Air Arabia, the UAE's only listed airline, has announced that it will start accepting the UAE-regulated stablecoin, AE Coin, as payment for flight bookings amid the shift to digital currencies.
The Sharjah-based airline has teamed up with the UAE’s digital bank Al Maryah Community Bank (Mbank) to enable the use of AE Coin payments through the AEC Wallet App, it said in a statement. It claims to be the first airline in the Middle East to allow air travel payments with stablecoin.
In December, AE Coin, the first regulated digital currency in the UAE, was granted final approval by local authorities. Scheduled to be launched soon, AE Coin is pegged 1:1 to the UAE dirham.
“The newly introduced payment option through AEC Wallet reflects our ongoing efforts to adopt smart solutions that bring greater value, choice and flexibility to our growing customer base,” said Adel Ali, Air Arabia’s group chief executive.
Stablecoins – which are pegged to a fiat currency – tend to be less volatile than, say, Bitcoin, where swings are influenced by everyday factors such as tweets. They are grounded being tied to a currency, or liquid reserves including government treasuries, or commodities such as precious metals.
In March 2023, the UAE Central Bank began implementing its digital currency strategy, Digital Dirham. Last year, its regulation on stablecoins indicated the bank would establish a clear operational framework for cryptocurrencies when implemented.
Last month, Abu Dhabi entities IHC, ADQ and First Abu Dhabi Bank said they plan to launch a dirham-backed stablecoin, which will be fully regulated by the Central Bank, aimed at easing payment solutions.
“By integrating AE Coin into flight bookings, we are simplifying the payment experience for travellers and enabling a seamless cashless solution that aligns with the growing digital economy,” said Ramez Rafeek, general manager of AE Coin.
Air Arabia’s adoption of digital payment solutions within the aviation industry will set the stage for a wider adoption of digital currencies in the region, he added.
The airline said for travellers to use AE Coin for their next Air Arabia booking, they need to download the AEC Wallet app from the App Store or Google Play, create an account, verify their identity, then top up the wallet via their Mbank account or other supported payment methods.
The stablecoin's dirham peg will ensure price stability, security and low transaction fees, Air Arabia said.
The move provides a degree of “consumer confidence, knowing that unlike other digital currencies, this one is backed by the UAE Central Bank and has less likelihood of erratic valuation fluctuations”, Saj Ahmad, chief analyst at StrategicAero Research, told The National.
“The thing to note here, though, is the attached fees. There will need to be greater incentivisation for customers to use AE Coin when booking flights because customers who are adept at online banking and purchases can also opt to simply buy their flights direct with Air Arabia and pay the cost of whatever their flight is without additional fees,” he added.
The use of stablecoins continues to grow. An estimated $208 billion worth will be in circulation this year, a 28.4 per cent jump from 2024, according to Visa and its data partner Allium.
UAE currency: the story behind the money in your pockets
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Gifts exchanged
- King Charles - replica of President Eisenhower Sword
- Queen Camilla - Tiffany & Co vintage 18-carat gold, diamond and ruby flower brooch
- Donald Trump - hand-bound leather book with Declaration of Independence
- Melania Trump - personalised Anya Hindmarch handbag
World record transfers
1. Kylian Mbappe - to Real Madrid in 2017/18 - €180 million (Dh770.4m - if a deal goes through)
2. Paul Pogba - to Manchester United in 2016/17 - €105m
3. Gareth Bale - to Real Madrid in 2013/14 - €101m
4. Cristiano Ronaldo - to Real Madrid in 2009/10 - €94m
5. Gonzalo Higuain - to Juventus in 2016/17 - €90m
6. Neymar - to Barcelona in 2013/14 - €88.2m
7. Romelu Lukaku - to Manchester United in 2017/18 - €84.7m
8. Luis Suarez - to Barcelona in 2014/15 - €81.72m
9. Angel di Maria - to Manchester United in 2014/15 - €75m
10. James Rodriguez - to Real Madrid in 2014/15 - €75m
The finalists
Player of the Century, 2001-2020: Cristiano Ronaldo (Juventus), Lionel Messi (Barcelona), Mohamed Salah (Liverpool), Ronaldinho
Coach of the Century, 2001-2020: Pep Guardiola (Manchester City), Jose Mourinho (Tottenham Hotspur), Zinedine Zidane (Real Madrid), Sir Alex Ferguson
Club of the Century, 2001-2020: Al Ahly (Egypt), Bayern Munich (Germany), Barcelona (Spain), Real Madrid (Spain)
Player of the Year: Cristiano Ronaldo, Lionel Messi, Robert Lewandowski (Bayern Munich)
Club of the Year: Bayern Munich, Liverpool, Real Madrid
Coach of the Year: Gian Piero Gasperini (Atalanta), Hans-Dieter Flick (Bayern Munich), Jurgen Klopp (Liverpool)
Agent of the Century, 2001-2020: Giovanni Branchini, Jorge Mendes, Mino Raiola
The specs
Engine: 2.0-litre four-cylinder turbo
Power: 178hp at 5,500rpm
Torque: 280Nm at 1,350-4,200rpm
Transmission: seven-speed dual-clutch auto
Price: from Dh209,000
On sale: now
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UAE currency: the story behind the money in your pockets
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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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From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
