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Emirates A380: The inside view

31 July 2008

Emirates has unveiled it A380. Business Traveller went on board for a look - this is their report.

www.businesstraveller.com

Economy class

This takes up the whole of the lower deck – 88 rows in a 3-4-3 configuration, making a grand total of 399 economy seats. There is mood lighting, the fibre-optic star-effect lights in the ceiling, and large windows. All seats have Emirates’ AVOD in-flight entertainment system "ICE" with e new larger screen.

Seat pitch is 32-33 inches, width is 18 inches, and recline is six inches, with an extra one inch “due to seat articulation”. The seats also have individual laptop power.

At the back, up the stairs, and into the bar area for business class.

Business class

Starting from the rear (since this is the way we walked), the bar area is a good size, although it might get crowded if more than a few of the 20 rows of business class passengers (1-2-1 configuration) decide to stretch their legs. Through into the first cabin – there are bassinet attachment points in both of these two business class cabins, so no certainty on one of these being child-free.

It’s an unusual configuration and what you notice immediately is that every other row has no walkway. If the seats are close together, there is one, if not, they don’t. The problem with flat-bed seating, of course, is how you recline and extend the seat to fully-flat without having several feet of dead space between the rows.

British Airways has a yin-yang configuration, with half the seats facing backwards, while Virgin goes for a herringbone layout and Etihad staggers the seating. What Emirates has done is arrange for the feet to extend under the side table of the row in front, meaning the next row has to be sitting to one side.

For those seats pressed together, there is an optional divider which rises between the seats, although whether people will realise they are booking seats so close to one another (or so far apart if they want to travel together) will be a challenge for the airline to manage for the first few months. For those who are further apart, it would be difficult to hold a conversation, assuming they wanted to.

The seat has several pre-set positions, laptop power, your own minibar replenished with drinks during the flight and a good-sized table for working and eating.

What is extraordinary about this new arrangement is that the seats have a different pitch depending on whether you choose an inner seat or an outer one. The stats are as follows: seat pitch is 39 and 48 inches, which extends to form 70 to 79-inch lie-flat beds. What that means is that if you go for an outside seat, you get more legroom both for sitting and sleeping, while the inside seats have less. Just how Emirates will sell both types of seat for the same price remains to be seen, yet it is doing so at the moment.

I spoke with Terry Daly, Emirates’ divisional senior vice-president of service delivery, about this, and he said the difference was necessary because of the design of the seat. As for how it would be sold, he said that he didn't think it would make any difference because the seat is so long anyway (ie: even in its shorter form).

On the matter of pricing, note that although Emirates is not charging a premium for flying on the A380, you will find the aircraft is on the most expensive flight on a route (whether that is New York from August, or London in December).

First class

As you’d expect, there are sliding doors on the suites (which are more like cabins, really, but that terminology would be confusing). Inside, there is a fully-flat bed, lots of space, a giant TV and a real sense of privacy once you shut the door. What’s more, first class passengers have access to showers at the front, either side of a stairway down to the exit and straight off the plane.

And the seating plan is:

EK forgets domain name renewal

31 July 2008

Initially reported on airliners.net and theregister.co.uk

Dubai's government-owned airline, Emirates, forgot to renew its domain name this week, sending its website crashing offline on the same day it was trumpeting delivery of its first Airbus A380 superjumbo.

Travellers keen to be among the first to book flights on the so-called "premium hotel in the sky" via Emirates.com were met on Tuesday with a standard parking page placed by domain seller Network Solutions. It offered generic flight and Arabian travel-related text ads, rather than the fully-featured ecommerce site they were expecting.

The site was only beginning to operate normally today.

One poster on passenger forum Flyertalk.com wrote: "I first thought what the?! Did Emirates liquidate overnight and management ran away to some remote island?.. or in the middle of their plane purchasing spree forgot to pay their domain fees?"

The answer is (b). Emirates sent El Reg this statement:

"Due to an administrative error, our domain registration temporarily lapsed and this was addressed immediately. However, it did lead to some minor technical difficulties with the site which our engineers have now resolved. We apologise to our customers who have experienced any difficulties."

The domain name affected included emirates.com, flyemirates.com and emirates.ae. There is a significant exposure to lost revenue as passengers unable to log onto the emirates web site looked to other airlines for their online booking.

According to our correspondents, the site disappeared for several hours before re-emerging with the aforementioned snafus on board. Global availability took a while too, as various DNS providers refreshed their caches at different times.

I suspect it is a case of everyone thinking that it was someone else's responsibility. But there is a lesson for every company heavily dependent on e-commerce.

Gulf airlines don't feel the pinch
By Caroline Brothers - International Herald Tribune
Monday, July 28, 2008

HAMBURG: Climbing the stairway Monday to the first Airbus superjumbo to join his expanding fleet, the chairman of Emirates was doing more than celebrating receipt of the world's biggest passenger aircraft.

With Sheik Ahmed bin Saeed al-Maktoum taking possession of his long-awaited A380 plane, the moment represented the shifting balance of power in an aviation industry grappling with one of the biggest crises it has known.

As carriers from American Airlines to Thai Airway International are responding to a new era of high oil prices by shedding jobs, culling routes and grounding aircraft, Middle Eastern carriers are expanding as fast as they can in hopes of redefining their region as the aviation crossroads of the globe.

"There is no sign of a crisis there," said Thomas Enders, the chief executive of Airbus, during an interview shortly before handing over the jet to the sheik. "These airlines are on a very impressive growth path and expansion course; they are steering a steady course while others are experiencing more difficulties."

Emirates, which in 2000 became the first customer to sign a firm commitment to buy A380s, has increased its order from the initial seven by more than eightfold since then, despite a delay of nearly two years for the first delivery.

"Our 58 A380s will certainly fly the flag more, and farther, than all the others," Ahmed said of the aircraft's other customers, moments before a screen was lifted to reveal the double-decker plane taxiing toward him at the Airbus delivery center in Hamburg in northern Germany.

He took the opportunity to sign a letter of intent for another 60 Airbus jets with a total price tag of $13.3 billion: 30 wide-bodied A330 planes and 30 of the A350s that are still under development. The overall investment by Emirates in the A380 alone exceeds ?32 billion, or $50 billion, Ahmed said.

The headwinds that are causing U.S., European and Asian airlines such grief - high oil prices and an economic downturn - are playing out to the advantage of carriers in the Gulf.

While Thai has suspended nonstop flights from Bangkok to New York, Air France-KLM is reining in its winter capacity growth and American, United and Qantas are eliminating jobs, the government-backed airlines like Emirates, Etihad, Qatar Airways and Saudi Arabian Airlines are adding routes, taking delivery of new aircraft and placing orders for more.

In a further sign of confidence, Emirates is creating a new airline: FlyDubai, a low-cost carrier scheduled to start operations next year. It leapfrogged three U.S. airlines to take early delivery positions for 50 Boeing jets that will serve countries like India and Pakistan.

"Here we have airlines with a clear view of what they want, using circumstances to accelerate growth," said Chris Tarry, an analyst at Ctaira, a British aviation consulting firm.

The higher oil prices hurting airlines are stimulating economies in the Middle East, even if they are importing inflation along with the rush of oil revenue.

The United Arab Emirates is promoting Dubai as a tourist destination that offers luxury hotels, shopping malls and beaches for wealthy leisure travelers.

At the same time, the technological capacity of new-generation aircraft like the Airbus A380 is allowing the Gulf to leverage its geographical position at an east-west, north-south crossroads, putting 80 percent of the world's most attractive markets, like India and China, within nonstop reach.

Tim Clark, president of Emirates, said that from the start, the airline had focused on the central location provided by Dubai. "What we did want was longer operations, but the aircraft didn't exist, so we set about pushing the manufacturers: 'We want more range, we want more payload capability, we want more seats,"' he said.

The aim was to link places that were not already linked: Africa to China, or Russia to South Africa, Clark added during an interview in the bar of the new airliner, which featured 76 business-class beds, a decorative waterfall, and two "spa" showers for passengers in first class seats. "We are atuning everything we do to the 21st century and not dwelling in the past."

The Middle East is pouring $54 billion into airport expansion over the next decade, according to the International Air Transport Association, while airlines in the region have ordered 700 planes at a cost of $140 billion over the past three years.

"The size of our order mirrors the rising prominence of the Middle East and its increasing emergence as a new focal point of global aviation," the Etihad chief executive, James Hogan, said about the 100-aircraft order he placed in July that included 10 Airbus A380s.

The big Emirates order for the superjumbos - which would be able to compete with low-cost carriers if configured for 750 passengers in economy class - might sound like a recipe for overcapacity.

But so far, airlines in the Gulf have done well in matching demand, which grew 11 percent in the first five months of this year, with capacity that rose 11.1 percent, according the IATA.

Furthermore, the Gulf airlines are mining fast-growing routes. Passenger traffic between the Middle East and Africa rose 19.8 percent in the five months to June this year, and 14 percent between the Middle East and Far East, though from a low base, IATA said; that compares with average growth of 4.5 percent for all international routes.

