Bertrand-Marc Allen, the president of Boeing International, said that Turkey has 'the capability, the geo­graphic positioning, the population, the culture to be a success and a source of a lot of growth over the next 20 years'. Reem Mohammed / The National
Bertrand-Marc Allen, the president of Boeing International, said that Turkey has 'the capability, the geo­graphic positioning, the population, the culture to be a success and a source of a lot of growShow more

Emirates, Qatar Airways face new rivalry with rapidly growing Turkish Airlines



The president of Boeing believes Turkish Airlines will emerge as a rival to Emirates Airline.

Competition between the pair is likely to heat up further when Istanbul’s new Dh40.45 billion international hub opens next year.

"Turkey is a significant opportunity," Bertrand-Marc Allen, the president of Boeing International, said at the Global Aerospace Summit in Abu Dhabi yesterday.

“It has got the capability, the geo­graphic positioning, the population, the culture to be a success and a source of a lot of growth over the next 20 years. It will introduce an interesting dynamic and another competitor in this hub strategy for aviation.”

The rapid growth of Turkish Airlines represents a challenge to the region's big three of Emirates, Etihad Airways and Qatar Airways, which are competing to establish international hubs in Dubai, Abu Dhabi and Doha.

Turkish plans to invest $3.74bn this year on previously ordered planes to grow its fleet to 261 aircraft.

The carrier’s ambition is also reflected in the growth of its Istanbul base, which is mimicking the expansion of Dubai International Airport as an international hub.

Istanbul Ataturk Airport attracted almost 61.3 million passengers last year, while Dubai drew 78 million. Dubai expects to handle 85 million passengers this year.

With about US$35bn of investments, Istanbul's new airport will have six runways, 500 aircraft parking spots and the capacity to accommodate 150 million passengers.

“I think that Turkey is starting to rival the UAE airline and Turkey is doing very well,” said Mr Allen. “We are keen to watch this develop.”

Other regional hubs are also investing billions of dollars in airport expansion projects.

Qatar opened Hamad International Airport in 2014, while Abu Dhabi International said it would open its Midfield Terminal, a huge facil­ity designed to handle 30 million passengers a year, in 2017.

Emirates this week said it was boosting capacity on its daily service to Istanbul’s Sabiha Gokcen Airport, while Turkish Airlines announced plans to add two more European routes to Dubrovnik in Croatia and Kosice in Slovakia.

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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