Direction of Travel

Jitters across the financial markets continue to create severe fluctuations across the majors – providing a great opportunity for traders and plenty of room for pundits like Roubini to peddle their next theory of financial meltdown, but there are rays of sunshine if you hold true to the emerging markets and consider where all the liquidity is going to go.

Anecdotal evidence comes in many shapes and forms and through various conduits. Not exactly sure why this particular trend has all of a sudden appeared in the last few days but in the course of a few conversations a noticeable increase in scrutiny surrounding Gulf airlines and their excellent work in linking the western world with the east strongly evident. Now, it is no great secret that the path from east to west is a growing and strategically important one, and has historically been, but recent emphasis on growth especially has brought a number of hitherto obtuse observations into sharper focus. Bare with me whilst we investigate some of the more “out-of-the-box” implications on the regional emerging market this visionary construction of dominating and versatile airlines may bring.

Fasten your seat belts…
Flying around the region and the Far East in particular, I can understand why you would want to be staying in the Doha premium terminal for longer than necessary. Some may even be tempted to check-in not just for the flight but for the night! Luxury in airports is not a wide-spread phenomenon in the western world, but with Hong Kong, Shanghai and Beijing airports routinely voted amongst the world’s best – Asia is not a stranger to warmly welcoming travellers. Dubai’s latest Emirates terminal is an example of how one can learn from experience and implement meaningful and elegant changes. How much emphasis can one place on the importance of luxury-reclining-leather-lined-seats and free (spiced to perfection) Bloody Mary’s though – are we ignoring a sly indicator of a shift in economic power or reading too much into the in-flight magazine?

With some simple research, passenger traffic numbers indicate an eye-opening trend. The world’s top 3 busiest airports are all still in the western hemisphere – Atlanta, Chicago and Heathrow taking the top spots with 90m, 69m and 67m passengers per annum (PAX) respectively** This is understandable given the more affluent populations living within these regions and the developed level of low-cost and domestic airline travel that takes place across the US in particular. Heathrow may be the world’s third busiest, but until its over-budget Terminal 5 was completed (aesthetically very impressive) it was little more than a dingy bus depot.

The two most intriguing entrants on the list though speak volumes of the trend we are witnessing in growth of disposable incomes and general economic growth rates. Although the highest placed Asian airport is still in Tokyo (Haneda 4th in the list with 65m PAX – the large Japanese population are very rich and enjoy travelling more often than others), Beijing rose by a hugely visible 18% in a year to make its way into the top ten on the list (8th at 55m PAX), and the highest rated Middle Eastern airport (the only one in the top 30 in fact) is of course Dubai. These big jumps are a symptom of the growing wealth of the developing world.

Clear skies ahead…
So what can we reasonably derive from such figures? Well, the usual spouting of “wisdom” about the shift of global power and influence from west to east is slightly clichéd, the decoupling theory has wobbled enough to almost look silly (but not having fallen flat on its face – just) and the normal story of one-billion-new-consumers is a long way off when you remember that 80% of China’s population are living on less income per annum than what a ticket from New York to Los Angeles on a low-cost airline would set you back. Better to focus on the slightly smaller in scale but far more fascinating trend that the likes of Emirates, Qatar Airways and Etihad are latching onto in a big way. It is a sign of the shift in entrepreneurial flair some might suggest.

Dubai’s greatest achievement in the eyes of the more intuitive is not its ability to attract package-tourists, whacked-up architects and fortune-chasing dreamers, but the creation of a significant and meaningful portal of access to destinations considered too remote and unprofitable for traditional western airlines. Stronger cultural ties and similarities make for a more natural linkage between the Middle East and such destinations – an organic advantage being exploited with serious intent. Call it foresight, an-engine-stroke of genius or sheer luck, but tapping into the world’s growing and increasingly wealthily mobile population will be proven and looked back-upon as the single most influential spark of entrepreneurialism in the region.

Emirates and increasingly its neighbouring (very high-class) airlines as mentioned above, has put more than just Dubai on the map. Fancy flying to Trivandrum or Cochin? Yes? Well you can now, and easily from Dubai (or from anywhere else via Dubai for that matter) acting upon a whim to spend a long weekend in some of the most luxuriously remote (and value for money offering) resorts in the state of Kerala in India is as easy as clicking on the website link. Never heard of them? Google them.

These Gulf airlines are exclusively cornering a smart market. Rich westerners wanting to travel to the emerging markets in Asia are quite poorly covered by other airlines. In doing so, they are creating a self-fulfilling prophecy of what makes a successful hub. More than that, they are placing their own names on the map through their levels of service and the huge marketing exposure the airline business offers.

Anyone recently travelling through Dubai will have been looking forward to the vast new Emirates terminal. It was once described right here as gleaming and empty. This must now be corrected. It is still gleaming mind you, but it was heaving with people – and that was at 7am. Reliable reports of equally large crowds were witnessed at 1am. Try finding a seat in the huge lounges (which I once thought were way over-optimistic in size and would never be fully utilised) and the look of pleasure on the seated passengers’ faces as they stare knowingly back at you would have you believe they just won the super-car available in the raffle down in Duty Free.

Forget about the choice of chicken or beef with the in-flight meal. The smart money is going to be choosing between biryani or bean-sprout noodles.