China is expected to account for 193 million of the 831 million expected new air passengers by 2016. AP Photo / Greg Baker
China is expected to account for 193 million of the 831 million expected new air passengers by 2016. AP Photo / Greg Baker
China is expected to account for 193 million of the 831 million expected new air passengers by 2016. AP Photo / Greg Baker
China is expected to account for 193 million of the 831 million expected new air passengers by 2016. AP Photo / Greg Baker

Air travel flying high as 3.6bn passengers expected by 2016


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The number of passengers carried annually by the world's airlines will hit 3.6 billion within four years, jumping almost 30 per cent on 2011's figures, according to the International Air Transport Association (Iata).

The emerging economies of Asia-Pacific, Latin America and the Middle East will see the strongest passenger growth, led by routes within or connected to China, which will account for 193 million of the 831 million expected new passengers, Iata said.

The Middle East alone is expected to have the third-fastest passenger growth rate in the world at 6.6 per cent, according to Iata's Airline Industry Forecast 2012-2016.

It sees global passenger numbers expanding by an average of 5.3 per cent per annum between 2012 and 2016. The 28.5 per cent increase over the forecast period will see almost 500 million new passengers traveling on domestic routes and 331 million new passengers on international services.

Middle East international freight demand is forecast to grow at 4.9 per cent, the strongest growth among the regions, while international freight volumes worlwide will grow at just 3 per cent per annum to total 34.5 million tonnes in 2016, a jump of 4.8 million tonnes of air cargo over the 29.6 million tonnes carried in 2011.

The United States will continue to be the largest single market for domestic passengers at 710.2 million. In the same year, passengers on international routes connected to the United States will total 223 million, making it the largest single market for international travel as well.

"Despite the current economic uncertainty, expected demand for connectivity remains strong. That's good news for the global economy," said Tony Tyler, Iata's Director General and chief executive.

"Growing air transport links generate jobs and underpin economic growth in all economies... But exploiting these will require governments to recognise aviation's value with policies that do not stifle innovation, tax regimes that do not punish success and investments to enable infrastructure to keep up with growth."

According to the forecast, five of the 10 fastest-growing countries are in the Middle East North Africa region, reflecting it's growing importance in international air freight. The largest international freight market is the United States at 7.7 million tonnes, while the United Arab Emirates ranks sixth place with 2.5 million tonnes.

Freight carriage within the Asia-Pacific region will account for around 30 per cent of the expected total increase in freight tonnage over the period. Globally, aviation supports some 57 million jobs and $2.2 trillion in economic activity.

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It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
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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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