The EU is being urged to relax airline rules that led to thousands of empty planes crossing Europe over the winter, prompting concerns over the effect on the climate and unnecessary waste of resources.
German airline Lufthansa said it would have to run 18,000 empty flights during the winter to keep its airport slots.
Its Belgian subsidiary, Brussels Airlines, expects 3,000 such trips by the end of March.
The so-called “use it or lose it” rule means that airlines must use 80 per cent of their allocated slots at airports or risk losing their take-off and landing rights to other carriers.
Although the EU reduced this to 50 per cent after air travel slumped during the pandemic, the threshold will rise again this summer, and critics say it is still too high given the unpredictable effects of the Omicron variant.
Travel chaos over Christmas led to thousands of flights being cancelled as Omicron case numbers surged in Europe, flight crew went off sick and border rules changed with little notice.
Lufthansa chief executive Carsten Spohr said the 18,000 trips were “empty, unnecessary flights just to secure our landing and take-off rights”.
The airline said it was running about 60 per cent of its flight schedule compared with 2019, and carrying about half as many passengers, as virus-related travel problems stretch into their third year.
Georges Gilkinet, Belgium’s mobility minister, described the empty flights as “environmental, economic and social nonsense”.
He said on Wednesday that he had written to the European Commission to demand that the rules be relaxed further to keep empty planes on the ground.
The EU needs to show more flexibility “given the significant drop in passengers and impact of Omicron numbers on crewing planned schedules”, he said. Traffic was well below 2019 levels even in the calmer autumn months.
Greta Thunberg, the Swedish climate activist, said mockingly that the EU hardly appeared to be in a “climate emergency mode”, despite its bold promises of environmental action. Brussels hopes to reduce carbon emissions from the transport sector by 90 per cent by 2050.
But a commission spokesman, Daniel Ferrie, said the reduced demand was already reflected in the adjusted 50 per cent threshold.
"The Commission expects that operated flights follow consumer demand and offer much needed continued air connectivity to citizens,” he said.
Brussels plans to raise the threshold to 64 per cent in this year’s April-to-November summer season, with high vaccination rates and a standardised EU health certificate cited as reasons for an expected recovery in air travel.
The commission said it hoped to take another step “towards the return to normal” this summer, although it said it would monitor the drop in flight bookings linked to Omicron.
Countries including France and Italy tightened travel rules because of the variant. But some governments have virtually given up on such restrictions, with Britain moving on Wednesday to restore the softer measures of last autumn.
Airline industry body IATA said it was now time for Britain to remove testing requirements entirely for vaccinated people.
“It’s clear that the extra measures had little or no impact on the spread of this new variant,” said IATA director general Willie Walsh.
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.”
