Mideast Carriers Post Growth

Middle Eastern carriers recorded the fastest growth in international passenger traffic, rising to 18 percent in the month of June compared to June 2009, thanks to a strong regional economy and the ability to attract long-haul traffic through the region’s hubs.
According to June’s statistics released by the International Air Transport Association (IATA) on Wednesday, international passenger demand showed continued growth with passenger traffic up 11.9 percent in June 2010 over the same period in 2009.
During the same period, freight traffic showed a 26.5-percent improvement, according to international scheduled traffic statistics for June, which continued to grow, as the industry recovered from the impact of the global financial crisis, Arab News wrote.

All-Round Growth
IATA statistics show capacity increased only slightly above demand during the month, keeping load factors in line with historical highs at 79.8 percent for passenger traffic and 53.8 percent for freight.
“The industry continues to recover faster than expected, but with sharp regional differences. Europe is recovering at half the speed of Asia with passenger growth of 7.8 percent compared to the 15.5-percent growth in Asia-Pacific,” said Giovanni Bisignani, IATA’s director general and CEO.
Outside of Europe, all regions reported double-digit growth in passenger traffic. “The question is how long the industry can maintain the double-digit momentum. Business confidence remains high and there is no indication that the recovery will stall any time soon. But, with government stimulus packages tailing off and restocking largely completed, we do expect some slowing over the months ahead,” said Bisignani.
After a dip in April due to the volcanic ash crisis in Europe, international passenger demand has returned to its upward trend. Passenger volumes are now 1-2 percent above the pre-recession peak in the first quarter of 2008.
Asia-Pacific carriers recorded the most significant demand improvement at 15.5 percent. China continues to be the region’s growth engine.
North American carriers posted growth of 10.8 percent, comparable to the 10.9 percent recorded for May 2010. Strong growth and the industry-leading load factor of 86.6 percent are contributing to strong second quarter financial results being announced by the region’s carriers.
European carriers reported 7.8 percent growth, down slightly from the 8.3 percent recorded in May.
African carriers posted a 21.3-percent increase in traffic in June, positively impacted by activities surrounding the FIFA World Cup.

$100m Profit
Middle East carriers are expected to post a profit of $100 million this year--their first since 2005--according to the latest research of IATA. The predictions are significantly better than IATA’s March forecast figures, which indicated that regional carriers would lose $400 million this year.
Local carriers posted a $600 million loss last year as the industry saw some of the worst declines in passenger traffic since World War Two. In total, IATA expects airlines to make a global profit of $2.5 billion in 2010. It’s a major improvement compared with IATA’s previous forecast released in March of a $2.8 billion loss.
“Subject to no further external shocks (volcanic ash, war, epidemics, oil price hikes, etc), and a continued improvement in general global economy, it would appear that we are now moving out of the bottom of the cycle,” says Simon McLean, COO of Waha Leasing, an Abu Dhabi-based investment holding company with interests in aircraft.
He adds, “There are positive indications of a turnaround in the leasing market with some improvement in demand and, consequently, of asset values and lease rental levels. On a general note, there is a lot of confidence and growing competition in the aviation sector with substantial amounts of new equity entering the market and existing players reaffirming their commitment to the aviation sector.”
Just when the world was ready to write off the entire aviation industry as a long lost cause, it appears to be back with a bang. Industry revenues are forecast to be $545 billion in 2010, up from the $483 billion the previous year but still below the $564 billion in 2008.
“The global economy is recovering from the depths of the financial crisis much more quickly than what could have been anticipated. Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black,” says Bisignani.
“We thought that it would take at least three years to recover the $81 billion (14.3 percent) drop in revenues in 2009. But the $62 billion top line improvement this year puts us about 75 percent on the way to pre-crisis levels.”
So where will the action be? Top of the list, thanks to the likes of Clark and Hogan, is the Middle East. Fears that premium class travelers would desert the industry have proved unfounded, and the region’s relatively strong growth rate means more travel, and more business, both of which are expected to have a positive impact on the aviation sector.
“The airline industry yet again stands as a microcosm for national economies,” Douglas McNeill, analyst at Charles Stanley Securities told The Guardian. “We are seeing a shift in power from West to East.”
A report by investment bank UBS, published last month, says that Middle East carriers account for 8 percent of global traffic while the region is well-placed to attract more long haul stopover traffic as it is located less than 8,340 km from 86 percent of the world’s total population.