Emirates, for its part, cannot acquire new planes fast enough. Clark had expected to have 17 A380s by now, before wiring problems on the troubled Airbus production line set back his growth plans by two years.

"The need for this aircraft is even more essential now," he said. Alongside the cost of oil, his airline's biggest problem was a lack of capacity. "We are maxing out at 90 percent so now we are losing business," he said.

The Middle Eastern carriers are also running a tight ship. During the five months to May, the "load factor," or percentage of available seats sold, on airlines of the region was 74.6, according to IATA figures, in line with a "high" global average of 75.2.

The level means that Middle Eastern airlines are flying as full as their rivals, and suggests that they are not emptying their competitors' planes.

But over the longer run, aviation experts said, airlines like Emirates, which competes on price for the mass market and on service for business travelers, should make some inroads against competitors.

"Their growth clearly relies on transit - they are taking away from markets occupied by Asia and European carriers," Niko Herrmann, a partner based in Zurich at the aviation consulting firm Oliver Wyman, said of carriers in the Gulf region.

"They are still on the cusp and will grow exponentially, partly because other carriers are not growing," he said.

Experts say they expect the profitable Emirates, which ranked 23rd last year among world airlines in terms of passenger traffic, to compete among the top 10 airlines in the next five to six years.

In that light, the A380 that Ahmed received Monday represents a crucial element of a business strategy that makes the Middle Eastern airlines "a competitive threat to any European-based carrier," according to Daniel Solon, an independent aviation consultant based in Barcelona.

The technological advances of the A380 mean that it can allow airlines to fly more passengers farther and for less money than their competitors.

"The capability of airlines has changed the reach of the Gulf region," said Tarry, the Ctaira analyst. "If you've got planes that can fly farther, you change the structure of the market."

Industry executives say that the Gulf region is shaping up as a well-positioned hub for traffic from China to Africa, while Emirates' services between Europe and Australia mean that passengers can bypass Asia altogether.

"Qatar and Etihad are following a similar strategy - all of them are targeting Japan, China, Australia, India," said Peter Morris, chief economist with Ascend, an aviation consulting firm in London. "They are redrawing the map."

Court sentences Pojaman to three years in jail
Court said Pojaman should have served as society's good example

31 July 2008

The Criminal Court on Thursday found wife of ousted prime minister Thaksin Shinawatra, guilty of intentionally avoiding tax payment of Bt546 million for the transfer of 4.5 million shares of the Shinawatra Computer and Communications' shares worth Bt738 million.

Found guilty in the same charges were her adopted brother; Bannaphot Damapong and her secretary Kanjanapa Honghern.

The Court sentenced Khunying Pojaman, Bannaphot to a total of three years in jail; two years for the charges relating to the conspiracy to evade tax and one year for giving falsified statements. Kanjanapa faces two years in jail.

The Court said the three defendants had committed serious crimes and filed false statements with the government agencies in order to avoid paying taxes. They intended not to pay taxes despite that they were rich people.

The court ruled that the prosecution's evidence was solid and indisputable. The three suspects were found guilty of fraud or collaboration to evade taxes.

In addition, Pojaman and Bannapot were also found guilty of filing false claims and presenting false evidence to the authorities with intention to avoid paying taxes.

The court also reprimanded Pojaman in particular, saying that with her high economic, social and political status - especially her status as wife of the then county leader - she should have acted as good example to society.

The Criminal Court rules out every defence argument on the tax evasion case as insubstantial in rebutting the prosecution evidence.

The court says the prosecution has proven beyond reasonable doubt that the defendants committed a conspiracy to evade tax. The ruling says Pojaman and Bhanapot made the shares transfer in the stock market in order to avoid tax liabilities even though there was no real transaction.

Bhanapot admits Pojaman gave shares to him and the court finds this is not a family gift.

The ruling is addressing a key legal issue whether the three defendants intentionally gave falsified statements to the authorities in order to avoid tax liabilities.

The charges were from from transaction, which took place in November 1997, come under the criminal codes of Article 37 (1) (2) of the Revenue Code. Violation of this law is punishable with a fine of between Bt2,000 and Bt200,000 and a jail sentence of between three months and seven years. A multiple violation of this law will result in a jail sentence of not more than 20 years.

The Office of the Attorney General filed the suit on March 26 last year, summoning more than 30 prosecution witnesses to testify including Sak Korsaengruang, spokesman of the nowdefunct Assets Examination Committee who chaired the AEC panel that probed the accusation of tax evasion, and former Finance Ministry permanent secretary and former directorgeneral of the Revenue Department Suparat Kawutkul.

The three defendants denied the charges and almost 20 defence witnesses testified in the case.

A night out at the FCC

29 July 2008

This is from the Otago Daily Times. I have no idea what the point of the article is or what message the writer is trying to convey. But it is not often that anyone writes about the old FCC in Bangkok.

I hope the writer loses some of her prejudices before she joins Reuters.

"Hardened old scribes share hot night in Bangkok. As evening falls in Bangkok the nightwalkers of Nana - the city's sex district - take to the streets, and happy mongrel dogs splash through the deep puddles formed by the afternoon monsoon rains.

Hopeful transvestites pucker their fuschia mouths at a grimy mirror, and the South East Asian anthem, Hotel California, begins to play.

Dan - a Guardian photographer - throws back another beer, and toasts the Thai-Cambodia border dispute.

"Perhaps it will blow up and there will be work and good pictures," he says dryly.

Tom, an Associated Press journalist, laughs his rumbling roar, swilling his whisky and coke he slaps his thighs with vigour - ready to move on, ready for more people and more drink - ready for a night out in Bangkok.

The two awkwardly navigate their way on to the Skytrain, distinct from the hordes of tourists in their total disregard for "doing it right".

"The best ham steaks in Asia!" says Tom, gesturing excitedly at a forgettable-looking place on a dusty side street.

He is to mention those ham steaks three times tonight.

The two talk shop non-stop, being of the old and hardened variety, they are critical of almost everyone in the business.

They met in Cambodia after the fall of the Khmer Rouge, and Tom is heading back to cover the election.

He says it will be quiet, and really just an excuse for the old "Cambo" hands to get together, drink, and reminisce about the good times of journalism past (loosely - The Vietnam War).

The FCC (Foreign Correspondents Club) is in the centre of town, on the top floor of a dated skyscraper.

It shares the space with the BBC, Asia Works, ITV and the ABC.

It is an old-fashioned and unstylish bar - a bit of an embarrassment in the business - but comfortable and familiar for this old crew.

We are half an hour late meeting the Voice of America Bangkok bureau chief but she and her husband are unfazed, and drinks are bought for all.

A conversation begins about who got into Myanmar/Burma for Cyclone Nargis, who tried, and who was too scared.

Of course the best in the business had no option - they were blacklisted long ago.

For the Asia correspondents, the country has become a good test; get in, stay in, and you're sure of a story.

The tight restrictions placed on foreign journalists (most enter illegally on tourist visas and work undercover) add spice to the assignment.

During the September monks' uprising last year, dubbed "The Saffron Revolution", The New York Times writer won the Pulitzer Prize for his dispatches, and a Japanese photo-journalist was killed.

The fast approaching Beijing Olympics begin on August 8, the same date as the 20th anniversary of the 1988 uprising in Burma, in which 3000 people were killed.

With 20,000 journalists accredited for the Olympics (and scores more not accredited) all eyes will be on China, an opportunity the Burmese Resistance are keen to exploit.

It is a loud party, everyone talking at once, and not at all politely.

The Voice of America chief complains about Bangkok's First-World prices for Third-World facilities.

Dan, the Guardian photographer, shows his friend some photographs taken of him and his Thai girlfriend visiting her family in the North recently.

Tom drinks, and talks, and eats, and complains - where to next? He asks.

A taxi is hailed and Dan splutters our destination in bad Thai: Gullivers.

The monstrous building is white and glaring on the narrow Nana street, a three storied sparkling faux-Grecian construction with potted palm trees, western prices and a tame elephant out the front on a leash.

Dan and Tom begin to talk of a colleague, a conservative fellow who has been with the same woman for 30 years (and doesn't cheat), and is a bad journalist - lazy. But don't get me wrong, they both add convincingly, I like the guy.

It's hot - 28 degrees and not cooling.

More drinks are ordered, thin Thai prostitutes saunter past, and old times are rehashed once more."

- Eleanor Ainge Roy is a journalist and a University of Otago politics and history student. She is en route to Beijing for the Olympic Games before taking up an internship with Reuters news agency in Bangkok.
 

EK places another Airbus order

29 July 2008

The mile high shower club

29 July 2008

Emirates Airline, which yesterday took delivery of its first A380 aircraft in Hamburg, has decided to offer its premium customers the chance to refresh themselves.

Such luxury is reserved for the 14 people in the first class cabin, who will have access to the two showers during the trip.

The passengers will book their 25-minutes slots, which will include five minutes in the shower itself and some extra time to dry themselves off and get dressed again.

They will be able to keep track of how much time they have left in the shower by looking at a dial in the cubicle itself.

