President raises salaries of Federal Government staff

30 November 2011

The President Sheikh Khalifa bin Zayed Al Nahyan has ordered pay increases for all federal government employees who are nationals of the country, the official WAM news agency reported.

The increases that take effect as of January vary between 35 per cent of basic pay to 100 per cent, it said.

Sheikh Khalifa also ordered the creation of a fund valued at Dh10 billion to help citizens with limited income meet loan obligations, the agency said.

Meanwhile in the UK the current public sector current pay freeze is followed by a 2 year 1% pay cap.

Guess there will not be public sector strikes in the UAE then !

The UK's terminal demise?

30 November 2011

It does feel as though the West is in terminal demise. The eurozone is on the verge of collapse. It's heralded five year old currency is now derided and widely hated. Unemployment levels across Europe are alarming and appear to be long term. The USA is a shadow of its former self. Its government crippled by the inability to act. Yes we can is a myth.

Living standards are falling across the west. Sure there is wealth; but it is concentrated in the hands of few.

The UK is not a member of the Euro; its borrowing costs are lower than the Euro zone; with bonds paying about 2.2%. But while London appears to prosper the rest of the country is in a long term slump.

Yesterday the UK Chancellor delivered his autumn statement - effectively this is a second budget statement for the year after the March budget.

It was bleak. Six more years of austerity are predicted. And this is the optimistic view as it assumes that the Eurozone will survive. The coalition's signature political promise to pay off the deficit by the end of this parliament will now be broken. That goal had now receded to the distant horizon of 2016-17. If at all.

The UK economy is now set to grow by much less than previously forecast in March (0.7% next year, against an earlier 2.5%). The government will have to borrow at least £111bn more than it hoped. In just six months the numbers have deteriorated significantly.

Six years of sharp spending cuts are a huge political risk. You do not get elected for that. Cameron will fight the next election just as Mr. Brown fought the last: promising that he is the best man to manage an interminable crisis. That is a blow to Conservative hopes; it is also a tough sales pitch.

Why are things worse than expected? The Chancellor blamed higher oil prices, New Labour's bubble, the eurozone crisis. The reality is that the private sector has not been investing and has had little incentive to do so. The Chancellor's earlier optimism was misplaced.

The chancellor also set out new measures to boost growth, although much of this was micro tinkering: credit easing, underwriting home loans, even money for new road and rail links. But these new costs are going to be paid for by cutting elsewhere even further at the expense of public-sector workers, who now face four years of a squeeze on wages.
On top of a two-year pay freeze in the face of rising inflation, the public sector will now be asked to swallow a third year in which the pay scale rises only by 1%.

Gordon Hector, public affairs manager of the Joseph Rowntree Foundation says the message from the autumn statement is clear: "Whatever your politics, it wasn't good news. And that is my overall impression of the statement. It wasn't notable as a failure of economic management; it was a notable as final confirmation, if needed, that ours is an age of sustained austerity. Today was about the Gathering Clouds of Economic Despair, not about the Future Sunlit Uplands of Prosperous Britain."

From Nick Pearce, director of the IPPR thinktank: "This mini-budget does not address the main problem facing UK economy in the short-term: the shortage of aggregate demand. Many of the Chancellor's collection of small measures are welcome but it is wrong to squeeze the living standards of lower and middle income families relying on tax credits in order to pay for lower increases in fuel duty."

And today sees the largest strike in Britain since 1926 with a massive public sector work out. The potential for violence today is very real.

The deficit continues to grow. The economy does not grow. Unemployment rises year on year. The VAT rise simply fuels inflation. Private enterprise ceases to invest prefering to hoard cash. Infrastructure projects dry up.

It is hard to see anything other than years of attrition. Indeed it is hard to see a UK recovery. Worrying times.

Thai minister "certain" military killed Reuters cameraman

29 November 2011 Reuters

"Thai investigators have clear evidence that the military was responsible for the death of Reuters cameraman Hiro Muramoto during political violence last year, a deputy prime minister said on Tuesday.

Witness testimony confirmed, with certainty, that the bullet that killed the 43-year-old Japanese national was fired by a soldier, Chalerm Yubamrung told reporters.

"For certain, the death was caused by a government official because we have witnesses who state that they saw the event when it happened," he said following a meeting with Japan's ambassador to Thailand.

"The direction in which the bullet was shot was confirmation that it came from the government officials' side," Chalerm said.

Muramoto was killed by a high-velocity bullet wound to the chest while covering clashes between anti-government "red shirt" protesters and troops in Bangkok on April 10 last year.

He was among 25 people, including several soldiers, who died that night in one of the worst bouts of political violence in Thailand in decades. Unidentified gunmen dressed in black clothes and balaclavas were seen among the demonstrators.

Chalerm's comments followed the issue on Monday of a police summons for former prime minister Abhisit Vejjajiva and former deputy prime minister Suthep Thaugsuban to answer questions related to the April-May unrest, during which 91 people were killed and more than 1,800 wounded.

The evidence stated by Chalerm concurs with witness accounts in a leaked copy of a preliminary investigation by the Department of Special Investigation (DSI) seen by Reuters last December, which said the shot came from the direction of troops.

A witness was quoted as saying he saw "a flash from a gun barrel of a soldier", then watched Muramoto fall to the ground after he was shot while filming security forces.

The issue of whether the military was behind Muramoto's death is sensitive in a country where the armed forces are extremely powerful and deeply politicised.

DSI Director-General Tharit Pengdit issued a statement on Feb. 27 that contradicted the initial findings, saying the bullet came from a type of rifle not used by soldiers that day.

But in September, the DSI pressed for a new probe into the case, a dramatic reversal from its earlier stance.

Chalerm said he told the ambassador during Tuesday's meeting that the probe would soon be concluded and there would be no political intervention in the proceedings.

"I expressed to the Japanese ambassador: "Let us be certain as regards our investigation. There will be no intervention" he said.

The head of the probe, Police Major-General Anuchai Lekbumrung, told Reuters that work on the case was continuing. It had yet to be sent to public prosecutors and Suthep and Abhisit would be questioned on Friday, he added.

Tharit told Reuters on Tuesday the DSI and the police were in agreement on the findings reached so far and believed there was sufficient evidence to show Muramoto was killed by a gun fired by a soldier.

The protracted investigation appears to have picked up pace since Prime Minister Yingluck Shinawatra took office in August after her Puea Thai Party's resounding victory over Abhisit's Democrat Party, which was in power at the time of the unrest.

Yingluck is the sister of ousted former Prime Minister Thaksin Shinawatra, the figurehead of the red-shirt protest movement long opposed by the military and Thailand's establishment.

Beware of falling masonry

26 November 2011 - The Economist

The crisis in the euro area is turning into a panic and dragging the zone into recession. The risk that the currency disintegrates within weeks is alarmingly high

First Greece; then Ireland and Portugal; then Italy and Spain. Month by month, the crisis in the euro area has crept from the vulnerable periphery of the currency zone towards its core, helped by denial, misdiagnosis and procrastination by the euro-zone’s policymakers. Recently Belgian and French government bonds have been in the financial markets’ bad books. Investors are even sniffy about German bonds: an auction of ten-year Bunds on November 23rd shifted only €3.6 billion-worth ($4.8 billion) of the €6 billion-worth on offer.

Worse, there are signs that the euro zone’s economy is heading for recession, if it is not there already. Industrial orders in the euro zone fell by 6.4% in September, the steepest decline since the dark days of December 2008. A closely watched index of euro-zone sentiment, based on surveys of purchasing managers in manufacturing and services, is also signalling contraction, with a reading of 47.2: anything below 50 suggests activity is shrinking. The European Commission’s index of consumer confidence fell in November for the fifth month in a row.

Now an even bigger calamity is looking likelier. The intensifying financial pressure raises the chances of a disorderly default by a government, a run of retail deposits on banks short of cash, or a revolt against austerity that would mark the start of the break-up of the euro zone.

The German government can probably shrug off a failed auction: it likes to price its bonds as richly as it can, and occasionally cannot sell all it would like, even in untroubled times. Still, the timing is awful, and other governments are not so lucky: the contrast between Germany’s borrowing costs and those of other euro-zone sovereigns is stark. European banks are dumping the bonds of the least creditworthy, and other assets, in an attempt to conserve capital and improve cashflow as a full-blown funding crisis looms. Governments are promising ever more severe budget cuts in the hope of pacifying bond markets. The direct result of these scrambles is a credit crunch and a squeeze on aggregate demand that is forcing Europe into recession. Add the indirect effects on the confidence of consumers and businesses, and the downturn will be deep.

