One of the challenges facing the rise of the budget carrier market is dealing with China's increasingly crowded skies.
The country is expected to have 4,200 commercial aircraft in 2020, compared with the current fleet size of 2,001 with 46 airlines. That will make for busy airspace.
Nearly 680,000 people flew every day in China in 2010, fewer than the 1.7 million who took to the air in the United States, but the rate of growth in China is much faster.
China's airports often feel like the worst in the world when it comes to delays and cancellations and recent data from industry research group FlightStats shows the facts bear out this impression.
Beijing's main airport, which is the world's second-busiest, had the lowest ranking for on-time departures in July with fewer than one in five flights leaving on schedule as military controls of airspace and an expanding fleet add to congestion.
And the country's financial capital, Shanghai, had the second-worst among the 35 busiest international airports in June, according to the FlightStats rankings.
Compare this to the best performer, Tokyo's Haneda airport, where 95 per cent of flights left on time, followed by the Japanese capital's Narita airport. Just 18 per cent of 22,019 flights departing from Beijing Capital International Airport were on time, while Shanghai Pudong International airport had a rate of about 29 per cent, FlightStats said. A delay is marked if an aircraft fails to take off within 15 minutes of the scheduled gate time.
However, more than 42 per cent of flights at Beijing airports experienced excessive delays, which means flights arrive at the gate or depart 45 minutes or more after the scheduled time, the report said. The flag carrier Air China came in sixth from the bottom of the rankings, with just 54.58 per cent of its flights arriving on schedule. Air China, China Eastern and other airlines have seen their fleets expand hugely as rising incomes translate into more people flying and China's commercial aircraft fleet is projected to double in the next seven years.
According to the civil aviation administration of China, the on-time performance rate of China's airlines was about 74 per cent last year. In the US, 82 per cent of the flights arrived on time last year, according to the US bureau of transportation statistics.
Of 35 facilities ranked in the report, Amsterdam airport came third, with an on-time rate of 84 per cent, while John F Kennedy International Airport in New York was 26th with 66 per cent. London Heathrow was ranked 21st with a rate of 72 per cent. There were some surprises among the figures. Hong Kong International Airport came in 29th, with 64 per cent of flights out of the 12,417 departing on time - clearly feeling the impact of increased traffic with the mainland. Singapore Changi Airport ranked 10th, with a 78 per cent of on-time performance.
To use empirical evidence - three flights I have taken recently, to Beijing from Shanghai (twice) and Chengdu, were all delayed by more than three hours. One flight from Shanghai was delayed by six hours, while another, to Wuhan, was delayed longer, and the passengers waiting started to chant slogans about wanting to go home.
In recent months, passengers have done more than just chant and there has been a sharp rise in the number of "air-rage" incidents - in Chinese known as kong nu zu or "angry people in the sky".
In February, the senior Communist Party official Yan Linkun furiously trashed a boarding gate, while at Baiyun airport in Guangzhou, two passengers beat up a member of staff over a delay to a flight to Melbourne.
The question of what role military air traffic plays in all this is open to debate. China's air force controls the country's airspace and civil aviation uses about a fifth of available routes of the country's total airspace.
Compare this with the US, where military restrictions have far less impact because civil aviation controls the vast majority of airspace and airways tend to be located in desert regions or over oceans, far away from the busy airport hubs in cities such as New York and Los Angeles.
With China's three biggest airlines planning to add a total of at least 273 planes in the next three years, on top of the plans the budget carriers have for expansion, traffic congestion certainly looks set to worsen.
"At present, the limited airspace resource has restricted the development of civil aviation," Li Jiaxiang, the head of civil aviation administration, said in Beijing in May.
"We will strive to further open up the airspace."
The state-owned plane maker Aviation Industry Corporation of China has said with a sharp increase expected in the number of passenger jets in the country in the years to come, the little available airspace will fall short of the actual demand.
However, the military insists it is not the problem. Sources from within the People's Liberation Army have indicated in recent months air force activity was responsible for at most 7 per cent of civil aircraft delays.
By far the biggest cause of flight delays, at 42 per cent, is the management and operation of air carriers, the sources said. This is followed by air traffic control, which results in 26 per cent of delays, and weather, which claims 21 per cent.
It seems until that is controlled, and who knows when technology might enable it, there will be plenty more angry people in the skies over China.
business@thenational.ae
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.”
Company profile
Name: Steppi
Founders: Joe Franklin and Milos Savic
Launched: February 2020
Size: 10,000 users by the end of July and a goal of 200,000 users by the end of the year
Employees: Five
Based: Jumeirah Lakes Towers, Dubai
Financing stage: Two seed rounds – the first sourced from angel investors and the founders' personal savings
Second round raised Dh720,000 from silent investors in June this year
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
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War 2
Director: Ayan Mukerji
Stars: Hrithik Roshan, NTR, Kiara Advani, Ashutosh Rana
Rating: 2/5
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
COMPANY PROFILE
Name: Mamo
Year it started: 2019 Founders: Imad Gharazeddine, Asim Janjua
Based: Dubai, UAE
Number of employees: 28
Sector: Financial services
Investment: $9.5m
Funding stage: Pre-Series A Investors: Global Ventures, GFC, 4DX Ventures, AlRajhi Partners, Olive Tree Capital, and prominent Silicon Valley investors.
The specs
Price, base / as tested Dh100,000 (estimate)
Engine 2.4L four-cylinder
Gearbox Nine-speed automatic
Power 184bhp at 6,400rpm
Torque 237Nm at 3,900rpm
Fuel economy, combined 9.4L/100km
Company%20Profile
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