Back to the Future
Last year was one of the aviation industry’s worst ever, but things are starting to look up. We look at what’s changed.
Tim Clark doesn’t look nervous. As a veteran of the aviation industry and president of Dubai-based Emirates Airline, he’s spent years strutting the global business stage. He’s used to handling problems. Big problems.
“It’s an ash cloud. We’ll deal with it, we’ll get on with it,” Clark told reporters back in April.
All around him the aviation industry was grinding to a halt as volcanic ash from Iceland threatened to see airlines lose up to $50 million a day. The news was disastrous; the global economic downturn had already wreaked havoc on the industry, seeing it lose a combined $9.4 billion last year.
But Clark had another set of figures on his mind. The news that Emirates was on track to make just under $1 billion profit for the previous year was just about to be made public. Across Dubai, in the UAE capital Abu Dhabi, Etihad CEO James Hogan was also studying his figures, which showed the carrier will be in the black next year--just eight years after launching.

Gilan Flower-Plant Terminal Planned

Iran has started constructing a major terminal of flowers and plants in Someh-Sara in Gilan, northern Iran.
Siavash Amini, the head of Gilan Trade Organization, said the plan to build the terminal was approved during the previous visit of President Mahmoud Ahmadinejad to Gilan province, adding that the terminal will be built in three stages, IRIB reported.
“The first stage of Gilan’s Flower and Plant Terminal will be constructed in an area of 4,800 square meters,” he said.
Amini added that the first stage of the project will be commissioned in the next Iranian year (starting March 21, 2011) and the private sector will pay $6 billion toward the project.
“The terminal will be equipped with delivery halls for flowers and plants, quarantine chamber, cold storage, exhibition hall, laboratory, storeroom and administrative offices,” he said.
Earlier, Babak Afqahi, the head of Trade Promotion Organization of Iran (TPOI), said the Supreme Council of Exports has approved the launch of three export terminals of flowers and plants in Tehran, Markazi (Mahallat) and Khuzestan (Dezful) provinces.
Afqahi made the above remark during the inauguration ceremony for launching the biggest export terminal for flowers and plants in the Middle East in Tehran province.
“From 2002-3 until the end of 2009-10, TPOI has allocated an aid package equivalent to 17 billion rials for building and completing this export terminal. The export of flowers and plants is the most profitable of non-oil exports. Before 2006, the export of flowers and plants was negligible, but in recent years the situation has improved,” he said.
He gave word of a 25-percent increase in the export of flowers and plants in 2009-10 and said, “Export of flowers and plants in 2008-9 amounted to $20 million.
This is while the figure reached $27 million in 2009-10. The growth in global export of flowers and plants in 2009-10 was 10 percent. Last year, flowers and plants were exported to the Republic of Azerbaijan, Iraq, Turkmenistan, Uzbekistan, UAE, Armenia and Vietnam.”
Afqahi underlined the need to adopt measures for increasing Iran’s share in terms of exporting flowers and plants in the global markets.
“In view of the fact that Iranian flowers and plants have been exported to several countries, it is possible to gain access to major markets such as theNetherlands, Germany and Japan.”
Afqahi noted that in 2008, the global export of flowers reached $6.635 billion.
“The Netherlands accounts for more than half of the global export of flowers. Other important countries in this respect are Colombia, Ecuador, Kenya, Ethiopia, Belgium, Italy, the US, Thailand and Germany. This is while Germany is the largest importer of flowers and plants worldwide. In 2008, Germany imported flowers worth $1.106 billion,” he said.

IMF: Yuan Substantially Undervalued

The Chinese currency is substantially undervalued, a senior IMF official said, more than a month after Beijing said it would allow the yuan to trade more freely.
“I think the staff view on the currency is that the renminbi (yuan) remains substantially below the level that is consistent with medium-term fundamentals,” said Nigel Chalk, who recently led an International Monetary Fund mission to China for annual consultations on Beijing’s policies.
The mission chief made the comment amid a split within the IMF over the current value of the Chinese currency, apparent in a report issued late Tuesday by the Washington-based fund’s executive board after the consultations, AFP wrote
The differences in view appeared between the board and the staff, who went on the mission, as well as within the board. “Several directors agreed that the exchange rate is undervalued,” the report said, without citing the countries they represented.
“However, a number of others disagreed with the staff’s assessment of the level of the exchange rate, noting that it is based on uncertain forecasts of the current account surplus,” it said.
The directors from United States, Germany, France and Britain were believed to be among those who felt the yuan was undervalued, following persistent charges China kept the yuan low to gain a trade advantage.