Consider the three ingredients for recession: a credit crunch, tighter fiscal policy and a dearth of confidence. In aggregate, European banks’ loans exceed their deposits, so they rely on wholesale funds—short-term bills, longer-term bonds or loans from other banks—to bridge the gap. But investors are becoming warier of lending to banks that have euro-zone bonds on their books and that can no longer rely on the backing of governments with borrowing troubles of their own. Long-term bond issues have become scarce and American money-market funds, hitherto buyers of short-term bank bills, are running scared.

Banks are frantically shedding assets both to raise cash and to ration their capital in order to meet European Union minimum capital-adequacy targets by next June. The early victims of this deleveraging are borrowers in emerging markets. The euro zone’s eastern neighbours may be hit particularly hard: the Turkish lira, for instance, has come under pressure in the past week, a hint that money is flowing out. The repatriation of funds by euro-zone banks might explain why the euro has been remarkably stable against the dollar in recent weeks, despite the zone’s internal convulsions. But businesses and householders at home will also soon be hurt by scarcer credit and rising interest rates, as the banks’ higher funding costs are passed on.

Governments are cutting back too. The precise impact of next year’s belt-tightening is tricky to gauge. France’s budget plans are close to being agreed on; further cuts are likely but will be delayed until after the elections in spring. Italy has yet to vote through a much-revised package of cuts. Spain’s incoming government has promised further spending cuts, especially in regional outlays, in order to meet deficit targets agreed with Brussels.

Even so, it seems plain that fiscal tightening will weaken growth. Take the plans that countries presented to the European Commission and add what has been advertised since, and the squeeze across the euro area comes to around 1.25% of GDP next year, reckons Laurence Boone, chief European economist at Bank of America. That alone is enough, says Ms Boone, to chop around a percentage point off GDP growth in 2012. Germany will be the least affected of the zone’s four biggest economies, followed by France. Spain and Italy will be hurt most.

The euro zone’s businesses and consumers will be drawn into the downward spiral of confidence. In the autumn of 2008 companies learned that credit lines could not be relied on when banks were fighting for survival. When banks are short of liquidity, firms have to watch their own cashflow closely. That implies leaner stocks and reductions in discretionary spending, such as capital projects or advertising campaigns.

September’s sharp decline in industrial orders is an early sign that companies are cutting back. Andreas Willi, head of capital-goods research at JPMorgan, notes that SKF, a Swedish firm that is the world’s largest maker of ball bearings and a bellwether of industrial demand, gave analysts a cautious assessment of its future revenues in mid-October. That guidance suggests a further softening of investment demand. Consumers are also likely to defer big purchases as long as the crisis is unresolved and credit is scarce.

A drop in demand for capital equipment, durable consumer goods and cars will strike at the euro zone’s industrial heartland, including Germany. Ms Boone reckons GDP will fall by around 0.5% in Germany next year and by the same amount in the whole zone. In September the IMF forecast that the zone’s GDP would grow by 1.1% in 2012 but estimated that if European banks were deleveraging quickly (as they are now), the economy could shrink by around 2%.

A downturn of such severity will hugely increase the pressures within the zone. Investors will be even less willing to finance banks, as more garden-variety loans to businesses and householders turn bad. As unemployment rises, tax receipts will go down and welfare payments up, making it harder for governments to rein in their deficits and hit the targets they have set, and causing bond markets to question their solvency more pointedly still.

In such circumstances, the chances of a policy error or broader panic increase sharply. The calculations of bond investors, bank depositors and politicians are prone to sudden change. Hopes that the fracture of the euro zone might be averted by far-sighted policymakers could give way to a belief that it is inevitable. Such beliefs, once they take hold, are likely to be self-fulfilling.

How? The drying-up of funding for sovereigns and for banks is a threat to the integrity of the euro, because of the stark divide between debtor and creditor countries within the zone. As late as March 2010, Jean-Claude Trichet, then head of the ECB, boasted that simply belonging to the euro area automatically ensured balance-of-payments financing. It doesn’t look that way now.

During the credit boom, cheap capital flowed into Greece, Ireland, Portugal and Spain to finance trade deficits and housing booms. As a result, the net foreign liabilities—what businesses, householders and government owe to foreigners, less the foreign assets they own—of all four are close to 100% of GDP. (By comparison, America’s net foreign liabilities are 17% of GDP.) Much of their debt is being financed by local bank borrowing or bonds sold to investors in creditor countries, such as Germany. Ireland is unusual in that a large chunk of what it owes is in the form of equity (all those American-owned factories and offices) and so does not need to be refinanced.

With a few exceptions, the benchmark cost of credit in each euro-zone country is related to the balance of its international debts. Germany, which is owed more than it owes, still has low bond yields; Greece, which is heavily in debt to foreigners, has a high cost of borrowing. Portugal, Greece and (to a lesser extent) Spain still have big current-account deficits, and so are still adding to their already high foreign liabilities. Refinancing these is becoming harder and putting strain on local banks and credit availability.

The higher the cost of funding becomes, the more money flows out to foreigners to service these debts. This is why the issue of national solvency goes beyond what governments owe. The euro zone is showing the symptoms of an internal balance-of-payments crisis, with self-fulfilling runs on countries, because at bottom that is the nature of its troubles. And such crises put extraordinary pressure on exchange-rate pegs, no matter how permanent policymakers claim them to be.

One of the initial attractions of euro membership for peripheral countries—access to cheap funds—no longer applies. If a messy default is forced upon a euro-zone country, it might be tempted to reinvent its own currency. Indeed, it may have little option. That way, at least, it could write down the value of its private and public debts, as well as cutting its wages and prices relative to those abroad, improving its competitiveness. The switch would be hugely costly for debtors and creditors alike. But the alternative is scarcely more appealing. Austerity, high unemployment, social unrest, high borrowing costs and banking chaos seem likely either way.

The prospect that one country might break its ties to the euro, voluntarily or not, would cause widespread bank runs in other weak economies. Depositors would rush to get their savings out of the country to pre-empt a forced conversion to a new, weaker currency. Governments would have to impose limits on bank withdrawals or close banks temporarily. Capital controls and even travel restrictions would be needed to stanch the bleeding of money from the economy. Such restrictions would slow the circulation of money around the economy, deepening the recession.

External sources of credit would dry up because foreign investors, banks and companies would fear that their money would be trapped. A government cut off from capital-market funding would need to find other ways of bridging the gap between tax receipts and public spending. It might meet part of its obligations, including public-sector wages, by issuing small-denomination IOUs that could in turn be used to buy goods and pay bills.

When cash is scarce, such scrip is readily accepted by tradesmen. In August 2001 the Argentine province of Buenos Aires issued $90m of small bills, known as patacones, to employees as part of their pay. The bills were soon circulating freely: McDonalds even offered a “Patacombo” menu in exchange for a $5 pata c ón. Argentina broke its supposedly irrevocable currency peg to the dollar a few months later.

Scrip of this kind becomes, in effect, a proto-currency. In a stricken euro-zone country, it would change hands at a discount to the remaining euros in circulation, foreshadowing the devaluation to come. To pre-empt further capital outflows, a government would have to pass a law swiftly to say all financial dealings would henceforth be carried out in a new currency, at a one-for-one exchange rate with the euro. The new currency would then “float” (ie, sink) to a lower level against the abandoned euro. The size of that devaluation would be the extent of the country’s effective default against its creditors.

Market gurus and other students of misaligned stock, bond or home prices often say that although it is easy to spot an asset-price bubble, it is impossible to know the event that finally pricks it. In much the same way, the likeliest trigger for a disintegration of the euro is unknowable. But there are plenty of candidates. One is a failed bond auction that forces a country into default and sends a shock wave through the European banking system. Italy has €33 billion of debt coming due in the final week of January and a further €48 billion in the last week of February. Since bond investors are turning their noses up even at offerings from thrifty Germany, the odds against Italy’s being able to raise the money it needs early next year are uncomfortably short.

Another danger is a disagreement between Greece and its trio of rescuers (the EU, the IMF and the ECB) over the conditions of its bail-out. The risk of a mishap will be greater after the Greek elections in February if the country’s political mood sours yet further. Perhaps the spark will come from another source: the bankruptcy of a bank; fresh trouble in Portugal; or a chain of events that starts with France losing its AAA rating and ends with runs on banks across Europe. The exposure of French banks to Italy and to other countries that have been in bond traders’ sights for longer implies that contagion would quickly spread to the euro’s core. Widespread defaults in the periphery would wipe out a big chunk of Germany’s wealth and begin a chain of bank failures that could turn recession into depression.

The few left in the euro (Germany and perhaps a few other creditor countries) would be at a competitive disadvantage to the new cheaper currencies on their doorstep. As well as imposing capital controls, countries might retreat towards autarky, by raising retaliatory tariffs. The survival of the European single market and of the EU itself would then be under threat.

