Emirates currently flies to 24 destinations in Africa. Ali Haider / EPA
Emirates currently flies to 24 destinations in Africa. Ali Haider / EPA

Emirates in talks with African carrier



Emirates Airline is understood to be in talks over a possible partnership with Africa's newest budget airline, Fastjet, according to an official statement issued by the fledgling carrier yesterday.

The announcement, made by the Fastjet chief executive Ed Winter, immediately followed comments to the Kenyan press by Jean-Luc Grillet, the head of African operations for Emirates, that his airline would be "willing to work with Fastjet".

Fastjet is the brainchild of the travel tycoon Sir Stelios Haji-Ioannou, who launched the UK-based budget airline easyJet in 1995.

"A partnership would benefit both Fastjet and Emirates with greater passenger traffic, and would give travellers in Africa the opportunity to connect to the rest of the world through Emirates' Dubai hub, with Fastjet providing passengers from African cities," said Mr Winter's statement.

"The talks are at an early stage but this represents a great opportunity for both parties. Emirates currently flies to 24 destinations in Africa, while Fastjet launched its operations in Tanzania last month and plans to become a pan-African carrier."

Sir Stelios founded Fastjet with the London-based investment company Rubicon after it acquired the aviation assets of Lonrho, the pan-African conglomerate, earlier this year. He owns 5 per cent of the new carrier, which launched with a domestic Tanzanian service on November 29, operating the first of three Airbus A319s from Dar es Salaam's Julius Nyerere airport.

A second operating base is scheduled to open in the Kenyan capital, Nairobi, during the first quarter of next year, to be followed by two West African bases in Accra, Ghana and Luanda, Angola.

The airline also said this week that it was close to acquiring South Africa's recently grounded 1time Airline, giving it a foothold in the continent's most developed aviation market.

Fastjet's pan-African aspirations could have appeal as a potential feeder network for Emirates, which relies on funnelling intercontinental traffic through its hub at Dubai International Airport.

Any such partnership would pose a direct competitive threat to Kenya Airways, whose strategy hinges on routing passengers through its Nairobi hub.

Officially, Emirates declined to confirm the Fastjet announcement.

"We routinely look at ways we can work with other airlines in order to offer customers the most convenient and seamless service possible. However, it is our policy not to comment on any discussions under way," said an Emirates spokesman.

Europe’s rearming plan
  • Suspend strict budget rules to allow member countries to step up defence spending
  • Create new "instrument" providing €150 billion of loans to member countries for defence investment
  • Use the existing EU budget to direct more funds towards defence-related investment
  • Engage the bloc's European Investment Bank to drop limits on lending to defence firms
  • Create a savings and investments union to help companies access capital

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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