The UAE flagship airlines are commencing daily non-stop flights to Washington DC - Dubai's Emirates Airline this week and Abu Dhabi's Etihad Airways next March.
The direct flights reflect the rapidly growing commercial aviation industry in the UAE and highlight the importance of increased access to markets in the United States for both airlines.
Aviation plays a key role in the US-UAE trade relationship, which experienced a record US$18.34 billion (Dh67.36bn) in total trade last year. The UAE, America's top export destination in the broader Middle East and North Africa region, netted $15.89bn in US exports during the year and aviation products comprised the largest subset at $3.63bn. Buoyed by Emirates' and Etihad's growing ledgers of American aircraft and parts, the trade relationship is poised for further expansion as bilateral market exposure rises.
Logistically, these new routes benefit more countries than just the UAE and the US. Aviation experts judge the UAE is within a six-hour flight of nearly 60 per cent of the world's population. With the launch of the flights, 60 per cent of the world will have the opportunity to use Dubai and Abu Dhabi as transit hubs for international travel to Washington and the broader US. Moreover, these new modes of travel will inevitably attract new customers - local and international.
Notably, Emirates and Etihad employ thousands of Americans and Emiratis globally and are leading customers of American aircraft makers. These new flights will translate into the direct creation and sustainability of Emirati and American jobs spanning the commercial aviation industry. From component suppliers to flight attendants, hundreds of job opportunities will be created for both nationalities as the economies of both countries grow stronger.
For its part, the UAE is building its commercial aviation industry from the ground up.
Recently, Strata Manufacturing, a subsidiary of Abu Dhabi's Mubadala Aerospace, won a contract to serve as Boeing's first Middle Eastern supplier of aerostructures for its 787 Dreamliner plane through 2020. Mubadala Development is a strategic investment company owned by the Abu Dhabi Government.
Moreover, Strata is projected to expand capacity and create up to 10,000 jobs by 2030. The US is a key partner in this effort under the UAE's broader push to diversify its economy.
Opportunity for foreign direct investment and trade between the US and UAE continues to grow. These growth areas span several economic sectors including: transport (aviation being a key component), infrastructure, energy (oil and gas, renewables and civilian nuclear), health care, education, media and culture and tourism.
As Emirates and Etihad continue to expand their American networks, travellers from the US, UAE and around the world will benefit from broader access to world-class products, businesses and services.
Strategically, this route also strengthens the deep ties between the US and the UAE.
First and foremost, the nations share the same priority to promote peace and stability in the Middle East at a time of heightened tension and conflict. As a close ally in this regard, the UAE is doing its part to contribute and take a leading role in maintaining regional security in close coordination with US and other allied forces.
The US Navy's largest port of call outside the US is located at Jebel Ali port in Dubai and Emirati troops regularly carry out humanitarian and security missions alongside American troops in Afghanistan.
Notably, the UAE is one of three countries and the only Arab nation to participate with the US in five coalition efforts over the past 20 years: Afghanistan; Libya; Somalia; Bosnia-Kosovo; and the 1990 First Iraq War.
The Washington market presents a unique opportunity for the UAE's flagship airlines to boost their corporate profiles in the US.
For both countries, this is a chance to merge commercial and political interests to enhance an already strong partnership.
By connecting the Washington metropolitan area to the UAE, the airlines will create a pathway to increase international commerce while working to solidify the UAE's stance as a global aviation hub.
Danny Sebright is the president of the US-UAE Business Council, based in Washington, and the head of the Middle East practice at The Cohen Group.
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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.”