In between each passenger an onboard janitor will scrub the facility clean for the next customer.

While business class passengers get rather large seats, those in first class are offered "suites", with a 23-inch television screen, plenty of gold trim, leather and wood.

Such luxuries are how the airlines try to set themselves apart from the rivals as they hope to lure premium passengers willing to pay significant amounts for a few hours pampering.

Singapore Airlines, who took delivery of the first superjumbo, boasted huge amounts of leather and vast seats in its premium cabins.

Emirates has decided that showers and a rather large cocktail bar will be what is known in business circles as its "unique selling point" for those passengers unaffected by the credit crisis and soaring fuel prices.

The airline is the second to take delivery of the aviation behemoth and has ordered 58 A380s.

News of the World gets a mild slapping

25 July 2008

The Mosley case concluded yesterday when Judge Eady Ordered the News of the World to pay Mosley £60,000 damages, the highest for a privacy action in recent legal history, plus an as-yet-undecided proportion of Mosley's estimated £450,000 legal costs.

The judge ruled there was no Nazi flavour to what Mosley had always maintained was simply a private "party". "I decided that the claimant had a reasonable expectation of privacy in relation to sexual activities (albeit unconventional) carried on between consenting adults on private property," said Mr Justice Eady in his ruling. "I found that there was no evidence that the gathering on 28 March 2008 was intended to be an enactment of Nazi behaviour or adoption of any of its attitudes. Nor was it in fact. I see no genuine basis at all for the suggestion that the participants mocked the victims of the Holocaust."

Because of this, he said, he was "unable to identify any legitimate public interest to justify either the intrusion of secret filming or the subsequent publication".

But the judge did also acknowledg that the NoTW held an honest belief that there were indeed Nazi elements to this "gathering". That is why he rejected Mosley's claim for exemplary damages, which are intended not just to compensate the wronged party, but to punish the wrongdoer.

Mr Justice Eady also said that Mosley was, to a degree, the architect of his own misfortune. "Many would think that if a prominent man puts himself, year after year, into the hands (literally and metaphorically) of prostitutes (or even professional dominatrices) he is gambling in placing so much trust in them. There is a risk of exposure or blackmail inherent in such a course of conduct," he said.

Mr Justice Eady added: "To the casual observer therefore, and especially with the benefit of hindsight, it might seem that the claimant's behaviour was reckless and almost self-destructive. This does not excuse the intrusion into his privacy but it might be a relevant factor to take into account when assessing causal responsibility for what happened.

"It is part and parcel of human dignity that one must take at least some responsibility for one's own actions."

Mosley is a high profile and controversial figure. The newspaper will have regarded his recklessness as a fair target. Mosley won the case; but is forever tarnished by it. I suspect the dinner discussions at home are interesting. The fine is a mild rebuke to the News of the World. It neither sets precedent or puts new restraints on tabloid editors. Sure they may make sure that stories are always reviewed by their legal counsel before publication. Privacy cases will continued to be judged on individual merit.

Dubai: More Bubble or More Boom? Time Will Quickly Tell
By Martin Hutchinson Contributing Editor www.moneymorning.com

23 July 2008

"Dubai has plenty of qualities that catch an investor’s eye. The emirate has the world’s only (self-proclaimed) 7-star hotel. Dubai also is home to the biggest financial market in the Middle East, which is itself publicly quoted and trades at 25 times forecast 2008 earnings. It has been enjoying one of the greatest construction booms the world has ever seen.

And Dubai is planning a huge tourist expansion, aiming to boost that sector to more than the 18% of the economy it already accounts for. So, why aren’t Dubai investments a screaming buy, where we should all be investing our money? After all, plenty of brokers think it’s just that.

From a short-term perspective, Dubai investments haven’t done too badly. The Dubai Financial Market General Index is down about 13% this year, far less than the much-hyped emerging markets of India and China, or even the United States. But there’s a possible catch.

Whereas 2006 and 2007 were good years for investors in India and superb ones for investors in China, they were lousy for investors in Dubai. The DFM General Index hit its all time high in November 2005, declined pretty steadily over the next two years, and is currently sitting about 40% below that high. Even at that depressed level, the DFM General Index is still trading at about 17 times projected earnings for this year and 3.3 times book value, so it’s not cheap.

That immediately raises questions. While Dubai has little in the way of its own oil reserves, its economy rests fundamentally on its position as entrepôt for the immense oil-exporting region of the Middle East, and for the United Arab Emirates (UAE), the oil-rich federation of which Dubai is a member. Oil prices were around $60 per barrel in November 2005 when the DFM General Index was at its peak; oil is now trading in the neighborhood of $130 per barrel, even after last week’s big sell-off – so why is Dubai’s stock market down 40%?

It’s entirely possible that Dubai isn’t as solid as some of its proponents believe.

Two years ago – before the real estate crash – it might have seemed impressive that Dubai, with 0.02% of the world’s population, was employing more than 10% of the world’s tower construction cranes; today we know better. Dubai’s rate of inflation is around 20%, and it’s on the upswing, while home mortgage interest rates sit below 7%. That means that the cost of making a home mortgage – in real terms – is negative 13%. The UAE government is considering allowing its currency, the dirham, to float upward against the dollar, but hasn’t done so yet.

Dubai received more than 7 million tourists last year, with 1 million of those coming in from Great Britain (who presumably prefer the climate) – but the British government currently rates Dubai’s terrorism threat at its highest level. It’s not hard to imagine what a terrorist attack could do to Dubai’s impressive tourist rates.

Dubai is also planning to spend $82 billion on aerospace projects to include the world’s largest airport – but with a population of only 1.5 million, it will need a lot of foreign traffic to fill up such a behemoth.

The potential for that to come to pass is there, given the growing levels of investment that China and others are making in the Middle East, and because the Dubai project isn’t solely focused on tourism: The airport and aerospace hub is viewed as an economic-development project. But success is far from guaranteed, and an economic downturn could make the objectives tough – if not impossible – to achieve. Indeed, should the ongoing global financial crisis eviscerate worldwide growth, Dubai’s development strategy could be exposed as a bubble, not a boom.

To be sure, other small nations have engineered economic miracles. Consider, for example, the economic success of Singapore, which has a smaller land area but three times the population.

Like Dubai, Singapore has no core advantage, such as a wealth of natural resources. Nor does it have a bevy of natural tourist hot spots. And much like Dubai, Singapore’s only advantage is one of geographic position. However, Singapore has an income per capita at purchasing power parity of $49,700 (eighth highest in the world) compared to the UAE’s $37,300.

Singapore’s growth has been built on two factors: The extremely high education level of its population (relative to income at first, in the 1960s, but in absolute terms now).
And an obsessive focus on moving up the value chain in everything it does.

Dubai has neither advantage; it supplements its small local population with a huge underclass of immigrants (more than 80% of the population in the UAE as a whole), rather than upgrading the capabilities of its own people, and it relies on building artificial tourism in an area where (because of the unpleasant climate and relative lack of natural or historic attractions) it’s possible that no natural flow of tourists would have otherwise occurred.

An economy built on construction, tourism, and a boundless flow of cash, without any special knowledge base, is one that could end up being derailed in the long run. And that long run could be more painful if it turns out that Dubai has been feeding a major construction bubble through deeply negative interest rates.

The other potential black cloud looming over the Dubai economy is that of oil prices, should $130 - $140 per barrel oil turn out to be a short-term speculative price spike.

With the Bush Administration pushing for offshore drilling and the world automobile industry devastated by consumer tastes that quickly shifted to small cars and trucks, increased supplies and decreased consumption could push oil prices down to a more reasonable level.

Assuming OPEC doesn’t intercede and act to keep prices high, the right confluence of factors could potentially push oil prices back down under the Century Mark. And in a perfect world, with the right confluence of factors, oil could end up below $100 per barrel, or even as low as the $60-$80 range. And while that price level would still be well above the $10-$15 per barrel prevalent before 2002, it is far below oil’s current levels.

The Middle East in general has predicated their future plans on the oil bonanza continuing in full flow for the indefinite future. Even though $60-80 oil would provide ample revenue for their citizens to enjoy an excellent living standard, their economies are not properly set up to adjust to such a lower revenue flow. If oil prices were to fall, the inevitable effect would be tighter money as interest rates return to normal levels, exacerbated by an acute cash shortage.

Dubai is looking to diversify itself away from the petro-gusher, which is one reason it is trying to position itself as a global boom intermediary, benefiting from tourism and establishing itself as a new residential destination for the world’s uber-rich. It also aims to utilize its airport and aerospace ventures to fuel its real estate and global commerce aspirations.

But a key question remains: Is it still tied in so tightly to the Middle East “black gold” bonanza that it will suffer in kind should energy prices hit a deflationary downdraft?

The next few years will be telling. If its global growth aspirations get a needed lift, the tiny Gulf nation could become more than just a well-recognized name on a map; it could end up as a key stopping-off point for business executives traveling from one side of the world to the other, might one day even evolve into a commercial spaceport, and will stand as an example of a country that was able to engineer an economic makeover of massive proportions.

