Al Maktoum International clears for take-off with cargo carriers


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The first airlines have signed up to operate from Dubai's second airport, Al Maktoum International, part of which opens at the end of this month. The opening of the airport close to Dubai's major seaport, Jebel Ali, will launch a new phase for Dubai's logistics and transport industry, which was the engine of the Dubai economy for decades before property development and other diversification schemes gathered pace.

Andrew Walsh, the vice president of cargo and logistics for Dubai Airports, said his company had signed a number of memorandums of understanding (MoUs) with cargo airlines to become the first carriers to serve the new airport. Dubai Airports and its sister agency Dubai Logistics City, have put together a package of incentives for the first airlines to build a critical mass of tenants. The incentives include periods of discounted or free aircraft parking and landings, as well as office and warehouse space.

Paul Griffiths, the chief executive of Dubai Airports, "has signed a number of MoUs", Mr Walsh said. "We are in the process of finalising certain operators." He declined to provide the number of freight firms ready to go or their names, but said: "It is good to get airlines signed up, absolutely." The Middle East is experiencing a strong rebound in air cargo after the global economic downturn. The region's airlines posted a 26 per cent gain in cargo volumes in April compared with April last year, and 35.5 per cent rise in March.

The expansion at Al Maktoum is being planned to keep pace with the heady growth of Dubai as a major air transit point. Dubai International Airport handled 1.92 million tonnes of cargo last year, a gain of 5.6 per cent during the worst downturn in civil aviation history. The airport operator has forecast demand exceeding 3 million tonnes by 2015 as Emirates Airline and other carriers carry more goods from Asia and then re-export them in the Gulf, Africa, Europe and even the US.

Plans call for Al Maktoum International to have five runways and the capacity for 160 million passengers a year and 12 million tonnes of cargo when it is fully complete in the 2020s or 2030s, at a projected cost of US$10 billion (Dh36.73bn). In its current phase, it has cargo capacity of 250,000 tonnes a year, rising to 600,000 tonnes soon, and room for 5 million passengers a year. It is slated to begin passenger operations next March.

Last April, Dubai Airports officials said they were reviewing the masterplan, which could have major effects on the design, cost and completion date. The new airport, including the logistics, property and office space development surrounding it called Dubai World Central, sits on a parcel of land in the Dubai desert reserved decades ago by the then Ruler of Dubai, Sheikh Rashid bin Saeed. As the project goes from blueprint to reality, Dubai Airports officials are trying to encouraging some of the largest tenants of Dubai International Airport to cross over, companies such as Cargolux, Atlas Cargo and DHL.

Mr Walsh said many freight firms were locked into their summer flight schedules but he expected airlines to move to Al Maktoum with increasing frequency later this year. Cargolux officials yesterday said they had no immediate plans to move to the new airport. The entire transition of dedicated cargo airlines should take five years, according to Mr Walsh, who stressed the moves would be voluntary.

"There will be no forced move out to Dubai World Central," he said. The only requirements that Dubai Airports has made of airlines are for those operating older aircraft, such as DC-8s, DC-9s, and Boeing 707 and 727s, which are noisier. They will be prohibited from flying out of Dubai International beginning in November, but permitted to use Al Maktoum Airport. igale@thenational.ae

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Abdul Jabar Qahraman was meeting supporters in his campaign office in the southern Afghan province of Helmand when a bomb hidden under a sofa exploded on Wednesday.

The blast in the provincial capital Lashkar Gah killed the Afghan election candidate and at least another three people, Interior Minister Wais Ahmad Barmak told reporters. Another three were wounded, while three suspects were detained, he said.

The Taliban – which controls much of Helmand and has vowed to disrupt the October 20 parliamentary elections – claimed responsibility for the attack.

Mr Qahraman was at least the 10th candidate killed so far during the campaign season, and the second from Lashkar Gah this month. Another candidate, Saleh Mohammad Asikzai, was among eight people killed in a suicide attack last week. Most of the slain candidates were murdered in targeted assassinations, including Avtar Singh Khalsa, the first Afghan Sikh to run for the lower house of the parliament.

The same week the Taliban warned candidates to withdraw from the elections. On Wednesday the group issued fresh warnings, calling on educational workers to stop schools from being used as polling centres.

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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