More than one in 20 flights are being cancelled at short notice by European airlines as the industry struggles to shake off the post-pandemic crisis.
Figures for recent weeks show, as a percentage of its overall capacity, Turkish Airlines was the worst performer on 6.66 per cent, while European short-haul specialist easyJet was not far behind on 5.46 per cent.
The industry has some cause for optimism as the latest data from industry analysts Official Aviation Guide suggest the severity of flight cancellations from 48 hours before departure may be easing.
"Cancellation rates have reduced very slightly at most European airports and airlines over the last two weeks," OAG's chief data analyst, John Grant, told The National.
That was good news for aviation chiefs, including Heathrow's John Holland-Kaye, whose airport has been plagued with luggage problems, cancellations and delays in recent weeks.
But Mr Grant believes the reduction will probably have an undesirable consequence.
"What I suspect we're seeing is slightly higher rates of delays now beginning to occur because airlines are not cancelling, but still don't have enough resources to depart flights on time," he said.
Given its status as a international travel centre, the UK has been badly hit by flight cancellations, but even there the data bodes well.
"Last week's rate in the UK was 1.6 per cent, but only three weeks ago it was 31 per cent, so it's coming down fast," Mr Grant said.
While the UK has registered a steep fall in cancellations, other European countries have seen a similar reduction in rates,
In the week beginning on June 27, the percentage of flights cancelled in Germany ― the worst performer among the major European airports ― was 5.95 per cent.
But two weeks later, in the seven-day period from July 11, the rate had dropped to 2.36 per cent.
Austria, Belgium and the Netherlands were also noteworthy fallers.
The reductions in Spain and Italy were less pronounced but these destinations tended to be starting from a markedly lower base.
Mr Grant ascribes their relatively lowly cancellation rates to much better pandemic management.
"There is a degree of correlation between the amount of support that airlines and airports received during the pandemic and the current rates of cancellations," he said.
"So in Spain, there was a lot more support given to workers and to the airlines.
"And, while it may be coincidence, cancellation rates [there] are much lower than in Germany, the UK or the Netherlands, for example."
A similar correlation can be made from the latest data on scheduled airline cancellations.
easyJet one of worst-performing airlines in Europe
Aviation data company Mabrian looked at the number of scheduled flights for July 1 to 15 that were cancelled on the schedule of June 28, compared with that two weeks before, on June 14.
Despite being frequently criticised not always endearing himself to customers, Ryanair chief Michael O'Leary should take a lot of credit for the Irish budget carrier's absence from the list, Mr Grant said.
"Michael O'Leary and Ryanair throughout the pandemic reached working agreements with their unions that allowed them to retain most of their staff and keep them working, whereas easyJet furloughed," he said.
"This meant Ryanair was able to ramp up quickly and more effectively."
The result has enabled the airline to extend its short-haul ascendancy.
"If look at where those two airlines were this week in 2019, Ryanair was probably about 40 per cent or 50 per cent bigger," Mr Grant said.
"Now it's twice the size of easyJet in terms of weekly production. While Ryanair has been growing its network, easyJet has been forced to rebuild."
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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Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
The specs
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Power: 360bhp
Torque: 500Nm
Transmission: eight-speed automatic
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