But should oil prices crater, Dubai’s aerospace venture fail to attain take-off speed, and its vision as a tourism and residential mecca of the future turn out to be ill-conceived as I fear, the opposite extreme is possible: With a construction bubble more inflated than the 2006 Florida condo market and a monetary policy looser than the one being operated by U.S. Federal Reserve Chairman Ben S. Bernanke, Dubai could shortly resemble a jungle of half-completed skyscrapers, with 10% occupancy rates and bankrupt landlords. Its landing would be painful, and, potentially, not long delayed. It’s not an investment for the risk averse."

Emirates unveils its mega-model (the airplane I mean!)

23 July 2008

Emirates Airline today unveiled a new landmark for London, a giant model of an Airbus A380 at the gateway to Heathrow Airport. This is located at the entrance to Heathrow Airport terminals 1-3, and replaces the old Concorde model.

Plenty of people are sad that Concorde has gone; but this is the age of globalisation and money: so why not a UAE owned airline advertising at a Spanish-owned airport in a city in which 42% of the population is non "British-White" and 31% foreign born. And, after all, there is also an Emirates Stadium in London.

The pr crew were also wearing the new uniform in public for the first time.

The 45 tonne world record contender was unveiled this morning at the "Emirates Roundabout" by the airline's President Tim Clark.

The completion of the giant A380 replica is the culmination of an ambitious 18-month project to place the Dubai-based carrier at the gateway to the world's busiest international airport, and at one of the most prestigious advertising sites in the UK.

The Emirates A380 will be seen at Heathrow for real from December 1st.

The newly named Emirates Roundabout at Heathrow is one of the most high profile advertising sites in the UK. Over 55,000 vehicles a day and approximately 25 million passengers a year, pass this site. Terminal 4 and 5 passengers use a separate entrance to the airport.

The one third-scale model was flown in ten component parts to Heathrow on July 5. Since then, specialist teams have been working around the clock to launch Emirates' "first" A380.

The replica was built by US-based Penwal at its manufacturing base in California over a six month period, using plans provided by the A380’s manufacturer, Airbus in Toulouse.

It was then transported by giant truck to Ontario Airport in Los Angeles where it was flown to Heathrow aboard a massive Antonov cargo plane, organised by the Emirates SkyCargo team. A special mechanical ramp was flown into London from Germany to offload the plane as it was too heavy for the Antonov’s winch crane. The wing section of the plane required a police escort as it was driven from Heathrow to the roundabout site.

The world’s leading aviation museum, The Smithsonian Air and Space Museum in Washington DC, has stated it is the largest known aircraft model in existence. A world record submission is currently with Guinness World Records.

Model quick facts include:
 Weighs more than 45 tonnes
 Wingspan of 26 metres and a length of 24 metres
 Same size as a real Boeing 737
 Exact 1:3 scale of the real A380, the world’s largest airliner
 More than twice the size of the roundabout's previous Concorde model
 Made of glass-reinforced plastic over a steel frame
 Foundations required 600 tonnes of concrete
 

Airbus has a web site dedicated to the delivery of the first Emirates A380:

http://www.a380delivery.com/emirates/

Pad: bulldog on a leash or another nail in democracy's coffin
Published on July 21, 2008 Chang Noi in the Nation newspaper.

Since it was formed in February 2006, and especially since it was revived in May of this year, the People's Alliance for Democracy (PAD), has become a distinctive force on the political landscape.

Formally, the PAD is simply an alliance of five orators. But as a political phenomenon, the PAD is also what they are saying, how they are saying it, what visual messages they convey, and who is supporting them.

The movement's main stated aim is to overthrow the current government. Normally any movement that professed this aim would be labelled dangerous, even revolutionary, and be strongly handled by the authorities. Strangely that is not happening. Probably that is because we know its true aim is to obstruct Thaksin's overt return to politics.

The movement's longer-term aim is to undermine the central principles of electoral democracy, namely the sovereignty of the people, and the selection of a parliament by the system of one-man, one-vote. The PAD leaders claim that the electorate cannot be trusted with the franchise because the mass of rural people are uneducated and corrupt. They want the elected portion of the lower house reduced to a minority (perhaps 30 per cent), and the remainder filled partly by "retired officials and important people" and partly by ordinary people and workers, selected by appointment. Since the logic of the PAD's proposal is to disenfranchise the rural poor, this new system is likely to favour the rich, the urban, and the higher educated.

In addition, the PAD wants the military to have a permanent role of political oversight. The military would be removed from political control (by making the defence ministry independent of the Cabinet), and granted the right to intervene in politics to check corruption and to protect the monarchy and national sovereignty.

The PAD seems against the freedom of expression, and in favour of the use of abuse and intimidation to limit the freedom of expression. This conclusion is based on the way PAD orators treat academics, actors or other public figures who disagree with its views. This tactic seems to have been quite successful. Some critics have apologised. The press has been generally rather uncritical of PAD's views and activities.

The PAD makes use of military and martial symbolism. Some of the leaders like to wear brown shirts and black shirts that resemble military and paramilitary uniforms. The headbands worn by leaders and followers recall the outfits of traditional warriors, samurai, and jungle fighters. The oversized neckscarf comes from the scouts, village scouts, and jungle fighters. It is not Chamlong's rural-ascetic look but this barracks-chic that distinguishes the movement. Among the supporters, yellow flags, headbands, T-shirts, and caps combine to give the impression of commonality and conformity which is the role of uniforms.

PAD promotes a visceral nationalism reminiscent of the early Phibun era. The nation is a body that is being physically ripped by its enemies (internal and external), causing pain to the citizens, who must rise up in the nation's defence.

The PAD's agitational practice suggests a high degree of organisation, strong financing, access to technology, and skill with sophisticated techniques. The equipment for staging and broadcasting the PAD's message requires high capital cost and running expenses. The crowds are well organised and provisioned. The programming shows strategic planning to sustain support and interest with relatively little novelty. The PAD seems skilled in the techniques and rituals of litigation. In short, this is not a few people gathered at a street corner with a soap box.

Analysing the PAD's audience on the streets and in front of television screens is difficult. There are only stray interviews, plus pictures. Perhaps the single word that emerges from this impressionistic data is "respectable". The crowds are generally smartly dressed. The age profile is quite high, though there are also many families in attendance (and the TV audience may be significantly younger). Head-counting from press photos shows a slight preponderance of women over men. From the few on-site interviews available, the crowds include retirees, public servants, small business people, and senior executives from modern firms. There seem to be relatively few manual workers.

The PAD is clearly well connected to other institutions. One of its leaders is a Democrat MP. Other Democrats have spoken from its stages. So too have academics from some of Bangkok's major universities. A serving general has taken the PAD stage in his full uniform. Other military figures, including General Saprang Kalayanamitra, have been seen backstage and are open in their support.

The PAD seems to be protected, perhaps by friends in important places, but also by virtue of its widespread urban support. No other Bangkok protest has suffered so little harassment. When the prime minister angrily threatened to clear PAD off the streets, the security forces refused to cooperate and the prime minister had to back down. When PAD set up a permanent blockade of roads, the police stood aside and public-opinion surveys were surprisingly lenient over the disruption to traffic. When the protest moved to Government House, the police resistance looked like a token showing designed to fail. This apparent immunity gives weight to PAD's message.

The PAD is flirting with the old agent provocateur's technique of placing its own crudely armed gangs in places where they will be attacked by enemies. This creates violent incidents, apparently initiated by their opponents, though in truth a result of the inherent violence of the PAD itself.

In short, PAD is an anti-democratic movement, supported by high investment and shadowy protection, that exploits the fears of the privileged and a deliberately anti-rational nationalism, and flirts with militarism and violence.

Is PAD a bulldog, let out on a leash for a specific purpose, that will be chained up when the threat from thieves has passed? Or is it another step in the destruction of democracy begun by Thaksin, continued by the coup-makers, and now plunging ahead on the momentum?
 

Fly Dubai starts to outline its plans

22 July 2008

As FlyDubai starts to plan it's 2009 launch it is clear that the owner's expectations are for an airline operated independently of Emirates and with a clear brand of its own. The airline gave some early briefings at Farnborough this week; it is proposing to link regional cities like Tehran and Cairo to Dubai as well as countries bordering the region (like the “stans”). It will be focused less on Emirates transit business and more on point to point traffic enabling tourists and the relatives of Dubai-based workers to visit the city.

This will also allow it to operate outside of the Emirates hub and spoke flying hours when peak slots are already busy.

FlyDubai will also challenge the regional carriers on local routes such as Dubai-Kuwait or Dubai-Doha in a move that should increase competition, improve service and lower fares.

FlyDubai is proposing a model that is rather different to the classic budget airlines of the USA and Europe but is also different to the local full-service carriers.

FlyDubai passengers will be able to select their service level from an online menu when they book their ticket, allowing them to determine whether they want a snack, meal or no food.

They will be to decide what sort of drinks and entertainment they have onboard and even how they will check-in at the airport.

