AirAsia mulls budget service in Gulf region

AirAsia, based in Malaysia, is considering setting up a low-cost carrier to serve the Gulf region, almost two years after its long-haul division AirAsia X axed its Kuala Lumpur to Abu Dhabi service.

Tony Fernandes, the chief executive of AirAsia, said in Doha yesterday an opportunity had opened up for a budget airline in the region. The Gulf is dominated by premium, full-service carriers although budget carriers such as flydubai, Air Arabia and RAK Airways have emerged in recent years.

Mr Fernandes said: "As a low-cost carrier, we are (into) creating new markets. The key is to create really low fares, which I think the Gulf hasn't seen.

"If you want to compete, you have to create a product that's very different and extremely low priced, so that a guy can go to Dubai for a cup of coffee and come back with his airfare being about the same as his taxi fare."

He said AirAsia had already opened discussions with unnamed potential partners to set up such a budget airline, adding, "AirAsia is investigating (the prospects) quite seriously".

Mr Fernandes also raised the prospect of the group establishing a Middle East hub, which could help its long-haul division reopen services to Europe.

AirAsia X, which left Abu Dhabi in 2010 after three months, has since scrapped routes to London and Paris, blaming the EU's new carbon emissions tax, which is based on the distance from a flight's last departure airport.

A stopover hub in the Middle East before flying to European destinations could help AirAsia X manage the additional cost.

"We want to have a hub in the Middle East in our 10-year strategy, since Asia is more or less covered. Two or three parties have made known their interest. It's interesting, but the talks are very preliminary," Mr Fernandes said.

The carrier has grown into Asia's biggest discount airline in the 10 years since being taken over by Mr Fernandes.

dblack@thenational.ae

* with agencies

The rules on fostering in the UAE

A foster couple or family must:

be Muslim, Emirati and be residing in the UAE
not be younger than 25 years old
not have been convicted of offences or crimes involving moral turpitude
be free of infectious diseases or psychological and mental disorders
have the ability to support its members and the foster child financially
undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially

COMPANY PROFILE

Name: Kumulus Water

Started: 2021

Founders: Iheb Triki and Mohamed Ali Abid

Based: Tunisia

Sector: Water technology

Number of staff: 22

Investment raised: $4 million

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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How to apply for a drone permit

Individuals must register on UAE Drone app or website using their UAE Pass
Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
Upload the training certificate from a centre accredited by the GCAA
Submit their request

What are the regulations?

Fly it within visual line of sight
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Drones must weigh 5 kg or less

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