A new airline is to take off in Saudi Arabia as the kingdom takes a major step in liberalisation of its aviation sector.
SaudiGulf Airlines won a licence to operate internal flights in the country. Saudi Arabia’s General Authority of Civil Aviation (GACA) approved the airline’s application for an air operator’s certificate on June 9, which was formally handed over on Wednesday night, Saudi Press Agency reported yesterday.
Based in Dammam, SaudiGulf will offer domestic flights to Riyadh and Jeddah as well as a service to Dubai, according to its website.
While the airline did not say when the flights will start, reports said operations are expected to begin in September.
Saudi Arabian Airlines, known as Saudia, and the budget carrier flynas are, currently, the only local carriers serving the 27 million people living in the country.
Analysts hailed the move, saying that Saudi Arabia has significant potential.
“The news is refreshing and encouraging to see the changes that the Saudi government have embarked on,” said Mark Martin, the chief executive of Dubai-based Martin Consulting. “We believe Saudi Arabia’s dependence on oil will lower to the point where we may see winds of a radical liberalisation trend aimed and designed to attract the world into the region.”
Saudi Arabia is one of the largest countries in Asia by land mass and has no rail network, so the potential for increased air transport is immense, Mr Martin said.
Al Maha Airways, a unit of Qatar Airways, has also been waiting for a certificate to operate in Saudi Arabia, having received an initial licence in 2012, when the Saudi regulator began accepting applications for domestic flights.
Qatar Airways was not immediately available for a comment on the latest development.
Competition is likely to heat up, as the parent company of Saudia plans to launch its own budget airline. The low-cost airline, called Flyadeal, will be based in Jeddah and is expected to be launched next year.
“Clearly the focus is on sustainable economic reforms that are progressive, formidable and radical,” said Mr Martin. “This falls in place extremely well with the recent Saudia restructuring [and] the launch of SaudiGulf Airlines, Al Maha Airways and Flyadeal.”
He said that Dammam’s location close to Qatar, the UAE and Bahrain could lead it to emerge as a seventh hub after Doha, Manama, Abu Dhabi, Dubai, Sharjah and Muscat, adding to already intense competition among Gulf carriers.
“Dammam as a destination was neglected and we’re glad that the Saudi government has finally recognised its strategic value,” said Mr Martin.
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OTHER IPL BOWLING RECORDS
Best bowling figures: 6-14 – Sohail Tanvir (for Rajasthan Royals against Chennai Super Kings in 2008)
Best average: 16.36 – Andrew Tye
Best economy rate: 6.53 – Sunil Narine
Best strike-rate: 12.83 – Andrew Tye
Best strike-rate in an innings: 1.50 – Suresh Raina (for Chennai Super Kings against Rajasthan Royals in 2011)
Most runs conceded in an innings: 70 – Basil Thampi (for Sunrisers Hyderabad against Royal Challengers Bangalore in 2018)
Most hat-tricks: 3 – Amit Mishra
Most dot-balls: 1,128 – Harbhajan Singh
Most maiden overs bowled: 14 – Praveen Kumar
Most four-wicket hauls: 6 – Sunil Narine
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.”
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
A State of Passion
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