By encouraging passengers to order in advance FlyDubai will have more flexibility to offer, for example, quality meals, unlike other budget airlines. This is obviously good for passengers but also for the airline as it will make a large proportion of its profits from these ancillary services.

Still this new carrier has a lot to do, other than generating smart ideas. It only ordered its first aircraft last week, it still does not know where its first destination will be, and it has not hired cabin crew or pilots.

There are some areas where it can take a shortcut, and save money, by partnering with Emirates. It will probably outsource training, catering and fuel purchasing, which will provide economies of scale and may also help eliminate some of the errors that are inevitable when a new airline is launched.

It will likely also be able to source some crew from Emirates; in particular crew with Dubai families who want to return home at the end of every day and who want a regular flying pattern.

What will be interesting is how much lower Fly Dubai's costs per seat mile can me than Emirates. Emirates is in many ways the first low cost full service carrier; with lower operating costs than all the major international carriers.

One-two-well and truly gone

21 July 2008

A day after low cost carrier one-two- go announced a voluntary suspension of operations for two months the Thai authorities went a step further and grounded both the low cost carrier and its parent airline Orient Thai.

Orient Thai Airline and its low-cost subsidiary One-Two-Go were ordered on Monday to cease operations for 30 days, starting from July 22, because of the poor safety standards.

The Civil Aviation Department has ordered One-Two-Go airlines to halt operations for 30 days due to substandard operations and revoked or suspended the flying licences of nine of its pilots.

Chaisak Angsuwan, director-general of the department, said suspension of the airline's Air Operator Certificate was effective from today.

The department had found shortcomings in the airline's aviation operations, flight schedules and maintenance, along with a lack of quality assurance. The low-cost airline had violated aviation safety regulations and lacked proper airline management.

The flying licences of seven of the airline's foreign pilots were revoked, six Indonesians and a Venezuelan, and the licences of two Thai pilots suspended.

The department found the pilots on the airline's MD80 series aircraft had submitted documents misstating their level of expertise.

The airline and its pilots were liable to criminal penalties and the department would file charges against them in two weeks, said Mr Chaisak.

The announcement follows the department's investigation into the crash of flight OG269, an MD-82, at Phuket International Airport on Sept 16 last year, killing 89 people and injuring 41.

The airline was required to correct the flaws in its operations during the suspension period, or the department could either extend the suspension or terminate the airline's certificate.

One-Two-Go was ordered to correct its flight schedules, aircraft maintenance and quality assurance system.

Mr Chaisak said One-Two-Go's parent airline, Orient Thai, was also warned it must change its flight schedules to allow its pilots enough rest time, as required by aviation safety regulations.

Transport Minister Santi Promphat said other airlines would face similar punishment if they were found to have committed the same offences. Airlines should be more careful in examining the qualifications of their staff, especially their pilots, said Mr Santi.

Udom Tantiprasongchai, the president of One-Two-Go Airlines, said the nine pilots were sacked on July 8. He had not previously known about the pilots' incorrect documents. He believed the airline could make all the changes required within the 30 days.

The paper-free, cost-saving A380

20 July 2008

The Emirates cost saving drive continues - at least in the back of the airplane. The latest initiative us to make its Airbus A380 superjumbos paperless planes.

The airline will remove all seat-pocket paper - in-flight magazines, entertainment guides and shopping catalogues - when the giant aircraft go into service in 12 days.

Tim Clark, Emirates’ president, has said that banning paper will lighten the aircraft by a tonne based upon  2kg per seat and 500 seats. This makes up for the tonne of water that will need to be carried for the two first class showers that will be installed (his and hers??) and available by prior booking with the flight purser.  Clark, that not so well known environmentalist also said that Emirates was doing it because of the environment.

The printed matter will be replaced by content shown on the aircraft’s seat-back television screens.

Recently the airline has been removing the footrests from all economy class seating; also presumably to save weight.

Clark said Emirates had also begun a project with Airbus to reduce the weight of the A380 by five tonnes by 2012. This would allow the airline to use the plane on extra-long routes, such as nonstop from Dubai to Los Angeles and San Francisco on the US west coast.

Coming to DXB on 28 July

19 July 2008

One Two Gone?

19 July 2008

One-Two-Go Airlines, one of Thailand's three main budget carriers, will cease operations (in theory) temporarily, starting on Tuesday, to allow time for a financial restructuring.

One-Two-Go flys older MD80s; one of which crashed at Phuket earlier this year. There have been regular concerns about maintenance and the qualifications on the airline's crew.

Relatives of the victims in the Phuket crash have started a web-site, www.investigateudom.com, to campaign for an investigation into Udom's business conduct.

It was alleged that Udom had misled pilots into flying unsafe planes and paid bonuses for those who worked beyond the legal maximum of flying hours.

The airline is facing mounting cost pressures led by rising oil prices, fierce competition from rival airlines, falling domestic passenger demand and the poor business outlook.

A One-Two-Go statement issued yesterday said that during the suspension, from July 22 to Sept 15, the airline will consider a new financial system that will do away with forward ticket sales which have hurt its financial status.

Forward sales of air tickets have become a critical problem for most airlines as the tariff is priced when oil prices are lower but by the time travel actually takes place they have tended to rise.

There may also be a need for it to put in place a new service model to differentiate One-Two-Go from other low-cost carriers, it said.

It was not clear yesterday how the airline would deal with its 700 employees, passengers who have bought tickets, and its fleet of eight MD 80 series jets.

Parent carrier, Orient Thai, will continue flights to Hong Kong and Incheon.

The degenerates of Dubai

By David Jones - The Mail - 19 July 2008

"Despite the presence of undercover 'love police' now patrolling its scalding white sands, and the promise of new signs warning foreigners of dire consequences should their passions get the better of them, little has changed on the Dubai beach where two drunken Britons staged their now notorious 'sex romp'.

Last Wednesday, at one end of the vast, crescent-shaped expanse, a contingent of preening expat women in designer bikinis fried themselves for as long as they could withstand the 50 degree heat before plunging into the blue waters to cool their bronzed bodies.

Further along the shoreline, meanwhile, their hapless Emirati counterparts were forced to wade into the waves wearing their amorphous black abayas, which weighed them down so heavily when drenched that they could barely paddle out again.

Set against a backdrop of dizzying new skyscrapers and a forest of giant cranes (50 per cent of the world's entire stock of the largest cranes is concentrated here), this tableau neatly epitomises the seismic clash of cultures and morals which has lately beset this desert-built Disneyland of a state.

This collision between traditional Islamic values and those of the decadent West may have been brought sharply into focus by the tawdry sex-on-the-beach saga - which is expected to reach its denouement next week with the prosecution of expat publishing executive Michelle Palmer and her fleeting partner, businessman Vince Acors.

To understand fully its complexities, and potential gravity, however, one must leave Dubai, with its glitzy shopping malls and nightclubs, and drive north for 50 minutes along the new Emirates Highway.

Here, sandwiched between the dramatic Hajja Mountains and the Arabian Gulf, one enters the most beautiful but little-known emirate of Ras al-Kaimah. Though it is still the same country, here there are no boozy Brits or flashy hotels. And to its 295,000 souls - naturally hospitable but fiercely religious and traditional in their ways - neighbouring Dubai is the new Babylon.

It is no coincidence that the 9/11 hijacker Marwan al-Shehhi, who piloted the plane that crashed into the South Tower of the World Trade Centre, hails from these parts.

Indeed, some locals regard his family's white stone villa, which stands near the mosque in a dusty hamlet where goats roam the streets, as a shrine.

By now, the enormity of the drunken beach romp - which is merely symptomatic of the routinely appalling behaviour of the new breed of British expats in Dubai - should be plainly apparent.

But if not, then it is spelt out by Dr Christopher Davidson, a Durham University lecturer who has spent much time in the United Arab Emirates and has just published an acclaimed book examining the possible consequences of Dubai's emergence as the world's fastest-growing commercial and tourism centre.

He is convinced that Dubai, with its unique position as a cosmopolitan and capitalist society at the heart of the Middle East, is high on the list of targets for Islamic fundamentalists - an assertion which gained credence recently when the Foreign Office elevated the emirate to the highest state of terror alert.

And Dr Davidson fears that the revulsion of seeing members of the 120,000-strong British community trampling over the sensitivities of their Islamic hosts could stoke the fire of hatred, turning some disaffected young Emirati into the next al-Shehhi.

'It's not making a quantum leap to connect the rising threat of a terrorist attack with badly-behaved Britons,' he told me. 'The Dubai government has gone for mass tourism and huge foreign investment, and they've been very successful so far, but the cost could be enormous.

'There is still no outlet for the frustrations of disaffected locals, many of whom are appalled by loose Western standards, in particular among women.

'I have sat in coffee shops with UAE nationals and they've looked me in the eye and told me: "I want my country to be an Islamic emirate." There is a lot of resentment. It is not stretching credibility to imagine that, for some, the only way to vent that frustration could be by committing an act of violence.'

For Dubai, of course, such an act would be disastrous. It would, as Dr Davidson points out, instantly burst the bubble of confidence on which the ruling Maktoum family have built their incredible dreamland in the dunes.

