Gulf Air is recording an increase in travel demand following a dip in passenger volumes after Bahrain and other Gulf countries briefly closed their airspace during the height of the Israel-Iran war.
Bookings for the end of July and August are recovering after passengers cancelled or postponed their travel plans in June, Jeffrey Goh, chief executive of Gulf Air Group Holding, told The National.
“We were affected by the regional tensions in June and that affected demand clearly and affected passenger numbers but overall, in terms of where we fly to and from, demand is reasonable in terms of our outlook,” he said.
Several Gulf countries temporarily closed their airspace on June 23 due to an Iranian attack on the US airbase Al Udeid in Qatar. Airlines scrambled to cancel flights and reroute planes, disrupting air travel across the region's busy skies.
The Bahrain airspace closure led to cancellations for the Manama-based airline, but passengers are now travelling into and through the Gulf region on a “deferral basis”, Mr Goh said.
“Those who had looked to travel in early July are pushing [their dates] to August. So we're seeing the numbers picking up again from the end of July and well into August,” he said.
The broader challenge is to address the concerns of transit passengers from the East and West over whether it is safe to fly through hubs in the Middle East, Mr Goh added.
“Inevitably and unfortunately, we will not be able to correct that perception 100 per cent,” but organisations including Gulf Air, Bahrain's tourism authorities and local hotels are working to spread awareness about security in the region.
This will “take a bit of time” but the aviation industry has proven its resilience in stimulating demand and attracting transit passengers and visitors to the region, he said.
Overall, demand in Asian markets is “healthy”, but some parts of the network are weaker and require stimulation including through competitive air fares.
“But overall in terms of volume, we see a reasonable, steady pace,” he said.
Boeing 787 plane order
Gulf Air last week agreed to buy 12 Boeing 787 Dreamliners, with the option for an additional six.
Mr Goh praised the new leadership of Boeing under chief executive Kelly Ortberg for steering the company's turnaround after years of challenges.
“There is progress in terms of improving Boeing's performance and improving Boeing's aircraft production,” he said. “It cements the partnership we've had for many years.”
The airline needed to “join the queue for new aircraft today” because it takes manufacturers an average of up to seven years to deliver them.
Gulf Air is finalising the exact delivery dates and is looking at “early 2030s”, Mr Goh said.
At least 30 per cent of the order will be used to increase its fleet, while the rest will replace the older 787 widebodies to ensure a “relatively young” average age of 6.8 years, he added.
The airline operates 10 Boeing 787-9s, with two more to be delivered in 2026 and 2027.
“In the new order we have the option of including the [bigger] 787-10s in the fleet, but we don't need to decide now,” Mr Goh said.
"The market is fast-moving and fast-evolving...we want to make sure we tailor our aircraft configuration based on market intelligence to the best of our knowledge at that time," he said.
The new 787 order will also allow Gulf Air to boost capacity on popular long-haul destinations by replacing narrow-body aircraft with the wide-body planes, he said.
“Slots are a premium in some of these locations where you're not able to add more frequencies, so the alternative for us is to upgrade the capacity,” he said.
Gulf Air also operates a fleet of Airbus A320s and A321s, with eight more narrowbodies to be delivered between 2025 and 2027.
“I don't foresee significant expansion of the narrow-body fleet at this time,” Mr Goh said, when asked about a potential order.
The airline last week announced it would start flights from Bahrain to New York's John F Kennedy Airport in October.
Gulf Air has a road map for the next five years as part of its “calibrated, disciplined growth” and the announcement of new destinations such as New York is a “manifestation” of that strategy to connect key business cities, leisure markets and religious centres, Mr Goh said.
GE vs Rolls-Royce engines
Gulf Air's new 787 aircraft will be powered by GE engines, a departure from previous purchases powered by Rolls-Royce engines.
“It was a very close call,” Mr Goh said. “It required a lot of extensive internal deliberations and understanding the advantages and disadvantages of both engine types. It took us quite some time.”
He said the evaluation was based on engine reliability, performance, fuel efficiency and time on wing (or the time the engine stays in workshops).
The two 787s to be delivered in 2026 and 2027 will be fitted with GE engines, he added.
The current 10 Boeing 787s operated by Gulf Air are equipped with Rolls-Royce's Trent 1000 engines. GE has a major market share on the 787 model while Rolls-Royce has long grappled with technical issues. However, the UK engine maker is upgrading the engine to make it more reliable.
"We also need to recognize that Rolls Royce has come some way in enhancing the Trent 1000 engine," Mr Goh said. "That made the evaluation much more interesting. In the end, based on the overall balance of considerations, we decided that for the future-proofing of the 787 fleet of Gulf Air, they should be powered by the GE engines."
US tariffs and plane costs
The Gulf Air chief said it is “too early” to determine the impact of US tariffs on the cost of planes but the industry is watching closely.
“We've negotiated an all-encompassing price for our aircraft orders. What Boeing does with the [additional tax percentage] in terms of any parts they need to import to manufacture the aircraft is a matter for Boeing,” Mr Goh said. “We are comfortable with the acquisition price.”
However, the wider aviation industry is concerned about the impact of tariffs on the cost of parts and airframes.
Also, the economic uncertainty stemming from the tariffs could hit consumer sentiment and corporate confidence, thereby dampening travel demand.
“We need to be very vigilant about the impact of these tariffs... We should be concerned about the general economic outlook for the industry," he said.
“If corporations are concerned about what the cost of business will look like, travel is often one of the first areas of discretionary spending that you address as a company.”
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Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
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Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
- Add all their personal details, including name, nationality, passport number, Emiratis ID, email and phone number
- Upload the training certificate from a centre accredited by the GCAA
- Submit their request
What are the regulations?
- Fly it within visual line of sight
- Never over populated areas
- Ensure maximum flying height of 400 feet (122 metres) above ground level is not crossed
- Users must avoid flying over restricted areas listed on the UAE Drone app
- Only fly the drone during the day, and never at night
- Should have a live feed of the drone flight
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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.”
Greatest of All Time
Starring: Vijay, Sneha, Prashanth, Prabhu Deva, Mohan
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
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Engine: 2.5L, in-line four-cylinder
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UAE currency: the story behind the money in your pockets
UAE v United States, T20 International Series
Both matches at ICC Academy, Dubai. Admission is free.
1st match: Friday, 2pm
2nd match: Saturday, 2pm
UAE squad: Mohammed Naveed (captain), Rohan Mustafa, Ashfaq Ahmed, Shaiman Anwar, Rameez Shahzad, Amjad Gul, CP Rizwan, Mohammed Boota, Abdul Shakoor, Ahmed Raza, Imran Haider, Sultan Ahmed, Zahoor Khan, Amir Hayat
USA squad: Saurabh Netravalkar (captain), Jaskaran Malhotra, Elmore Hutchinson, Aaron Jones, Nosthush Kenjige, Ali Khan, Jannisar Khan, Xavier Marshall, Monank Patel, Timil Patel, Roy Silva, Jessy Singh, Steven Taylor, Hayden Walsh
Mohammed bin Zayed Majlis
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MAIN CARD
Bantamweight 56.4kg
Abrorbek Madiminbekov v Mehdi El Jamari
Super heavyweight 94 kg
Adnan Mohammad v Mohammed Ajaraam
Lightweight 60kg
Zakaria Eljamari v Faridoon Alik Zai
Light heavyweight 81.4kg
Mahmood Amin v Taha Marrouni
Light welterweight 64.5kg
Siyovush Gulmamadov v Nouredine Samir
Light heavyweight 81.4kg
Ilyass Habibali v Haroun Baka
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The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