Such a disaster can still be averted. The ECB might launch a programme of bond-buying on the pretext that a deep recession in the euro area threatens deflation. If done on the scale that the Bank of England has undertaken, it could restore stability to Europe’s panicky bond markets. If bond purchases were made in proportion to the size of each euro member’s economy, that might go some way to overcoming German misgivings that the central bank was being used to provide favourable financing to profligate countries.

Such action by the ECB is an essential short-term palliative. But any lasting stability for the euro must lie with governments, particularly in the degree to which they are willing to give up fiscal sovereignty in return for pooling liabilities. Germany stands firmly at one extreme of this debate. Its chancellor, Angela Merkel, wants big changes to force probity (and wants the EU summit on December 9th to focus on such rule changes), but has opposed the idea of jointly guaranteed “Eurobonds”. German officials have argued that any open-ended commitment to joint liabilities would encourage errant governments to profligacy, violate Germany’s constitution and raise its borrowing costs. Even now, the head of the Bundesbank, Jens Weidmann, appears to believe that the imposition of fiscal rigour will be enough to restore calm to Europe’s bond markets.

Others think that circumstances demand speedier concentration on ways to pool liabilities. On November 23rd the European Commission laid out three approaches for issuing Eurobonds, two of which imply mutual guarantees.

Another new proposal is intriguing—thanks, in part, to its provenance. Germany’s Council of Economic Experts recently proposed a “European Redemption Pact”. This scheme would place the debt, in excess of 60% of GDP, of all euro-zone governments not already in IMF rescue plans into a jointly guaranteed fund that would be paid off over 25 years. Modelled in part on the federal government’s assumption of the debt of America’s states begun by Alexander Hamilton in 1790, the fund would provide joint liability for these debts under strict conditions. These would require euro-zone countries to introduce debt brakes into their constitutions, like the one Germany and Spain already have; give priority to paying off the mutualised bonds; set aside a specific tax revenue to do so; and pledge foreign-exchange reserves as collateral.

At its peak, the redemption pact would be huge: the joint liability would amount to €2.3 trillion. But it would technically be temporary. For all these safeguards, Germany’s government has so far poured cold water on the idea. But time is running out. And the scale of the impending catastrophe demands radical answers.

20 years jail for 4 text messages

23 November 2011

The Thai Criminal Court today sentenced 61-year-old Amphon Tangnoppakul to 20 years in jail after finding him guilty of lese majeste and computer crimes.

The verdict was read out over a video conference link this morning because the Bangkok Remand Prison is isolated by the flooding and Amphon was unable to attend the court.

The court found him guilty on four counts under two laws - Section 112 of the Criminal Procedure Code, widely known as the lese majeste law, and Section 15 of the Computer Crime Act. He was sentenced to five years in prison on each count.

Amphon is also known as "Uncle SMS" among those who follow his updates, or as ``Ah Kong'' or grandpa among his acquaintances.

He was charged with sending four short messages with offensive content in May 2010 to the personal secretary of then prime minister Abhisit Vejjajiva.

In his defence he argued that he did not know of or have in his possession the SIM card that was used to send the messages.

Investigators insisted they had checked and found the serial number of the mobile phone SIM in question was the same as the Motorola phone Ampon had used for about two years.

Amphon was arrested in August last year and charged with lese majeste and four counts of computer crime. Amphon was arrested on 3 Aug 2010, and was granted bail on 4 Oct. He was indicted by the public prosecutor on 18 Jan 2011, and has been detained without bail ever since.

After his arrest, Thailand's Central Bureau of Investigation said the messages were "inappropriate and considered insulting to the monarchy and have upset the recipients," without revealing their content.

The royal family is a very sensitive subject in Thailand. King Bhumibol Adulyadej, 83, is the world's longest-reigning monarch and revered as a demi-god by many Thais.

Under Thai laws, anyone convicted of insulting the king, queen, heir or regent faces up to 15 years in prison on each count.

Meanwhile it is worth noting that has not been one prosecution for either the 2008 occupation of Bangkok's airports or the deaths of 91 civilians on the streets of Bangkok last year as the Thai government dismantled the red shirt protests.

The coming demise of Thomas Cook

22 November 2011

Thomas Cook is a travel legend. It has grown to become Europe's second largest tour operator. A company that has been built over 170 years is today looking as though it is well on the way to a painful demise.

The company admitted today that it is in crisis talks with its banks.

European travel companies notoriously have a cash squeeze in the winter; this is the time when they are pre-booking hotels for the next summer's packages, but not yet taking in cash from customers for those holidays.

But Thomas Cook has a bigger problem - a big debt burden since its flotation due to a series of acquisitions.

Since 2007 the company's net debt has expanded every year. In the financial year to the end of September 2009 it had £300m in debt. By the end of June this year the travel group had more than £900m in net debt.

Over that period the company's turnover has expanded to almost £9bn from £5.3bn in the year to the end of October 2006, but pre-tax profits have suffered. Last year it made £41.7m in pre-tax profits, down from almost £150m in 2006.

Thomas Cook grew out of the nineteenth-century temperance movement. Cabinet-maker Thomas Cook launched the business arranging trips for fellow temperance campaigners to meetings using the fledgling railway service.

After the first trip from Leicester to Loughbourough in 1841, Cook's business expanded with excursions to the Great Exhibition in 1851, and then across the Channel to an international exhibition in Paris in 1855.

The business expanded and came to have a key role in British life – with son John Mason Cook asked in 1884 to organise a relief expedition to rescue General Gordon from Khartoum.

Thomas Cook played a key role in the post-war holiday boom. Now state-owned as part of the nationalised British Railways, the company's net profits exceeded £1m for the first time in 1965.

Bought by a consortium in 1972, the company then changed hands a number of times, owned at different stages by several German investors.

Part of a conglomerate including department stores and mail order operations in Germany, it was eventually split out in a merger with UK rival MyTravel, resulting in a listing on the London market.

The rump German business, renamed Arcandor, retained a 52% stake, subsequently sold off by creditors when Arcandor went bust in 2009.

If Thomas cook who sell 22 million holidays a year are in trouble??? How bad are things???

The company has 17 banks; it is arguing that extending the overdraft facility by gbp100 million would the company through the winter. The stock market is less convinced and the share price has fallen by 73% in a single day.

On twitter the alarm is out "Can't decide whether to book a Thomas Cook holiday for £300 or buy the whole company for £100" wrote one wag.

The companies bonds have also fallen by 25 basis points in the day.

Now it may be that the company is not that it's ceasing to exist. It could muddle through with some liquidity. But will anyone now book a Thomas Cook holiday or flight. The damage has been done in a single day.

Of course there are excuses and explanations: The French aren't booking holidays in north Africa and Russians aren't keen on flood-hit Thailand. And the overall malaise of the european economies means fewer shorter holidays. Some airplanes have already been parked. There will be more.

With a further £100m total borrowings should peak at £1.4bn-£1.5bn, including bonds, at the end of December. The banks will probably prefer to believe that Thomas Cook can trade its way out of the crisis. But the banks' patience will be costly.

The banks might have demanded that the company puts its finances in order once and for all by asking shareholders to inject cash – in other words, an enormous rights issue to pay down debt. But that will not work now. The share price has collapsed to 11p (from 200p at the start of the year), a fall that threatens a near wipe-out for current investors if a rights issue is launched.

There is no incentive for shareholders to throw in more cash? Worse Thomas Cook itself is rudderless with out a permanent chief executive.

Thomas Cook had grown through mergers to a size where it appeared to believe that its cash flows were reliable and consistent - like a public utility. Not so. Revolutions, volcanic ash clouds, strikes by air-traffic controllers, floods, oil prices etc all play havoc with profits and cash flows.

Worse the company appears to lack direction or strategy. People package together there on vacations using easyJet, Ryanair, Expedia, tripadvisor etc. Yet Thomas Cook is still on the high streets.

Restructuring should have been done years ago. It is much harder to do it in the current crisis. Manny Fontenla-Novoa, who was jettisoned as chief executive in August, earned £14.5m over four years in pay and bonuses. The board saw his failings too late.

When a business gets to the point where customers start to wonder whether their operator will be around when they go on vacation, the signs for trading out of the doldrums aren’t promising.

Emirates plans for Facebook

22 November 2011 Marketing Magazine

"The global airline group is hiring a digital agency to create a Facebook page as the first step in the process of establishing its ‘social-media footprint’.

Emirates intends to target the ‘experience economy’ audience, which it identifies as ‘the new school’ of frequent business travellers.

The page will provide Emirates with a platform for content, a way of communicating its ‘voice’ and a convenient channel for consumers to reach the airline group.