International investment would dry up; the million British tourists who flock here to shop and sun themselves each year would melt away; the Premiership footballers and pop stars who have bought exclusive villas on the new Palm Islands development, such as Michael Owen and Rod Stewart, would doubtless move to safer shores.

Moreover, since Dubai is the Middle East's cosmopolitan melting pot, and its experiment with Islamic capitalism could become the blueprint for surrounding Arab states, its failure would have dire consequences for the entire region.

On the surface, the sordid encounter between Palmer and Acors may be the stuff of saucy seaside postcards, but to the many Dubaian nationals I have spoken to this week it is no laughing matter.

As I was reminded repeatedly, they are already a minority group in their own country, where more than 85 per cent of the estimated 1.8 million residents are from overseas.

And this latest incident is but another reminder of the manner in which, they claim, their mores are being eroded by the vast foreign influx.

After spending a week here, it is easy to understand why they feel so strongly, for it is not only on Dubai's beaches that one finds the locals on the wrong side of an invisible line in the sand.

Take, for example, trendy bars such as Sho Cho, on the exclusive marina development, where Michelle Palmer and Vince Acors downed cocktails before their starlit fumble.

Here, as in many fashionable restaurants, only Western clothing is permitted, and any man wearing an Arab costume is summarily turned away.

This discrimination extends to the workplace. Young Emiratis may be first in line for civil service positions, but the plethora of perk-laden, tax-free jobs in the new foreign businesses in places such as Media City and Internet City routinely go to candidates from London, Birmingham or Manchester.

Generations ago, when an altogether different kind of Briton ventured to the Middle East to help unite the Arabs and build their country, such privileged positions were hard-earned.

As one expat, Lucy Roberts, explained scathingly, however, the sad truth is that many of the new British émigrés have only decamped here after failing to forge careers back home.

'Frankly, there are a lot of idiots here who are working in jobs they shouldn't be doing,' said Lucy, 32, who quit her job as a London estate agent and runs a graphic design company.

'I think the term is "punching above their weight". They brag a lot and don't deliver. One girl I know works in PR and thinks she's Anna Wintour (editor of America Vogue), when she's really nothing to write home about.

'People who would never get on at a big company in London can come here and be the boss in two years.'

These annoyingly brash Britons, who zip about in Porsche Boxters and Mitsubishi Pajeros with sunglasses perched on their streaked hairlines, and whose idea of fun is to get legless at Dubai's famously debauched champagne-and-lobster Friday brunch sessions, are bagging all the best apartments and villas, too.

With property prices going up at a mesmerising rate (no sign of the credit crunch here), it means that Emiratis are being priced out of the most exclusive areas and shunted into what one local government clerk described as 'up-market ghettoes' on the fringes of the city.

Worse, as Dubai is a hereditary monarchy without any parliament, the ordinary people have no voice, so no one can question who is really benefiting from this modern form of colonisation.

However, the UAE government is sufficiently concerned at the creeping loss of Arab customs and traditions to have staged a two- day 'national identity conference' recently. And there, one or two senior government figures were brave enough to express dissent.

Given the fascination for American TV shows and movies, and the need to master English to secure a good job, a former education minister foresaw the time when no one could speak proper Arabic.

The refreshingly outspoken UAE police chief General Dhahi Khalfan Tamim went further, saying in a speech that the nation was flooded with so many foreigners that it was 'at a crossroads' and in danger of getting out of control.

'I'm afraid we're building towers but losing the Emirates,' he said, to frowns from the bearded royals on the podium. For once, someone was telling them what their subjects really think.

One Oxbridge-educated Dubaian woman in her late 20s, who asked not be named for fear of damaging her career prospects, told me plaintively how she returned from her studies in England to find a country in which she no longer feels at home.


Backdrop to beach loving: The Burj Al Arab hotel, where some 79 people have been arrested for 'behaving indecently' in recent days

'Taxis don't stop for us, people won't rent us apartments, and we're routinely ridiculed and insulted,' she said. 'And how do you think it feels to hear about a British woman having casual sex on the beach when we still can't even discuss sex with close friends? It's the big unspoken elephant in the room.

'Our parents are in a collective state of denial. The pace of change in Dubai is so bewildering that they simply don't know how to react. I think my father's generation all need therapy.

'While the expats flaunt themselves in short skirts and low-cut tops and get drunk, we are still at the stage where female students need a pass-card to leave the university campus.

'I don't want to see this woman [Michelle Palmer] severely punished, but she needs to understand that she has done irreparable harm to our chances of improving women's rights here. Incidents like this just make our parents even more paranoid about what might happen to us if British behaviour becomes the norm, and so they are more controlling.'

Like others, she would like prospective incomers to be rigorously vetted to root out the vacuous new breed of British yobs and spivs who are being lured to Dubai in the expectation of acquiring an easy playboy lifestyle.

For despite its reputation for severe border and customs controls (a British woman was recently jailed for possessing a codeine-based painkiller, and a BBC DJ for possessing a minute trace of cannabis), the fact is that almost anyone can come to stay here.

The effect of this open-door policy, which the government deems vital to keep the economic wheels turning, is to make Dubai seem wilder and more debauched than even the Spanish costas after the British invasion of the Seventies.

Nowhere is more sickeningly emblematic of the country's seedy new underbelly than the bar at the downtown York International Hotel - a squalid cauldron that should shame any civilised society, let alone one so devoutly Islamic. As the overhead TVs show bloody, noholds barred fighting contests, and music throbs deafeningly, a veritable United Nations of prostitutes - Chinese, Ethiopian, Russian, Nigerian - barter their services.

So why do Dubai's rulers turn a blind eye to a vice industry now as endemic as that of Amsterdam or Las Vegas? The answer came from an anonymous expat executive.

'To them it's one more service industry, pure and simple,' he said. 'If they are to entice businessmen and tourists here, they know they must cater for their every need. The only real taboos are gambling and drugs.'

For the government, he added, problems arise only when these 'needs' become so visible that they begin to offend and corrupt the locals - which is what is happening with increasing frequency.

They will then make a brief but very public show of propriety by ordering a crackdown on ' immorality', as has happened in recent days following the beach sex episode.

These events are dutifully reported by the state-controlled media. Last week, police announced that no fewer than 79 people had been behaving ' inappropriately' on the beach; all westerners, naturally.

Bizarrely, they also claim to have arrested 41 foreign men for ' crossdressing' - proof that Dubai is fast becoming as exotic a sexual playground as Bangkok.

To rub salt in the wounds, most of the cavorting is played out on Fridays - a holy day in the Islamic world but a day of frenetic partying for the expats, which begins with the notorious Friday brunch and often continues until the sirens are wailing the first call to prayer at 5am the next day

Many native Dubaians are demanding that the gorging, riotous (and occasionally orgiastic) brunch ritual be banned.

They also believe westerners should be required to observe the rules of Ramadan, when locals are forbidden to eat and drink in public.

Bearing in mind the views of many British people who are concerned about the lack of integration of some ethnic groups in this country, the feelings of the Dubaians hardly seem unreasonable. At least, in Britain, many immigrants have the desire to learn about our traditions and values, and master the language.

But try asking an expat in Dubai whether they have ever toured the magnificent Jumeirah Mosque (open to non-Muslims on certain days of the week) or been for dinner with an Arab work colleague and his family.

When I posed that question to British residents here this week, most gave me a look which suggested that they thought the sun had gone to my head.

One young Briton who works for the Dubaian royal family put it bluntly: 'There is no integration here at all. It may sound insulting, but nobody is the slightest bit interested in making friends with the Arabs. It's just not done.'

What the British are interested in is having a good time - and almost everyone you meet has an anecdote about their shameful excesses.

One Indian taxi driver told me he often picks up British men and women so drunk and abusive that he simply decants them at the police station, where they are detained until they sober up and then escorted home. (So much for 'police heavy-handedness'.)

At Barasti, a fashionable bar on the new marina, a Filipino waiter spoke of another regular spectacle: that of drunkards falling into the swimming pool besides the decking. 'They are usually British,' he said. 'Sorry, but it's true.'

Overlooking this bar, incidentally, is the skyscraper from which Ryan Guest, a 26-year-old oil engineer, plunged to his death this week - reportedly after an alcohol-fuelled row with his girlfriend.

It is not only the cocktail-swilling younger crowd who are disgracing themselves. In the massive new Mall of the Emirates, a supermarket checkout girl grumbled about the habitual rudeness of the so-called 'Jumeirah Janes' - the expat British trophy wives who take their name from the affluent district where they usually live.

Among the dozens of nationalities who shop there, she said, these women of leisure, whose days revolve around nail parlours, beauty salons and luncheon engagements, were invariably the most obnoxious customers.

'Why are your people so badmannered?'

Why indeed? Such complaints may seem trifling. Remembering Dr Davidson's doom-laden prognosis, however, they are far more serious.

'Because Dubai has become this successful international brand, and Premiership footballers go there, it has become so much more accessible, and people tend to forget exactly where they are when they go there on holiday, or to find work,' he says.

