Capacity is critical for future of Dubai airports, chief says


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Expanding capacity at Dubai's airports is a priority if the emirate is to maintain its lead as a regional hub and hold off competition from other airports in the Gulf and Turkey, according to the chief executive of Dubai Airports.

Speaking at an aviation industry conference in Dubai yesterday, Paul Griffiths said: “If we cannot continue to supply the capacity required for growth, then this growth will not going to stop, but find another hub to fly over.”

Mr Griffiths was referring to growing competition from Doha’s new Hamad International Airport, Abu Dhabi’s upcoming Midfield Terminal and Istanbul’s new airport, which is slated to open in 2017.

Dubai International handled 7.2 million passengers in August, up 9.5 per cent year-on-year, and is on target to reach 79 million this year. Mr Griffiths said that the airports operator has planned a series of developments to help accommodate the 126 million passengers that are projected to fly through the city's two airports by 2020.

With the opening of Concourse D by the end of this year, Dubai International will be able to handle 90 million passengers. “By 2020 the demand that we are going to have to accommodate is somehow 100 million,” he said. “We [have] got to add [capacity for] another 10 million passengers.”

The airport will resort to advanced technology to help with a speedy turnover of passengers.

Dubai International is also studying ways to reduce the take-off time between A380 aircraft, which makes up the majority of Emirates' fleet.

“We are running trials to selectively reduce the separation for the A380 down from five miles to three miles in certain combinations under certain conditions,” said Mr Griffiths.

“That clearly will have a positive impact on capacity … If we can prove that this practice works in complete safety.”

Additionally, capacity at Al Maktoum International at Dubai World Central (DWC) will be scaled up to accommodate 26 million passengers before 2020, said Mr Griffiths.

The airports chief said there was the possibility that the low-cost carrier flydubai would move its operations “gradually” to DWC to make way for capacity to be released at Dubai International.

Without giving more details about the move, Mr Griffiths said: “The thing is, to make best use of slots [at DWC] this transition has got to be reasonably rapid. But obviously the details of that are still being worked on.”

Flydubai started operating 70 flights per week from DWC this month. "DWC is the new frontier of aviation in the UAE," the flydubai chief executive Ghaith Al Ghaith said yesterday.

“The start of our new operations at DWC provides further opportunities for growth for flydubai.”

selgazzar@thenational.ae

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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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  • If you decide to be brave and go for it, seek professional advice and use a semi-permanent colour
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Man of the match: Diogo Jota (Liverpool)

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  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
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