The aim of the Facebook page is to make the brand more relevant to a wider audience, positioning it as ‘cosmopolitan’ and ‘prestigious’, as well as driving loyalty among current Emirates customers.

The social-media strategy is part of Emirates’ broader business objectives of doubling in size within five years and becoming the biggest independent airline in the world.

Emirates has fallen behind its rivals on social media, with several airline brands deploying sophisticated strategies for engaging with consumers online.

American Airlines and Air France are the carriers with the most-popular Facebook pages. Both allow users to select flights via the pages and to click through to their main websites to complete the transaction.

Meanwhile, British Airways, which uses its Facebook page predominantly as a marketing platform, launched a ‘Perfect Day’ app in August. It enables Facebook users to create and share itineraries for destinations to which BA flies.

Virgin America has been particularly active on Twitter and last year became one of the first brands to roll out a paid-for tweet.

This featured a promotion that the brand claimed resulted in its fifth-highest number of sales in a day in its history.

American Airlines has used Twitter to promote its AAdvantage loyalty scheme, offering consumers the chance to win 30,000 advantage miles.

Airlines are also making greater use of social media for crisis management, particularly when severe weather causes delays and cancellations."

Leveson inquiry: Hugh Grant delivers damning testimony

22 November 2011 - The Guardian

It may be just as well that Hugh Grant fervently believes a film succeeds on its qualities, not on publicity about its stars, because he did his tabloid reputation as a heartless, feather-brained Lothario immense harm in the process of delivering damning testimony on phone-hacking to the Leveson inquiry on Monday.

He was still the diffident, self-deprecating Grant who has won audiences around the world as a light comic actor – not a particularly good one, as he occasionally says himself, though his ad libs in the high court were better than many of his scripts. But he also revealed himself to be thoughtful, articulate, brave in an unheroic way and – at least twice – very kind. No longer the foppish stereotype Brit, more high-minded Gary Cooper in Mr Deeds Goes to Town. How his tabloid tormentors will punish him for this if they can.

It was another of the witnesses, the novelist, feminist and anti-censorship campaigner Joan Smith, who complained that tabloid morality – such as it is – is locked in the straitlaced 1950s while the rest of us have moved on. True, but in court 73 the plentiful girlfriends were rarely identified by name, while postmodern euphemisms like "additional partner" (in the 50s they said "bit on the side") were also deployed.

Keen to protect them from yet more horrid publicity, Grant referred to "girlfriend 1" and "girlfriend 2," yet his gallantry only served to underline how much some things have changed since Queen Victoria set the tone. There was the prostitute in Los Angeles (no names), which showed how absurd it was to claim he traded on his good name – "I've never had a good name". But the film he had just made then still did well, he added.

Asked why he had eventually issued a statement about Ting Lan Hong, the mother of his child, Grant explained it was important to say that she was – and is – "a friend, not a formal girlfriend," lest tabloids claim she had been jilted.

Both of them were hounded, he told the inquiry, in revenge for his new role as scourge of the phone-hackers.

In the murky world of jaw-dropping phone hacks, pre-publication injunctions, New York publicists and paparazzi who drive their cars at grannies in London streets, the only remotely normal people on view yesterday were Bob and Sally Dowler, who came to repeat – yet again – the heart-rending story of the abduction and murder of their daughter Milly in 2002, and of the cruel intrusions they recently learned of by the News of the World.Only once did emotion break through, when Sally Dowler recalled how she had regularly rung Milly's mobile phone and got the familiar automatic message once it was filled up. Then one day, she heard her daughter's voice. Unaware that the hackers had deleted some messages to make space for more, she cried excitedly: "She has picked up her voicemails, Bob, she is alive."

Lord Justice Leveson's court was packed with lawyers, journalists and computer screens, which made it look like a City trading floor, and which – in a way – is the Leveson story: what price privacy, what price the risk of publishing gossip without checking it, what price tip-off fees about the rich and famous that might be worth £5,000 to a police or NHS worker – or the £500,000 (so top injunction solicitor, Graham Shears, told the hearing) for bedding a David Beckham? Allegedly.

By their own description "ordinary people who have no such experience" of the tabloid jungle, the Dowlers proved themselves a level-headed credit to middle Britain. They had decided they must be consistent and courteous when dealing with the media, cut no sweetheart deals for "exclusive" rights and offer no comment unless advised by their (much-praised) police handlers: "If you engage in one question it becomes an interview, doesn't it?" Exactly. Grant,, who has been fending off doorstep encounters for most of the 17 years since Four Weddings and a Funeral, famous, (but only briefly popular in Fleet Street) could hardly have expressed it better – though he did his best for two hours in the witness box. Like all the day's witnesses, he distinguished between excellent British journalism – plenty of that – and tabloids who had lost their ethical moorings in the past 30 years.

Murdoch years, you might say, though no one did and there were repeated efforts to drag the Daily Mail into the frame. Jonathan Caplan QC, the poor sod briefed to represent the Mail group, had asked for what Leveson described – with conscious irony – as a "right of reply". It meant that Robert Jay, counsel for the inquiry, was required to make points on the Mail's behalf. "You have been very fair to News International and Associated [the Mail]. You told me backstage you were going to bowl me straight balls. If these are straight balls, I'd hate to see your googlies," Grant replied in one of several lapses into irritation which neither Jay's nor Leveson instinctive deference to his celeb status could wholly assuage.

More than once Grant started cross-examining his interrogators. If he hadn't been hacked or betrayed by a hospital tip-off, how could they explain the story or the photo? "How else? Was it my cousin or Ting Lan's Chinese parents who speak no English?" At another, he said his New York publicist offers no advice about media PR in Britain – "it's uncontrollable".

Beyond court 73 Twitter was abuzz with idle speculation that one of the women lawyers present was clearly infatuated with Grant, effortlessly glamorous and with his spectacles off. It serves as a reminder that there is always a market for gossip, even when the star is playing Gary Cooper and has just revealed he wouldn't hand over secret tapes he made of ex-NoW hack Peter McMullan confessing to heinous offences – "too harsh, I didn't want to send him to prison."

Such kindness, but it is not just celebrities whose privacy is ravaged, Grant reminded Leveson. Hundreds of celebs he knows would forgo damages and apologies "if they'd just make an undertaking never to mention their names again". The Dowlers would probably say yes to that too.

DWC passenger terminal to be ready by early 2012

21 November 2011

Dubai’s new Al Maktoum International Airport is expected to open its (first) passenger terminal early next year, according to Khalifa Al Zaffin, the executive chairman of Dubai World Central, or DWC.

An investment of around Dh4 billion is expected to be made for Al Maktoum Airport and Dh26 billion for the expansion of Dubai International Airport by 2020, Al Zaffin told reporters on Sunday.

The passenger terminal at Al Maktoum International will be ready in two months, he said.

Recently, it was reported that Dubai’s first low-cost carrier, flydubai, will soon move to DWC. Al Zaffin said it was difficult to give any date now.

Regarding the operations of other airlines out of the new airport he said: “We cannot force airlines to go to Jebel Ali.”

Last week, it was announced that Dh1 billion had been allocated for the relocation of the 2013 edition of the Dubai Airshow to DWC.

The new venue will encompass a larger area than the current facility and will consist of a grand reception building, two large exhibition halls and static display areas, which will offer more space to accommodate additional aircraft. In addition to this, the investment will also cover the start of the first phase of the development of the DWC aviation district, which could exceed Dh1 billion, Al Zaffin said.

DWC is one of the most ambitious projects of its kind in the world, comprising the new Al Maktoum International Airport, set to be the world’s largest in volume and size upon completion, and the adjacent specialised free zones focused on logistics sectors and aviation industries. Early this year, it was opened to limited passenger traffic. Dubai Airports, which owns and manages operations of Dubai International and the new airport, said the new facility initially opened to receive helicopter and passenger aircraft with no more than 60 people on board.

Meanwhile, freighter service is growing fast at DWC and a total 40 cargo airlines are operating out of Jebel Ali, Dubai Aviation City Corporation chief operating officer Rashed Buqara’a told Khaleej Times at the event. The cargo terminal is operating 160 weekly flights, he added. This is not much  to get excited about - averaging 12 arrivals and departures each day.

Basil D'Oliveira dies aged 80

18 November 2011

The former England all-rounder Basil D'Oliveira has died at the age of 80.

D'Oliveira made headlines in 1968 when he was included in the England squad for the tour of South Africa which had to be called off as the South African government refused to accept his presence. The incident marked the start of South Africa's cricketing isolation.

Cricket South Africa chief executive Gerald Majola led the tributes to the South African-bornn D'Oliveira, whose health had been deteriorating for some time before his death in England.