Italy Approves Austerity Package

Italy’s lower house of parliament on Thursday approved in a final vote a 25-billion-euro ($32 billion) austerity package to bring the public deficit under control and reassure markets.
Sponsored by the government of Prime Minister Silvio Berlusconi, the law passed by 321 to 270 votes, with four abstentions, AFP reported.
The law was approved by the Senate two weeks ago and was the object of a confidence vote on Wednesday.
The ballot was in the form of a vote of confidence in Berlusconi’s center-right government.
A much-criticized parliamentary maneuver used with increasing frequency as a way of minimizing dissent within majority ranks, Berlusconi called the tactic “an act of courage”.
The billionaire leader, although flagging in opinion surveys, has comfortable majorities in both houses of parliament.
What Berlusconi has called “essential sacrifices to save Italy’s future” has sparked protests and strikes among a cross-section of Italian society, including judges, diplomats, civil servants, public sector doctors and museum curators.

Japan’s Unemployment Rises

Japan’s unemployment rate ticked higher while production of automobiles and electronic gadgets saw a surprise slip in June, data showed PM on Friday, in signs that an export-driven recovery may be stalling.
The data poses a challenge for Prime Minister Naoto Kan’s government, which must balance Japan’s uncertain economic reality with an agenda that has placed cutting the industrialized world’s biggest public debt at its core, AP reported.
Shipments of cars, gadgets and components have been crucial in offsetting a weaker demand picture back home, but concern is mounting that Beijing’s efforts to cool China’s economy and doubts over eurozone and US demand may hit Japan.
The planned expiry of government incentives to purchase cars may also weigh on production for the domestic market as the overseas climate worsens, analysts say.
“Clearly, the recovery has slowed down, particularly since the January-March quarter,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo.
“We are seeing exports gradually become more sluggish, made worse by the receding effects of stimulus programs.”
Unemployment rose to 5.3 percent in June, the highest level since November and missing market expectations of 5.1 percent, in an illustration of the headwinds faced by the world’s second-largest economy.

Saudis Urged to Invest in Pakistan

Pakistan Consul General Abdul Salik Khan has called on Saudi businessmen and fellow Pakistanis in the kingdom to consider investing in areas like finance, economy and technology for the mutual benefit of the two countries.
“The government and people (back home) are passing through a tough time, but due to the commitment and hard work we will overcome the situation and Pakistan will soon be a developing country,” he said, Arab News wrote.
He was speaking as the chief guest at an Engineers Welfare Forum (EWF) workshop on strategic marketing on Wednesday night.
Pakistani business consultant Asif J. Mir, who visited the kingdom to conduct the workshop, offered to run the training institute for professional development for EWF free of charge.
Mir said marketing had totally changed and assumed tremendous importance in modern business. He called on the Pakistani government to establish ethics regulating business operations and management so that trading activities could be monitored, while customers locally and abroad received professional and trusted services and products.

Georgia to Offer Tax-Free IT Zones

The Georgian government is banking on tax-free IT zones to draw foreign investment and boost local businesses.
The parliament will vote in September on draft legislation that would set up several zones in which Georgian and foreign IT companies could operate without paying income, excise, sales, customs or profit taxes. Other privileges are still under discussion; the government says that it expects to hammer out the details by September.
“What is known for sure is that the exports of both resident and non-resident IT companies operating in Georgia and producing their products locally will be exempted from taxes,” Deputy Finance Minister Natia Mikeladze told EurasiaNet.org.
The government estimates that companies operating in the zones could reduce their business expenses by roughly 70 to 80 percent. But altruism does not figure into this calculation; the plan is for Georgia’s underdeveloped IT sector to benefit from the tax break, too.
The legislation would require that local staff make up 70 percent of the employees working at each non-Georgian company operating in the zone.

Oil Near $78

Oil prices fell to near $78 a barrel on Friday in Asia, as the region’s stock markets dropped on dour economic figures from Japan ahead of a key US growth report.