Business

SAS joins Etihad codeshare fleet to strengthen Scandinavian-Middle East ties

Etihad Airways said yesterday that it signed a codeshare partnership with Scandinavian Airlines SAS, which will allow its passengers greater connectivity in Nordic cities in Europe.

Shereen El Gazzar

November 27, 2014

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There is no stopping Etihad Airways’ codeshare partnerships.

Scandinavian Airlines (SAS) yesterday became the Abu Dhabi carrier's 22nd codeshare partner in Europe and the 47th globally. The deal will allow Etihad passengers greater connectivity to cities in Denmark, Sweden and Norway.

A codeshare allows airlines to publish and market a flight under their own brand.

Under the agreement, which is subject to regulatory approval, SAS will place its SK code on Etihad’s flights between Abu Dhabi and the seven European cities of Brussels, Düsseldorf, Frankfurt, Rome, Milan, Zurich, Geneva and London Heathrow.

In return, Etihad will place its EY code on SAS flights from these seven cities, apart from Brussels, to SAS hubs in Copenhagen, Oslo and Stockholm. Etihad will also be able connect its passengers on SAS flights to the cities of Billund and Ålesund in Denmark; Ålesund, Kristiansand, Trondheim and Stavanger in Norway; and Umeå, Sundsvall, and Östersund in Sweden.

Etihad’s growth strategy is focused on expanding its global route network by codeshares partnerships and forming equity alliances, in which it invests in carriers in strategically important regions.

It has minority stakes in Aer Lingus, Air Serbia, airberlin, Air Seychelles, Virgin Australia, India’s Jet Airways and Switzerland’s Darwin Airline. Etihad’s latest investment is in Alitalia, the ailing Italian airline. For SAS, which operates 1,000 flights daily to 127 destinations in Scandinavia, Europe, the US and Asia, the codeshare with Etihad is its 23rd globally and the third in the Middle East. SAS is a member of Star Alliance.

Etihad’s chief executive, James Hogan, has previously branded the model of international carrier alliances as “fractured”.

He said that Etihad had avoided entering into global alliances favoured by global carriers such as oneworld, SkyTeam and Star Alliance. Mr Hogan has said he prefers growth via codeshare relationships and equity investments in other airlines.

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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