"'Dolly', as he was known around the world by an audience that went far beyond the game of cricket, was a true legend and a son of whom all South Africans can be extremely proud," Majola said.

"He was a man of true dignity and a wonderful role model as somebody who overcame the most extreme prejudices and circumstances to take his rightful place on the world stage."

D'Oliveira starred in Cape Town club cricket in his home country but found his path to the top of the game blocked in apartheid-era South Africa.

He moved to England with help from the cricket commentator John Arlott and fought his way through the ranks to earn a place in the national side, where he went on to shine on the international stage after making his debut in 1966.

He scored 2484 runs at an average of 40.06, and took 47 wickets in 44 Tests.

His most famous innings was 158 against Australia at The Oval in the 1968 Ashes, a tally that should have sealed his place on the tour of South Africa that would ultimately never take place.

He was initially left out of the side after pressure was exerted by the South African authorities, but after he was called in due to an injury to Tom Cartwright, the tour had to be cancelled.

"The fact that he could have a Test career batting average of 40 in 44 Tests and an economy rate of less than two with the ball on his way to 47 wickets was remarkable considering he was past his prime when he made his debut for England in his mid-30s," said Majola.

"One can only imagine what he might have achieved had he made his debut as he should have done at the age of 20 on South Africa's tour of England in 1951.

"I would like to pay tribute also to all those people in England, notably John Arlott, one of the greatest cricket radio commentators of all time, for the roles they played in making it possible for Basil to achieve his dream of playing international cricket for his adopted country.

"The circumstances surrounding his being prevented from touring the country of his birth with England in 1968 led directly to the intensification of opposition to apartheid around the world and contributed materially to the sports boycott that turned out to be an Achilles heel of the apartheid government.

"Throughout this shameful period in South Africa's sporting history, Basil displayed a human dignity that earned him worldwide respect and admiration. His memory and inspiration will live on among all of us."

D'Oliveira's former Worcestershire and England team-mate Tom Graveney paid tribute to his close friend on Sky Sports News.

"It's terrible news to me because Basil was one of the my best friends," Graveney said. "We met because we were on a tour of Pakistan together and I persuaded him to come to Worcester in 1962. He had to serve a year playing in the second XI and then came straight into the first class game and was an immediate success and a wonderful character as well."

Graveney recalled that D'Oliveira had been in tears when he was initially left out of the team for the tour of his homeland.

"I can remember saying, 'If he doesn't go, I'm not going' because we were such great friends and he'd done everything to go and get back into the team, so it was politics I'm afraid," he said. "It was very sad."

Had politics not intervened, Graveney said D'Oliveira would be primarily remembered for his outstanding skill as a batsman.

"He was a very good all-rounder," he said. "He bowled medium pace, with a few off-spinners in amongst them. But his batting was the thing. He was tremendously strong. I can remember batting with him when the pitches were turning a bit because we played on wet wickets in those days and he was just terrific."

The next financial crisis will be hellish, and it’s on its way

18 November 2011 Forbes

"There is definitely going to be another financial crisis around the corner," says hedge fund legend Mark Mobius, "because we haven't solved any of the things that caused the previous crisis."

We're raising our alert status for the next financial crisis. We already raised it last week after spreads on U.S. credit default swaps started blowing out. We raised it again after seeing the remarks of Mr. Mobius, chief of the $50 billion emerging markets desk at Templeton Asset Management.

Speaking in Tokyo, he pointed to derivatives, the financial hairball of futures, options, and swaps in which nearly all the world's major banks are tangled up.

Estimates on the amount of derivatives out there worldwide vary. An oft-heard estimate is $600 trillion. That squares with Mobius' guess of 10 times the world's annual GDP. "Are the derivatives regulated?" asks Mobius. "No. Are you still getting growth in derivatives? Yes."

In other words, something along the lines of securitized mortgages is lurking out there, ready to trigger another crisis as in 2007-08.

What could it be? We'll offer up a good guess, one the market is discounting.

Seldom does a stock index rise so much, for so little reason, as the Dow did on the open Tuesday morning: 115 Dow points on a rumor that Greece is going to get a second bailout.

Let's step back for a moment: The Greek crisis is first and foremost about the German and French banks that were foolish enough to lend money to Greece in the first place. What sort of derivative contracts tied to Greek debt are they sitting on? What worldwide mayhem would ensue if Greece didn't pay back 100 centimes on the euro?

That's a rhetorical question, since the balance sheets of European banks are even more opaque than American ones. Whatever the actual answer, it's scary enough that the European Central Bank has refused to entertain any talk about the holders of Greek sovereign debt taking a haircut, even in the form of Greece stretching out its payments.

That was the preferred solution among German leaders. But it seems the ECB is about to get its way. Greece will likely get another bailout — 30 billion euros on top of the 110 billion euro bailout it got a year ago.

It will accomplish nothing. Going deeper into hock is never a good way to get out of debt. And at some point, this exercise in kicking the can has to stop. When it does, you get your next financial crisis.

And what of the derivatives sitting on the balance sheet of the Federal Reserve? Here's another factor behind our heightened state of alert.

"Through quantitative easing efforts alone," says Euro Pacific Capital's Michael Pento, "Ben Bernanke has added $1.8 trillion of longer-term GSE debt and mortgage-backed securities (MBS)."

Think about that for a moment. The Fed's entire balance sheet totaled around $800 billion before the 2008 crash, nearly all of it Treasuries. Now the Fed holds more than double that amount in mortgage derivatives alone, junk that the banks needed to clear off their own balance sheets.

"As the size of the Fed's balance sheet ballooned," continues Mr. Pento, "the dollar amount of capital held at the Fed has remained fairly constant. Today, the Fed has $52.5 billion of capital backing a $2.7 trillion balance sheet.

"Prior to the bursting of the credit bubble, the public was shocked to learn that our biggest investment banks were levered 30-to-1. When asset values fell, those banks were quickly wiped out. But now the Fed is holding many of the same types of assets and is levered 51-to-1! If the value of their portfolio were to fall by just 2%, the Fed itself would be wiped out."

Mr. Pento's and Mr. Mobius' views line up with our own, which we laid out during interviews on our trip to China this month.

Emirates flypast and tall orders

18 November 2011

As the curtain went down on the Dubai Airshow with a roaring business of $63.3 billion in aircraft purchases, maintenance services and flight training programmes, Emirates airline marked the last day of the mega event with an impressive aerobatic display using one of its Boeing 777-300 ER aircraft.

Flanked by the UAE’s new aerobatic display team, Al Fursan, the Emirates Boeing 777 made a low pass over the show at the Dubai International Airport, trailing the colours of the country’s national flag in honour of the UAE’s 40th anniversary.

Emirates then took its striking display across Dubai, circling three of the city’s most iconic landmarks, including the Burj Khalifa, Burj Al Arab and Palm Jumeirah.

Flying the Emirates aircraft was a UAE national, Captain Hassan Al Hammadi, Chief Pilot of the B777 fleet, accompanied by Captain Ahmad bin Huzaim and Captain Fali Vajifdar, both UAE nationals.
 
Emirates’ $18 billion order for 50 777-300 ER aircraft kicked off a spate of deals at the five-day show, while Airbus and Boeing finished the event neck and neck on agreements.

“This year’s Dubai Airshow has been a monumental one for Emirates. What better way to mark the end of the show than by flying one of our 777’s over it, the same type that we ordered 50 of earlier this week,” said Tim Clark, president, Emirates airline.

Visitor numbers also broke the Dubai Airshow record with 56,548 people attending, making the 12th edition of the airshow the biggest as well as the most colourful yet as the Airport Expo displayed the colours of the UAE national flag in celebration of the nation’s 40th anniversary in two weeks’ time on December 2.
 
“We have sealed key agreements that mark a significant step forward in our partnerships in the UAE and across the Middle East region,” said Charlie Miller, vice-president (international communication) of Boeing, while Airbus chief operating officer John Leahy echoed the same views, saying it was the record show for the Toulouse-based aircraft manufacturer.

Flydubai to shift base to DWC Al Maktoum Airport

16 November 2011

Flydubai will shift operations to Al Maktoum International Airport in Jebel Ali, according to Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Department of Civil Aviation and Chairman and Chief Executive Emirates Airline and Group.

Flydubai is second largest operator in Dubai Airport and flies to 43 destinations and has 20 planes.

One minor detail missing - no date has been given. Although as reported before on this website this move is inevitable and is necessary to reduce traffic congestion at Dubai Airport following increasing traffic and growth of fleets.

A quick message to the DXB media office helped - "Flydubai to shift to Al Maktoum Airport "soon" as per the statement of Sheikh Ahmed bin Saeed Al Maktoum." was their response.

