Gulf airlines swap butlers for bargains

The Gulf airlines previously hit the headlines for their luxurious offerings, but are increasingly focusing on luring more budget-focused passengers. (Emirates)
Updated 06 July 2017

Gulf airlines swap butlers for bargains

DUBAI: Etihad and Emirates once tempted travelers with flying butlers and luxurious premium cabins, but fierce fare competition has forced the pair to look at how to appeal to budget-conscious economy passengers.
It is a new phenomenon for the airlines, who in the past have been able to shrug off cheaper fares from European rivals because of the strength of their service and the comfort of their cabins.
Now they are targeting economy passengers with promotions focused more on cost than comfort as overcapacity in the global aviation industry forces fares lower.
“There is a recognition of the need to compete on price as well as generating additional revenue from economy,” said John Strickland, a London-based aviation industry consultant. “Although that can be a bit more challenging to keep the exclusivity for those who are paying higher fares.”
The harsh competitive environment has been made worse by a bitter political standoff between Qatar and some of its Gulf neighbors.
The row has upended air travel in the region in the middle of the busy summer season when tens of thousands of travelers fly out as schools break up and temperatures rise.
The price of global air travel was about 10 percent cheaper in the first quarter of 2017 than a year ago after adjusting for inflation, according to data from the International Air Transport Association (IATA).
That has hurt airlines based in countries with dollar pegs because of the continued strength of the greenback, which has helped many rival European carriers offer more competitive fares.
IATA says that in seasonally adjusted terms, international traffic through the Middle East has been tracking sideways since the start of the year.
As the competitive environment heats up, Gulf carriers are being forced to take a closer look at their cost structures to fend off fare-slashing by rivals.
That process started with thousands of job cuts this year and now airlines from the region are looking at how to squeeze more revenue from economy passengers.
It is unfamiliar territory for Emirates, an airline that is perhaps more associated with unbridled commercial success than any of its rivals after delivering successive years of profit for decades.
In better times, the comfortable Emirates flying experience was enough for many passengers to pay more.
But aggressive fare discounting by competitors, a slowing economy at home and regional instability have hit the airline hard.
Emirates President Tim Clark did not sugarcoat the challenges facing the carrier when he was interviewed by the Financial Times in early June.
“We’ve got to tough it out,” he said. “The business model is essentially a sound business model, but at the moment it’s challenged. For no reasons of our own, purely from geopolitical and socio-economic reasons.”
Etihad, the Abu Dhabi-based carrier that offers a flying butler service for its most expensive “suites,” also wants to boost economy passenger revenue.
The airline said in June it also planned to make a series of changes to its ground and inflight services aimed at offering “increased value.”
The cost-saving measures included giving economy class passengers paid access to its premium lounges.
Mohammed Al-Bulooki, executive vice president commercial for Etihad Airways, said the changes would “ensure fares remain as low and as competitive as possible.”
Earlier, Etihad said it would offer free stopovers in Abu Dhabi during the summer period.
While regional carriers are buffeted by economic turbulence there is at least some expectation of an increase in passenger demand later this year.
IATA predicts passenger demand among Middle East airlines will rise by about 7 percent in 2017 — but that is only just ahead of expected capacity growth of 6.9 percent.


Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 22 October 2019

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.