'But they would do well to remember that, to get there, they have had to fly over Iraq and Saudi Arabia. That alone ought to be a very sobering thought.'

So it ought. And this week, when the chastened Michelle Palmer and Vince Acors face an Arab court, they will no doubt be reminded, in the starkest terms, exactly where their act of drunken folly was committed.

In ordinary circumstances, one might argue that their abject public humiliation is punishment enough. But given that the stakes are so high, perhaps it is time for an exemplary sentence to shock the hedonistic British expats back to their senses.

If not, how long before another disaffected Emirati's home becomes a terrorist's shrine?

The UAE and Congo air pact

17 July 2008

How strange is this air alliance. United Arab Emirates-based RAK Airways plans to launch a new national airline in Democratic Republic of Congo within three months, a company representative said on Thursday.

RAK Airways, promoted by the government of tiny Ras Al Khaimah (RAK), will invest around $160 million and hold a 60 percent stake in the joint venture with the Congolese state. The airline, with the original name, Air Congo, will fly on domestic routes and to Ras Al Khaimah and  to several African destinations using a fleet of nine aircraft.

The airline is also looking into establishing long-haul flights to two destinations in China via its hub in the UAE.

The venture is the latest foray by the tiny emirate into the vast mineral-rich former Belgian colony. RAK Minerals and Metals Congo, operated by Ras Al Khaimah's investment authority, is already involved in copper and cobalt exploration in Katanga province, Congo's mineral heartland.

Congo has been fighting a civil war for decades. People rely upon poor roads, unsafe boats and planes to travel. Congo has one of the worst air safety records in the world.

In April, at least 21 people were killed when a passenger jet slammed into a busy market after failing to take off from the eastern city of Goma. The accident was the country's fifth fatal plane crash in less than a year.

All Congolese airlines are currently on a European Union blacklist of companies banned from flying to European destinations. Air Congo will need to be cleared by the EU before serving destinations outside Africa; this could take 6 to 12 months.

RAK Airways, launched two and a half years ago, is the UAE's third-largest carrier, with international routes to Colombo, Dhaka, Kolkata, Beirut, and Sofia.

Man the barricades - this will get ugly

16 July 2008

Let's call it what it is - a recession of mega proportions. A recession that may rewrite in a very short time the economics and power map of the world. The USA is reeling; the US$ is reeling; and all that appears to be saving it is that the rest of the world holds so much US$ that they cant afford a major revaluation.

Now down 23% from its October high, the Dow Jones industrial average has reached a two-year low. The US Labor Department says wholesale prices are rising at their fastest pace since Ronald Reagan's first year in the White House. Embattled automaker and American icon General Motors suspended its dividend to stockholders. The last time that happened? 1922.

This is no ordinary economic crisis, and it won't be over anytime soon. It may have started in the USA. But the impact is global. There are few beneficiaries other than those who want to see the USA humbled.  But will the US financial crisis create a contagion effect that could yet weigh more heavily on the global economy. The impact is already apparent in Europe and on world markets. In Paris and London, stock markets fell yesterday to their lowest levels since 2005, partly as investors doubted plans unveiled by U.S. regulators this weekend to prop up the ailing government-sponsored mortgage giants Fannie Mae and Freddie Mac.

It will get worse before it gets better. A year ago, the financial virus seemed confined to subprime mortgages, defaults on loans given to those with less-than-perfect credit. Now, the US and increasingly the global banking system appears insecure. Huge credit card defaults are starting. While industrialised economies are slowing to a near standstill the fats-growing countries such as China and India are making the prices of commodities from oil to food soar at alarming rates.

The western nations have lived off property booms. Rising house prices boosted consumption, as consumers tapped home-equity loans for cash to pay for everything from new cars to college for the kids. It was left to market forces to act as the regulator. And the market did react but too late and with dramatic effect.

Global concern is mounting for several reasons. First, foreign financial institutions are heavily exposed to U.S. lending giants, and an alarming 50 percent of U.S. mortgage-backed securities are held by foreign investors. American woes have fostered a global credit crunch, claiming overseas victims such as Britain's Northern Rock, where a lack of liquidity led to its nationalization by the British government in February.

Secondly U.S. consumers, who gobble up more foreign goods than the citizens of any other land, are eliminated expenses significantly in the face of falling housing values, rising unemployment and a possible recession.

So governments step in and in the US there were $91 billion of tax rebates that consumers began receiving in May. Banks are bailed out of crisis in the US and the UK. But maybe that merely postpones the recession.

How bad will it get - who knows. Some are forecasting the worst financial crisis since the Great Depression. What it does mean is that fortress America is being breached like never before. American is for sale to foreign investors who now have the cash that U.S. institutions lack. This week, it was Anheuser-Busch, maker of Budweiser beer, being sold to a Belgian company. Earlier this month, the Chrysler building in New York went to an investment fund based in Abu Dhabi.

As for banks; the housing crisis has left financial institutions with deeply wounded balance sheets, as the mortgage securities they hold have turned out to be worth far less than once believed. Major global banks now need to raise a lot of money. There will be more bank failures; not just in the USA but in Europe as well.

Meanwhile expect to see some good old fashioned pump priming to try to salvage western economies; public works projects to the fore and this means further government involvement in western financial systems is inevitable.

Living in Dubai makes so much of this crisis feel unreal. Managed economies. Soaring immigration. Housing prices continuing to escalate and the Middle East nations using the petro-dollar surpluses to buy significant dollar based assets at bargain prices.

Is this the recession that moves the balance of economic power from the west towards the east? The trouble with being the world's largest economy is that you have the furthest to fall when the going gets tough. The USA may never be the same again and there are many people in the Middle and Far East that will be smiling at that thought.

The "just business" defence

16 July 2008

This article is by By Peter Navarro and was published by Asia Times - with only a few weeks until the start of the Olympics expect a few more articles on China.

"China last week once again demonstrated its willingness to opportunistically trade diplomatic favors for access to African riches. Joining with Russia, the People's Republic vetoed a UN Security Council resolution that would have imposed tough sanctions on Zimbabwe's President Robert Mugabe and other members of his illegitimate regime for rigging the country's presidential election.

China has in the past "sold" its UN veto power to protect Sudan from sanctions over the killing of people in Darfur in exchange for access to Sudanese oil. China is now Sudan's biggest customer. Beijing has also provided Iran with diplomatic cover at the UN for the Middle East country's nuclear development program in exchange for access to its huge natural gas reserves.

In Zimbabwe, it's not petroleum that China covets. Rather, the African nation is the world's second-largest exporter of platinum, a key input for China's auto industry. China is also the world's largest steel producer, and Zimbabwe controls more than half of the world's known chromium reserves, used in making stainless steel.

On the agricultural front, China has long coveted Zimbabwe's rich tobacco fields. As the world's largest cigarette producer, China produces roughly 2 trillion sticks a year (which annually kill about a million Chinese). Over the past decade, by providing Mugabe with diplomatic cover at the UN and by lending his regime huge sums, China has been able to gain control of much of Zimbabwe's valuable tobacco output.

Zimbabwe used to sell its tobacco at international auction for top dollar and hard foreign exchange. Today, Zimbabwe’s crop is funneled directly to China's 300 million smokers as payment in kind for the loans Beijing provides. Even as Zimbabwe's agricultural sector collapses under Mugabe's rule, Chinese companies control land the Zimbabwean government once confiscated from white farmers.

China's Zimbabwe gambit is symptomatic of a broader brand of Chinese imperialism that would have Vladimir Lenin and Mao Zedong turning in their graves. It is a strategy driven by China's reliance on a heavy-manufacturing economic model, leading to the country now consuming half of the world's cement, one third of its steel, one fourth of its copper, one fifth of its aluminum, and having the fastest-growing share of the world's oil.

China's strategy for securing these scarce natural resources is a zero-sum game played against the West. Rather than relying on world markets as do Europe and the US, China seeks to gain physical control of these resources. It does this by first ingratiating itself with foreign governments, then encircling the country's natural resource riches with virtually every strategy described by Lenin in the "imperialist playbook".

As its core strategy, China dangles lavish, low-interest loans as bait and uses its huge army of engineers and laborers to help the country build up its infrastructure, from roads and dams to hotels and stadiums, from parliament buildings and palaces to satellite capabilities and telecommunications networks. In countries from Angola to Zimbabwe to Myanmar, China also sells the ruling elites the weapons they need to hold on to power - and rig the occasional election, as Mugabe just did.

Today, more than a thousand Chinese firms, private and state-owned, have been deployed to more than 50 African countries, many bringing in their own workers to add to the estimated 3 million Chinese working overseas. Backed by heavily subsidized, low-interest loans from the government, both state-owned and private Chinese construction firms have been able to put down deep economic roots in African soil, while helping China to solve its own politically volatile unemployment problems.

The investments made in highway systems and communications quite literally and digitally pave the way for precisely the kind of imperialistic "high-low" trade that Lenin once railed against. On the high end, China directs its financial capital and human resources to the development of the extraction and harvesting activities and transport of the natural resources back home for the production of higher value-added goods.