Sheikh Ahmed confirmed, the first phase of the Al Maktoum Airport is going well and there is growth in freight traffic month after month. "Apart from flydubai, there are plans to transfer business aviation to Al Maktoum Airport," he added.

Emirates is planning to start operations to new destinations such as in China, India, Russia and the Americas. However, he ruled out the idea of acquisition of other companies.

"The restriction on some new destinations in Germany and Canada will not hinder growth of the airlines... there are new plans in America which are much larger than those of Canada. Negotiations are on... it's just a matter of time."

Meanwhile, he said, "Concourse 3, scheduled to open in the first quarter of 2013, will be the largest in the world and include 20 parking lots for A380s. I thought this was originally due to open in 2012 so this date looks to have slipped; although no one seems concerned enough to mention it.

Sheikh Ahmed in a wide ranging interview noted that the "Boeing 787 aircraft is very successful and excellent, but it is small for us; the company will receive 72 A380 aircraft in the next five years of which 18 will be delivered next year."

The likelihood is that all DXB terminal 2 carriers will be expected to move to Jebel Ali.

Wading in Thailand’s Murky Waters

16 November 2011 International Herald Tribune

In the industrial estate of Lat Krabang, a few kilometers from Bangkok’s international airport, Honda workers clad in ghost white are standing around the shuttered factory, like the idle employees of a suspended space program. The floodwaters are approaching from the north and the east, raising canal levels and bubbling up through drainage systems. One of the men says that the defenses — sandbags and plastic sheets — can withstand one meter of water, but no more.

So far, Bangkok has managed to keep the waters out of the city center, but the battle is far from over and a dozen of the city’s 50 districts are inundated. Losses in six industrial areas north of Bangkok — the heart of Thailand’s manufacturing base — are expected to be colossal. Some 600,000 people are out of work, and insured losses could reach $19 billion. Thailand’s central bank has cut this year’s forecast of economic growth from 4.1 percent to 2.6 percent. Private economists say the impact of the flood could be even greater.

The residents of Bangkok were effectively caught unawares by a foreseeable occurrence. The risks were well known. Large floods have hit Bangkok at least twice a decade over the past 30 years. A recent study by the World Bank, the Asian Development Bank and the Japan Bank for International Cooperation on Asian Coastal Cities found that the excessive extraction of groundwater is threatening to sink parts of the Venice of Asia. The study projects that the size of the area in Bangkok and the neighboring province of Samut Prakarn that is prone to floods will increase by 30 percent by the middle of the century, affecting almost one million people.

Yet most Thais are woefully unprepared. Termsak Techakanok, a middle-aged man with an endearing smile and an expanding waistline, owns a small company in Lat Krabang that gives imported trucks from Japan a facelift before selling them in Thailand. His factory remains dangerously exposed despite the crew of inmates that the government has temporarily pulled from prison and put to work fortifying earthen dykes along clogged-up canals. A Rolex around his wrist, Termsak says he’s never thought of purchasing flood insurance.

Few small and medium-sized companies take out flood insurance in Thailand. And only 1 percent of households do. Many Thais are simply too poor to afford coverage. But most remain unprotected from flood losses because of a false sense of security nurtured by official reassurances that Bangkok’s defenses can guarantee dry feet.

Especially to those in the northern part of the city who have had to move to higher floors or are wading neck-deep in murky waters, the government’s inability to protect Bangkok has come as a dirty surprise. The government’s emergency plan has been to spare the city by deliberately flooding the old capital of Ayutthaya, which lies some 70 kilometers north, and the surrounding province. The plan worked last year. This year, it has failed because there simply has been too much water. The government has no Plan B. Meanwhile, it has in turn instructed people to expect the worst and to not worry at all.

Thailand’s flood defenses and flood management are far superior to those of, say, Dhaka. But in Dhaka people accept flooding as a part of life, and even in a country as politically divided as Bangladesh, the battling begums stop fighting when a natural calamity hits. The prospect of a flood fills most people in Bangkok with anxiety, and to them, the politicians become part of the disaster. By keeping their home constituencies dry, Thai politicians have been getting in the way of letting enough water be safely redirected to the sea.

A Bangladeshi friend jokes that the mayor of Dhaka would probably be shot if he disobeyed the prime minister’s order. But in Thailand, the floods have exacerbated political differences: the governor and the prime minister have been debating who has the authority to operate sluice gates. Bemoaning the city’s fetid canals, and its officials’ failure to improve sanitation, the king of Thailand once reportedly said “Bangkok is a toilet without a flush.” These days, the toilet seems to be overflowing.

Last Thursday was Loy Krathong, the annual festival of Phra Mae Khongkha, the goddess of rivers, streams and canals. It’s a day that most Thais typically celebrate by setting lotus-shaped receptacles with votive candles to float down waterways all over the country. The Bangkok Metropolitan Administration had asked people to hold back this year for fear that these krathongs might clog the drains and the canals that are expected to channel the floodwaters out to the sea. Most Thais chose to ignore the order. With the failures of their government in plain sight, perhaps they thought it even wiser than usual this year to placate the spirits of the waters.

Emirates adds a third daily A380 to Heathrow

16 November 2011

Emirates’ A380 services to London Heathrow will become triple daily from January 24, 2012.

This will mean three out of the airline’s five daily flights into Heathrow will be served by the whale jet.

Strangely the A380 will replace Boeing 777s on EK flight 029 from Dubai and on the return flight EK 030, adding capacity to one of the airline’s busiest routes. This is the least used of the London flights largely because of its arrival time into Dubai at about 03.30am when there are no connecting flights.

Presumably the flight timing has more to do with the availability of an airplane, allowing the A380 to fly another rotation in the morning departure bank sometime after abouy 07.30.

The A380 started to fly to London in December 2008. After supporting EK flights 001 and 002 between Dubai and Heathrow, EK 003 and EK 004 became A380 services in July of last year.

The third A380 service into Heathrow is another major investment for Emirates in the UK, where it operates 105 weekly flights via six gateways; London Heathrow, London Gatwick, Birmingham, Manchester, Newcastle and Glasgow.

In September of last year, Manchester, which is now a triple daily service, became Emirates’ second UK gateway to be served by the superjumbo, replacing EK flight 017 and 018.

The international airline of the UAE has a fleet of 17 A380s amongst a total fleet of 162 aircraft, flying to 116 destinations.

Emirates fleet to reach over 250 planes by 2020

16 November 2011

In a rather vague interview Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group told the Gulf News that Emirates expects its fleet size to reach more than 250 aircraft by 2020.

"We will be over 250 aircraft… maybe around 280 aircraft by 2020," he said in an interview yesterday. The Arab world's biggest carrier currently has 162 planes, including 18 Airbus A380 superjumbos.

Shaikh Ammad told the Gulf News that some of the future deliveries would be used to replace the airline's previous fleet. "Some of them [the 777s] will go into retiring old planes… I don't know how many," he said.

He knows much more detail than that. There is a clear fleet plan to remove the A340s from the fleet and gradually to phase out most of the A330s. Some of the older 777-200s and the early none LR 777-300s will also leave the fleet in time.

"And as we speak today, maybe we will have to extend some of the leases for aircraft that we were supposed to return. But the business was good and so we kept them. So within a year or so from now, you will perhaps see some of the older aircraft going out and being replaced by newer versions," he added in his interview.

Meanwhile, Emirates' hunger for growth will see the carrier expanding manifold in the future, Shaikh Ahmad said. Asked if Emirates was ever going to stop growing, he said: "Some of the carriers in the world have been in business for 50-60 years. Did they stop? Our growth should be forever."

Emirates has recently expressed intentions to increase its order for Airbus A380s to 120 planes from the current 90 it has on order as a long-term plan. Shaikh Ahmad said: "I hope [we will have] more. Today we have a huge firm order for 90 A380s, of which 18 are operational in our fleet today. We should have all of the 90 superjumbos operational between now and the next five years."

He said the new Concourse 3 coming up at Dubai International's Terminal 1 would be geared towards accommodating growth.

As the floods recede, the temperature increases

16 November 2011

Is this for real refers to a proposed amnesty that may return Thaksin Shinawatra to Thailand. His return has been inevitable since his sister led the Puea Thai party to an overwhelming win in the August 2011 general election. A win that conveniently so many critics seem to ignore. It was a comprehensive rejection of the Democrats.

The Bangkok Post is reporting that "the cabinet yesterday endorsed a royal decree to seek amnesty for convicts on His Majesty the King's birthday next month in a move criticised by the opposition as being designed to benefit former prime minister Thaksin Shinawatra." The Post continues "If the decree is approved, convicts who are at least 60 years old and are sentenced to under three years in jail will be eligible for the amnesty. Unlike the 2010 amnesty decree issued by the previous Democrat-led government, the approved draft does not bar convicts prosecuted for corruption from being eligible for the amnesty. The decree does not require the convicts to partially serve a jail term before being eligible for the amnesty, either."

