The Hindenburg disaster in New Jersey in 1937 brought an end to the age of the passenger zeppelin. AP Photo
The Hindenburg disaster in New Jersey in 1937 brought an end to the age of the passenger zeppelin. AP Photo
The Hindenburg disaster in New Jersey in 1937 brought an end to the age of the passenger zeppelin. AP Photo
The Hindenburg disaster in New Jersey in 1937 brought an end to the age of the passenger zeppelin. AP Photo

New-generation airships to be safer and nimbler


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The golden age of airship travel came to an abrupt end in 1937 when the German airship Hindenburg, coming in to New Jersey after a transatlantic flight, collided with its mooring tower and disintegrated in a huge fireball, killing 36.

The images of its huge cigar shape crumpling into a gas-fuelled inferno was enough to convince the world that the aircraft's flammable skin and the vast volumes of explosive hydrogen used to lift the airships made them unsafe.

Today's airships are lifted by helium. But, while helium is a major component of our atmosphere, it is nearly impossible to extract it from the air, which makes it more expensive than hydrogen.

However there are huge naturally occurring reserves of the gas in the United States, Poland, Russia and Canada, and a huge reserve of helium was discovered in Qatar.

Another problem that bedevilled the early airships was buoyancy control. Airships relied on taking on board water or soil as ballast to ensure they stayed on the ground as passengers boarded. It also made adjusting the buoyancy mid-flight relatively difficult.

The prototype airship being built by Aeros will use a new system doing away with the need for ballast to reach the correct altitude and ropes and docking stations on the ground to stop a vessel floating off.

Instead, the Aeroscraft uses large bags, or bladders, inside a rigid structure. When the pilot wants to descend, the vehicle needs to be heavier, so the helium in the craft is compressed into storage tanks.

The vacuum created inside the body draws air from the outside.

As air is heavier than helium, the vehicle sinks. To rise again, the helium is released, pushing the air out of the bags and giving lift. "We can control the buoyancy and allow ourselves to come to the ground and land vertically as well as take off vertically," says Fred Edworthy of Aeros.

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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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