Helicopter service woos superrich



In a region where the elite are both so fabulously wealthy and endowed with royal lineage that calling them VIP is simply inaccurate, marketing luxury services has its own unique set of rules and challenges. Heavy doses of pageantry and royal star power were on hand on Sunday night at the corporate relaunch of Falcon Aviation Services, a helicopter and corporate operator in Abu Dhabi. The event was held at Falcon's base at Bateen Airport on the island of Abu Dhabi, where the operator offers services to whisk businessmen to Dubai in a helicopter for about Dh13,000 (US$3,540), or to Paris on a new Embraer Legacy 600 corporate jet for Dh330,000.

"We decided we had to improve the level of brand awareness," said Philip Markham, the general manager of Falcon. "We've been focusing predominantly on operations, negotiating aircraft deals and recruiting pilots, but what we haven't done is pay a lot of attention to the brand." The UAE is home to a large number of the very wealthy, and Falcon is one of many companies to have sprung up to cater to their every whim. According to the World Wealth Report, compiled by Merrill Lynch and Capgemini, there were 68,100 millionaires living in the Emirates as of last year. A popular marketing tool for reaching the rich in the Gulf is the glitzy, star-studded event full of VIPs, and even more important, guests called VVVIPs.

"The event will be attended by a number of Sheikhs and other dignitaries," promised an announcement for the Falcon relaunch, noting that the evening was "under the patronage" of some members of Abu Dhabi's royal family. With the promise of royalty attending, more than 40 photographers and journalists flocked to the airport and were bused to the event. With clipboards and mobile phones at the ready, event organisers of this carefully orchestrated event greeted the lines of sparkling white sport cars and four-wheel-drives, and duly shepherded guests down the red carpet lined with Falcon employees standing at attention, finally seating them in a helicopter hangar transformed for the evening into a large event hall. The evening flowed with flashy presentations of the new aircraft in the fleet, representing the first fruits of more than $500 million of investment.

Mr Markham said the event was primarily a way to create brand awareness in an increasingly crowded marketplace. After growing from a small start-up with three helicopters in 2006, Falcon is now big enough to seriously challenge the two big players, Abu Dhabi Aviation and Royal Jet. Falcon now has 11 helicopters from several manufacturers, and two corporate jets. More than its competitors, Falcon has diversified its services beyond charter flights or offshore oil and gas support, working as emergency medical response providers and even helicopter banner towing. The company is also working with the Tourism Development and Investment Company (TDIC), Abu Dhabi's largest developer of hotels and tourism projects, to build a helipad from which it can begin offering tours of the capital.

At the end of the evening, the curtains were drawn back on the event hall to reveal the Falcon fleet. Company officials escorted the royal guests, personally explaining to them the virtues of each jet and helicopter. As the VVVIPs were given a private tour of Falcon's Gulfstream G450, one member of the crowd gazed wistfully at the Dh165m aeroplane. "One day, I will fly on this," he promised himself.

igale@thenational.ae

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  2. Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc. 
  3. Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway. 
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Devesh Mamtani from Century Financial believes the cash-hoarding tendency of each generation is influenced by what stage of the employment cycle they are in. He offers the following insights:

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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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