more through AUH as a hub for their passengers, for the Australasia Region, and the plans are to increase these flights.
I am unsure about cutting back on DXB, but from using the AF A380, and a 772 overnight, is now a 773 and once daily, with a KLM 772 from AMS.
So one flight has been cut out already by AF, and both operate at the same time of day.
Ot seems inevitable, that VS would carry for its Brand through AUH, and work with closer ties to Skyteam, especially AF /KLM and with Delta.
But Etihad in the picture, they gain much influence once they have gained shares, and clearly they change the strategy of the other Airline to complement their own. They also have a significant share of Virgin Australia.
So it can be clearly seen, Etihad will call the shots here. The only hope of creating an alternative Emirate Hub, would be through AUH, and they are all lining up in as mentioned, to do just that.