Sounds like a slam dunk. Except that this is Thailand and even if Thaksin does return he will likely need an airplane on standby to leave the country at shirt notice as there will be legal cases, old and new, to be answered.

No one is changing any law - the point is that there has been a substantial "Royal Decree on Royal Pardons" at the auspicious end of every cycle. The King turns 84 ending his seventh cycle on 5 December and another pardon is certain. There was also a Royal Pardon under the Democrat government last year. Last year’s Royal Pardon had a provision that it applied to those aged over 60 who had a period of imprisonment not exceeding three years – (Thaksin is 62 and his sentence is only 2 years so Thaksin qualifies). Note this is a pardon for past sentences not an Amnesty. Thaksin faces at least 6 other charges for which he may be tried at a future date.

If he does return, and I have always assumed that he will, he may need to keep his private jet on immediate standby for another quick getaway.

He would need to be in the country the day that the Royal Pardon is granted to benefit from it.

There are more details is Bangkok Pundit's excellent and balanced blog - http://asiancorrespondent.com/69633/did-the-thai-cabinet-discuss-a-collective-pardon/

The floods in Bangkok have been unprecedented. No government, least of all a Thai government, could have effectively managed the crisis. As it was the water arrived just two months after the Puea Thai givernment took office. Abhisit could not have timed the election better. He left office with the state apparatus is disarray. And could sit on the sidelines, even take a trip to the Maldives, while the inexperienced new government dealt with the crisis.

The government was not helped by he fact that the Bangkok governor is a democrat connected to Bangkok's highest families and ensured there was littl eif any co-operation between the governing bodies.

Sadly the bias of the mainstream media in attacking everything that Yingluck Shinawatra government does while mollycoddling the Army and governor would be breathtaking if it had not now become the norm.

In just one example Bangkok Governor Sukhumbhand Paribatra yesterday apologised for mistakenly ordering evacuation in many areas of the mostly dry Phya Thai district on Monday night.

The governor said he read out a document that should have been released by the Phya Thai district office on Friday, when the flood levels in the area were rising because of the brimming Bang Sue Canal.

If that had been the PT government the media would have turned into a lynch mob.

Strangely many reporters and opinion page writers have been demanding strong leadership. Yet these are the same headline writers who hated Thaksin Shinawatra’s strong leadership. They only want unelected strong men.

Thailand's political woes are far from over.

As for the Royal Pardon - the process appears to be as follows: The Cabinet has approved in principle the Royal Decree, but it now goes to a 20 member committee (according to Chalerm).  It then has to go to the Council of State (according to the Office of HM Principal Private Secretary (OHMPPS)). Then it has to go back to Cabinet to be passed (per OHMPPS). The main way to block the Royal Decree would be for the Council of State to find it contrary to the law. Without seeing the draft, it is hard to comment, but *if* the only difference is to remove the exclusion of drug and corruption offences then hard to see what legal grounds to reject. Seen some speculation that no need for person to serve jail time to qualify, but last year's Royal Decree only required that person be in custody on day the Decree became effective. If this is not included this time then perhaps that can be used as grounds for Council of State 2 reject. Would be surprising it was not included as per comments by Elected Senator and Kaewsan, if it is included TS only needs to do 5-10 minutes jail time

Cruise fever outbreak in Dubai

15 November 2011

The big announcement of the week is that Tom Cruise will be in Dubai for the world premiere of ‘Mission: Impossible - Ghost Protocol’.

‘MI-4’ will be featured as the opening film of the 8th Dubai International Film Festival (DIFF) on December 7.

Dubai will be the first public screening of the film, although a private "fan screening" is due to take place earlier in Mumbai.

Featuring an all-star cast including Tom Cruise, Jeremy Renner and Simon Pegg, the fourth installment in the Mission: Impossible franchise has been much anticipated by movie fans in the UAE due to the Burj Khalifa's starring role.

Cruise and the film’s co-stars will take to the festival’s opening night red carpet alongside the city’s leadership at the Madinat Jumeirah.

As the financial crisis hit Dubai Cruise seemed on a mission to arrest the city's slumping image. For six weeks last autumn Cruise filmed his successful franchise, performing stunts in Dubai's most famous landmarks, including the outside of the world's tallest building, the Burj Khalifa.

Filming was also shot in Prague, Moscow, Mumbai and Vancouver. But for Dubai, the Burj Khalifa will be the star.

Cruise was photographed by tourists hanging on the outside of the Burj Khalifa, and other scenes were shot at the Dubai International Financial Centre and on the Palm Jumeirah.
Bollywood star Anil Kapoor is also expected to attend the premiere.

‘Mission: Impossible - Ghost Protocol’ begins with an explosion at the Kremlin in Moscow. Ethan Hunt (Tom Cruise) and his Impossible Missions Force are informed that they will be held responsible for the blast, but are allowed to escape so they can track down the real culprits. Their search brings them to Dubai.

Eastern Express to take off from Fujairah

15 November 2011

The UAE’s newest airline, Fujairah-based "Eastern Express", plans to offer return flights to Abu Dhabi in early-2012 with two flights daily.

The airline plans to break-even within the first three years of operations.

The airline plans to target corporate travellers keen to cut down the commute between Fujairah and the oil-rich UAE capital, and will be the first commercial carrier to fly the route.

The one-way fare to Abu Dhabi from Fujairah will be AED645, and so return will be approximately AED1200.

Eastern Express is Fujairah’s first passenger airline, and the only commercial carrier to operate out of the Northern emirate. The $3.5m venture is supported by three Emirati investors, including the Dubai-based Gargash family.

Eastern Express hopes to provide onward connections alongside an international airline (presumably Etihad), in a bid to boost ticket sales.

Beginning with two flights per day to Abu Dhabi, Eastern Express will eventually increase its service to four daily flights including connections with Abu Dhabi’s executive airport Al Bateen.

A second route to Doha is scheduled to launch next year.

The company’s aircraft will be chartered out for private use when no flights are scheduled.

The airline has still not selected an airplane for the route; one option is the Jetstream 41. To meet the target launch date an aircraft should be sourced within this month.

Looking forward, the airline hopes to secure routes to the Indian subcontinent and the East coast of Africa, but has yet to confirm any additional services.

Dubai speed machine defies slowdown

15 November 2011 - Reuters

Boeing savoured an order worth at least $18 billion for 50 wide-body 777 jetliners from host airline Emirates as the Dubai Air Show entered a second day beating the drum for growth despite widespread economic gloom.

The largest single order by value in Boeing's history boosted the Middle East's largest industry event and pushed talk of global recession to the sidelines -- though analysts said getting aircraft financing was proving an increasing challenge.

Qatar Airways looked set to step in with a possible Boeing order on Monday and was expected to give its final verdict on a long-awaited Airbus order that sources said would include A380 superjumbos on Tuesday, but talks appeared to be continuing.

Sources familiar with the matter said Abu Dhabi's Etihad Airways was ready to buy an extra 12 Boeings including 10 787 Dreamliners and two more 777s, but may not announce at the show.

The Gulf's big three are buying wide-body aircraft to serve Asia and the United States and redraw the world's transport and logistics map with the Gulf at the center, thanks to its ability to reach most of the world's population in one long-haul hop.

Kuwaiti lessor Alafco plans to boost an order for 30 Airbus (EAD.PA) A320neo passenger aircraft, probably on Monday.

The battle to redirect flows of people and cargo via the Gulf has provoked sharp exchanges with airlines in Europe. Emirates hit back at charges that it is flooding the market by pointing to European superjumbos flying into Dubai.

Emirates is the largest customer for the 525-seat Airbus (EAD.PA) A380 superjumbo with 90 of the world's largest airliner on order and there have been signs it might buy even more.

"The three big Gulf airlines are attacking other people's traffic. They are converting oil wealth into an aviation market position," said aerospace analyst Richard Aboulafia of Virginia-based consultancy Teal Group.

Gulf airlines say they simply operate a better service.

Airline chiefs played down the risk of contagion from Europe's debt crisis, but the head of Boeing's commercial division said it was a "watch item" and Brazil's Embraer trimmed a forecast for business jet deliveries due to the downturn.

Emirates said it had adequate financing in place for 2012 and planned a mix of funding options for the latest 777 order, including Islamic finance.

Record sales of the Boeing 777 capped by the Emirates announcement, attended by the ruler of Dubai, could force Airbus to do another rework of its future A350, Aboulafia said.