In the process, China systematically strips nations of their raw materials and natural resources. Adding injury to injury, China recovers the costs of these resources and materials by dumping cheap finished goods into these same countries, often driving out local labor and driving up the local unemployment rate.

That China implements this imperialistic strategy by leveraging its position as a permanent member of the UN Security Council with veto power is arguably one of the most reprehensible aspects of an amoral foreign policy. That foreign policy is founded on a principle that China's own President Hu Jintao has preached like the lowliest of rug merchants across Africa and Latin America: "Just business, no political conditions.""

Peter Navarro is a business professor at the University of California-Irvine, a CNBC contributor, and author of The Coming China Wars (FT Press). www.peternavarro.com

 

FlyDubai goes Boeing
14 July 2008

In something of a surprise FlyDubai has opted for Being 737NG airliners. Many of the successful low costs carriers operate the passenger popular Airbsu A320 fleet.

New low-cost airline FlyDubai has ordered 54 Boeing single-aisle 737 passenger jets in deals worth a total of 4.0 billion dollars (2.52 billion euros). The purchase was announced at the Farnborough Airshow on Monday.

FlyDubai said on the first day of the key industry event that it had made a firm order for 50 of Boeing's so-called next-generation 737-800 fuel-efficient passenger jets for 3.74 billion dollars at list price.

FlyDubai had also agreed to lease four Boeing 737-800s from Babcock and Brown Aircraft Management.

The mid-range 737-800 can transport up to 189 passengers and FlyDubai will take delivery of its planes between 2009 and 2015.

Meanwhile Etihad Airways, the national carrier of the United Arab Emirates, said it had agreed to firm orders to purchase 45 Boeing passenger jets.Etihad, which launched in 2003, said it was buying 35 mid-sized Dreamliner 787 jets -- Boeing's new fuel-efficient aircraft -- and 10 mid-sized Boeing 777s.

The airline made the announcement at a press conference on the opening day of the Farnborough International Airshow being held outside London and added that it would take delivery of the 777s in 2011 and the Dreamliners in 2015.

Watch this space for more Etihad announcements which are likely to include 10 AirbusA380s and at least 25 A350s for delivery after 2012.

"Dubai - The Vulnerability of Success"

13 July 2008

A newly published book by Christopher Davidson - Columbia University Press: 376 pp., $32.50. This is the first review that I have seen and was published by the LA Times. It is unclear whether the book will get a Dubai distribution. The issues raised are worthy of thoughtful debate and as Dubai takes an ever larger role on the world stage it is inevitable that the city's virtues and concerns will come under ever greater scrutiny. Still it is better to be talked about than ignored! Read on !

"Back in February, Related Cos., the developer working with architect Frank Gehry on a $3-billion mixed-use complex on Grand Avenue in downtown Los Angeles, announced it was bringing in a new investment partner: Istithmar, a sovereign wealth fund controlled by the ruling family of Dubai. The deal, which gave Istithmar a 45% stake in the project, was reminiscent of the 1980s, when Japanese companies took advantage of a sagging American economy to acquire skyscrapers and other high-profile buildings in Manhattan and Los Angeles. And as was the case 20 years ago, people began asking curious, anxious questions about the flush foreigners: Where did they get so much cash, and what's leading them to use it to buy up -- or at least buy into -- our skylines?

For many Angelenos, the answer probably seemed obvious: The Istithmar fund gets its money from oil, and Dubai's sheiks are keen to stash it abroad as a way to diversify their portfolios before the petroleum reserves back home run dry. As Christopher Davidson's "Dubai: The Vulnerability of Success" makes clear, though, that explanation is mostly wrong. Dubai, one of seven semiautonomous Persian Gulf sheikdoms that make up the United Arab Emirates, has turned itself into a rising and nimble economic power that actually depends on everything but oil to fill its coffers and fund its wide-ranging domestic and international ambitions.

Unlike its supremely wealthy neighbor Abu Dhabi, which is practically drowning in petroleum, Dubai never had much of the stuff to begin with. Its production peaked in 1991, at around 420,000 barrels a day -- less than half a percent of what Saudi Arabia now produces -- and today no more than 5% of Dubai's GDP comes from oil-related revenue. The rest is provided by a remarkably forward-looking economic engine that draws steady profits from trade, luxury tourism, high technology and high-profile real estate investments like the one on Bunker Hill.

While we moan about gas prices and try rather fitfully to imagine a post-petroleum urban future, Dubai has largely already arrived there. Even as construction workers hammer away at the 2,300-foot-high Burj Dubai tower, which will rank when finished later this year as the tallest building in the world, Dubai is showing its ambition below ground as well. The emirate is building a sophisticated subway system that will be mostly complete by 2010 and rival any in the developing world -- and many (ahem) in the West.

As Davidson traces Dubai's rise from sleepy Gulf port to player on the world scene, he devotes equal time to highlighting "several key problems that lie beneath the emirate's glittering facade." Now a fellow at the Institute for Middle Eastern and Islamic Studies at England's Durham University, Davidson earlier worked as an assistant professor of political science at the Sheikh Zayed University in Abu Dhabi and Dubai, and his familiarity with the quirks and customs of Dubai helps lift the text, while quite dry, above typical think-tank fare.

The book defines Dubai as a new breed of political and urban animal, equal parts Las Vegas and Singapore. Nominally Islamic but increasingly Western on its public face, Dubai combines laissez-faire economic policies with an unapologetically closed political system. As a place to run an international business, Dubai has few peers, as was demonstrated last year when defense contractor Halliburton, to Washington's chagrin, relocated its corporate headquarters there from Houston. As a political entity, Davidson writes, "Dubai is still an autocracy, where real evidence of an opening for true democracy proves hard to find, and where far less political reform has occurred than in neighboring Gulf states, including even Saudi Arabia."

As singular a place as Dubai has become, with its just-add-water skyline and its indoor ski resorts, with its archipelagoes of man-made islands topped by multimillion-dollar villas, its blueprint for success may also be a sign of things to come. If the titanic, expensive struggle between capitalism and communism dominated the geopolitics of the second half of the 20th century, the early years of the 21st are shaping up as a test for a handful of hugely ambitious regimes trying to mix free-market growth with autocratic rule. Like China, if on a far smaller scale, Dubai is involved in a high-stakes game of chance, betting that as long as it can keep its economy revving at a high enough level, it will be able to keep real political restructuring at bay.

Unlike China, however, Dubai's government can take some patriotic solace in the fact that the repressed masses are guest workers rather than its own citizens. Dubai is both a land of opportunity and a harsh proving ground for its lower-class immigrant workforce, particularly the South Asian construction workers brought over to build a mushrooming collection of skyscrapers in punishing desert heat. In Dubai, economic growth is a means of maintaining a patronage system for the emirate's 80,000 or so actual citizens, who make up just 5% of the total population of roughly 2 million. China's boom, meanwhile, is largely being carried on the backs of its own people, many of them internal migrants desperate for work. Dubai's so-called nationals make up what Davidson calls "a business-focused national population that to some extent views the government as a board of directors rather than as a forum for political participation." Dubai's first elections were held in 2006, for a handful of regional positions, and were "widely regarded as farcical."

That patronage system may pose risks to Dubai's future stability. Because they grow up coddled by "an extreme nanny state in which every aspect of their financial lives has been taken care of," Davidson argues, Dubai's citizens are hardly models of diligent ambition. "A weekday visit to any of Dubai's major shopping malls [reveals] legions of able-bodied young men drinking coffee and playing video games."

The emirate's much-vaunted commitment to free trade has a dark side: It has become a busy hub for gunrunning, money laundering and human trafficking. In global political terms, Dubai leads a risky double life. It operates under the Western military umbrella but continues to be attentive to Islamic fundamentalism and is frequently accused of paying protection to extremists to prevent terror attacks on its own soil. The UAE was one of only three states to recognize the Taliban government during its reign in Afghanistan, and in the wake of the U.S. invasion of Iraq, a number of Saddam Hussein's top lieutenants took refuge there.

Washington has long had serious worries about the ruling sheiks' relationship with Al Qaeda. Two of the Sept. 11 attackers were UAE natives, and much of the funding for the attacks themselves was wired from or laundered in the emirates. In 1999, American forces were ready to fire cruise missiles on a hunting camp in a remote corner of Afghanistan where they believed Osama bin Laden was hiding. Before they could pull the trigger, intelligence officials noticed that a C130 transport plane with UAE markings was sitting on an airstrip at the camp. According to the Sept. 11 commission report, the strike was called off because "policymakers were concerned about the danger that [it] would kill an Emirate prince or other senior officials who might be with bin Laden or close by."

At the same time, curiously and dangerously enough, Dubai's close relationship to Washington makes the emirate itself a possible terror target from the same extremists it is accused by the West of harboring. Rather ominously, Davidson cites a fiery threat from a group calling itself the Al Qaeda Organization in the Emirates and Oman. The statement demands that all U.S. military installations in the UAE be dismantled. Failing that, it concludes, the UAE's ruling families wil