Bookings to Australia for Etihad Airways have increased fourfold this year as a result of its new strategic partnership with Virgin Australia.
The two airlines are linking up Etihad's global network with Virgin Australia's more than 40 flights across Australia and New Zealand, part of Etihad's strategy to broaden its reach by partnering global carriers.
High fliers: More on Etihad's expansion.
Etihad mulls joining air alliance Etihad Airways believes it would make a great partner for one of the three large airline alliances. Australia is proving to be a happy hunting ground for Etihad as bookings increase fourfold. Read article
More flights, visitors and more cash The number of UAE tourists to Australia has almost tripled in the last decade, as flights have increased. Read article
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The burgeoning relationship marks a dramatic contrast to Etihad's previous partnership with Qantas, which it viewed as an unsatisfactory arrangement for the interests of the Abu Dhabi carrier. Etihad ended the accord last year to pursue a partnership with Virgin Australia.
"We are actually quadrupling the results we had with Qantas," said James Hogan, the chief executive of Etihad. "It has worked very well and it is just early days - we haven't cranked up." Etihad carried 450,000 passengers in and out of Australia last year. The tie-up with Virgin Australia, which is moving from a budget airline into a full-service competitor to Qantas for the business-travel market, means the Abu Dhabi airline can now offer more reach into Australia than Emirates Airline or Singapore Airlines, Mr Hogan said.
As part of the deal, Virgin Australia started flying directly between Sydney and Abu Dhabi in February and is expected to expand this by flying to the UAE capital from Brisbane next year.
The two airlines are also planning to jointly build and operate a business-class lounge in Sydney, and already share costs by partnering on aircraft maintenance and joint sales and marketing efforts. Another major piece of the partnership is allowing Virgin Australia customers to earn and redeem frequent flyers' benefits on Etihad flights, and vice versa.
Code-share deals are a central plank for Etihad, which is often grouped together with Emirates and Qatar Airways as one of the big three long-haul Gulf airlines.
"If you look at the fleet network growth of those two airlines, we are not going to be anywhere near that," Mr Hogan said. "We always talk about the right shape and size, and we believe a strong code-share strategy is good for our customer."
Etihad has 31 code-share agreements with foreign carriers and is in talks to add TAP of Portugal to its list of partners.Partners include Czech Airlines, which announced it would operate services into Abu Dhabi after sealing a code-share pact with Etihad. With demand for travel between the UAE capital and Prague limited, the code-share will allow Czech Airlines to carry passengers to Abu Dhabi who will then fly Etihad to points in South East Asia or the wider Middle East
The pact was similar to the one Etihad signed with Ukraine International Airlines, which also operates flights to the UAE capital. "We have no intention to fly to Czech or Ukraine so to have them operating here and synchronising with us is a win-win," Mr Hogan said.
Elsewhere, the Abu Dhabi airline is going after big-spending high-fliers by upgrading its loyalty awards programme with a new category, Gold Elite. The expanded features of the Etihad Guest programme are designed to help the airline snag lucrative premium-class travellers as it builds up its Abu Dhabi base to serve long-haul passengers between Asia and Europe.
The carrier said the new category would add layers of service for customers and also hinted it would be unveiling further benefits for customers by the end of the year. This includes passengers being able to redeem their guest miles at any retail point of sale worldwide, in lieu of currency.
"We have spent considerable time listening to our most frequent passengers," said Peter Baumgartner, the chief commercial officer of Etihad. "We believe the offering to Gold Elite members is unsurpassed."
The new status will be added to existing categories of basic, silver and gold status for members with more than 125,000 miles collected through air travel, or those who have taken 30 return flights over a 12-month period. Such programmes are popular tools for airlines to build customer loyalty, gather important customer information and create a more direct dialogue between airline and customer.
Etihad's strategy has included partnering airlines such as American Airlines and Virgin Australia to integrate the respective loyalty programmes and give customers the ability to earn and redeem miles on these foreign carriers.
Etihad Guest was launched in August 2006 and now has almost 1.2 million members, after growing by 32 per cent in the past year. About 400 members will automatically be upgraded to Gold Elite status.
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
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Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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Mohammad Fakhreddine (LEB) v Christofer Silva (BRA)
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Sulaiman (KUW) v Abdullatip (RUS)
Super lightweight:
Flavio Serafin (BRA) v Mohammad Al Katib (JOR)
The Sand Castle
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Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
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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.”
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
- Stay invested: Time in the market, not timing the market, is critical to long-term gains.
- Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
- Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
Dubai Bling season three
Cast: Loujain Adada, Zeina Khoury, Farhana Bodi, Ebraheem Al Samadi, Mona Kattan, and couples Safa & Fahad Siddiqui and DJ Bliss & Danya Mohammed
Rating: 1/5
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