Few if any A350 orders are expected at the show, but sales chief John Leahy said he felt under no pressure to drum up new sales for the aircraft, whose development has been delayed.

Sunday's opening day brought a raucous display of speed and power across the southern Gulf as rival Typhoon and Rafale fighter jets screamed over Dubai and the airline-sponsored Formula One circuit rolled into neighbouring Abu Dhabi.

A potential $11 billion order for French jets was thrown into doubt when the four-nation consortium that builds the Typhoon said it had been invited to give a sales pitch to military officials of the United Arab Emirates.

The combat jet is supplied by Eurofighter partners Britain, Germany, Italy and Spain.

France is anxious to win its first Rafale export order but analysts said it was unclear whether the UAE request signaled a change in requirements or was merely a tactic to put pressure on manufacturer Dassault Aviation (AVMD.PA) over Rafale prices.

"They are sending Dassault a signal, that much is certain," an aerospace industry executive said.

France said it remained in what Defense Minister Gerard Longuet called a late stage of talks with the UAE on the Rafale.

Analysts say rising geopolitical tensions surrounding Iran in past weeks could lead to a spike in defense orders.

Emirates: Dubai airline’s bid to be biggest takes off

11 November 2011 The Financial Times

It started out with a stipend of $10m from Dubai’s ruler in 1985. Now, Emirates, one of the fastest-growing airlines in the world, is knocking on the door of global domination.

Other airlines fret about projections that Emirates is on track to become the largest long-haul carrier by 2015, as its relentless growth in passenger numbers continues to underpin Dubai’s recovery after its damaging property crash in 2008.

Over the past five years, the airline has tripled capacity and revenues, and is set for a 9 per cent increase in capacity through 2015, says a recent report by Boston Consulting Group.

During that time, cash margins have declined from 28 per cent to 23 per cent, but they still compare favourably with competitors at a time when the global industry has come under intense pressure.

Emirates’ fleet of 159 aircraft is set to be enlarged by an order book of almost 200. The city-pairing strategy – linking the Middle East with Asia, Africa, Europe and the Americas – continues to define the airline’s strategy. Its large Chinese and African networks are expanding to include a thrust into the Americas.

Throughout the emirate’s 2009 recession, Dubai airport remained busy. It is now lifting the broader economy as tourism recovers.

The airport is forecast to become the world’s second busiest this month, leapfrogging Paris, Hong Kong and Frankfurt, according to a report by the Centre for Asia Pacific Aviation.

The new Dubai World Central-Al Maktoum airport, located in the desert near the border with Abu Dhabi, has already opened to cargo and could start to receive passenger flights next year.

Sheikh Ahmed bin Saeed Al Maktoum, who has guided the airline since its formation, also runs the civil aviation authority, nurturing the symbiotic relationship between the two entities, as the airport tries to overtake London’s Heathrow as the world’s busiest by 2015.

An uncle and close aid to the ruler, Sheikh Ahmed’s political star has risen as fast as the airline has grown. He is increasingly involved in the day-to-day business of digging Dubai out of its $110bn debt hole.

The airline’s aggressive sports marketing drives – from sponsorship of the stadium of Arsenal, a UK football club, to Real Madrid’s shirts – has combined with a reputation for service and onboard entertainment to raise the carrier’s profile globally.

Emirates’ rapid growth has benefited from Dubai’s low-cost environment: it is free of corporation tax, and offers cheap labour. This extends to airport fees at its Dubai airport hub – the envy of many other international airlines that have to pay much more for access to airport infrastructure at their home bases, according to BCG.

Though Emirates says it receives no subsidies from the government, bankers say that tacit sovereign backing ensures low borrowing costs.

However, the airline remains vulnerable to the vagaries of the oil market, despite having delivered profits for its shareholder, the Dubai government, over the past 23 years.

Its interim results for the six months to September 30 saw profits tumble 76 per cent to some $225m, hit by high oil prices and foreign-exchange volatility.

Sheikh Ahmed reported: “Emirates remained focused on its long-term strategy despite global instability, ever-climbing fuel prices (which resulted in Emirates paying $1bn more in fuel costs over the same period last year), and fluctuating exchange rates.”

Revenues rose 15 per cent; passenger load factor remained high at 79 per cent, close to last year’s first-half record-breaking 81 per cent; and revenue per passenger kilometre also rose 5.7 per cent.

Analysts wonder whether Emirates can keep its long-haul strategy on track in the coming years, as it faces increasing regional competition from Qatar Airways and Abu Dhabi’s Etihad, as well as the established carriers from Asia and Europe.

Stephen Furlong, equity analyst at the research division of Davy, the Irish stockbroker, says “The greatest challenge is, I believe, persuading time-sensitive business passengers from areas such as China and north Asia – that are not as time-efficient as Australia and southeast Asia – to travel via Dubai.”

A conundrum for the airline, says BCG, is that its margins weaken as it comes into more direct contact with global competitors in the areas that are driving traffic the fastest: Europe, Asia and Africa.

BCG has calculated that the most profitable passengers are those whose journeys originate in the Middle East and travel via Dubai. International passengers transiting through the region’s hubs are less profitable. The airlines’ global expansion is thus partly subsidised by regional passengers.

Further expansion will therefore suggest a “significant allocation of capacity to unprofitable passenger segments”, BCG argues.

But as Sheikh Ahmed says, Emirates remains focused on its long-term strategy. Many have bet against it before; fewer would do so now.

Fake mob goes viral in Dubai

10 November 2011

Internet viewers and Gulf News readers have gotten all excited about a video of a dance routine in terminal one of Dubai airport last week.

Dubai Airports extols this as a flash mob - something spontaneous. The video has over 100,000 hits on youtube since Saturday.

But this was no flash mob - even the Gulf News says that "the event, which included 55 dancers...took weeks to arrange and was organised by the airport to promote the new DXB Connect Card, a pre-paid card designed for airport passengers."

Professional dancers were recruited and dressed using the uniforms of the airport workers.

55 people does not a mob make. Professional dancers were recruited and dressed using the uniforms of the airport workers - no airport staff were involved except presumably in arranging the vast number of approvals and permissions. No passengers and no members of the public were involved.

A flash mob is meant to be a spontaneous eruption of community fun. The dance moves are often made available ahead of time on a video, with the details about the place and time of the flash mob being disseminated covertly through social media.

Sadly all this suggests is that nothing communal can happen in Dubai without a major sponsor.

As for comments such as: "Fantastic! In a world with so much sadness, this puts a lot of smiles on a lot of faces." Maybe - but equally likely is that the commenter is employed by Dubai Airport or at the very least, the company that does its PR.

On the Gulf News site : "Love Dubai for such spectacular show. Unbelievably super performance. Keep it up and more to come. Thanks to MJ..the father of creativity of Mob Dancing. Thanks Gulf News to bring to my notice. Dubai can Doooo All.... Cheers" from Vipin, Dubai, United Arab Emirates

And "Amazing...only Dubai can do it !" Mohammed Zaheer OV, Dubai, United Arab Emirates

Typical Dubai hype. Unreal. Misleading. Excessive. Entirely fake. Yet so many people fall for it. Have our lives in Dubai become that commercialized.

Emirates Airline readies for Dubai Airshow

9 November 2011

Emirates Airline, the Official Airline of the 2011 Dubai Airshow, will take centre stage next week and will bring aviation industry professionals together from around the world to its dedicated stand and chalets at the Dubai Airshow.

The Emirates stand will be located at the Central Hall, where all major industry players will showcase their products and facilities, and will serve as a networking platform for the aviation community.

“Emirates has been a sponsor and main exhibitor at the Dubai Airshow ever since its inception,” said HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline & Group. “This year marks the 40th Anniversary of the UAE, a significant milestone in the nation’s history, which includes the remarkable development and continuous growth of the aviation industry.” “The Dubai Airshow is poised once again to attract industry leaders and generate numerous aviation deals for another successful show.”

“This is the choice platform to highlight our products and services, build relationships and explore significant business opportunities by providing an engaging experience for all participants,” he added.

Reaffirming its commitment to the Dubai Airshow, Emirates has designed a 154 square metre exhibition stand open to all airshow visitors. Spread across two stories the stand will feature a number of Emirates divisions including; Emirates SkyCargo, Emirates Engineering, Emirates Aviation College, Skywards, Emirates Official Stores and Emirates Recruitment.

The Emirates stand , located in the central hall at stand C380, is fully equipped and will house two private meeting rooms as well as catering facilities, with all food prepared by the multi-award winning Emirates Flight Catering. Visitors to the stand will also have the opportunity to view a model of the new Engine Overhaul Facility during the Airshow.

For corporate hosting and networking Emirates will also have three double-storied chalets equipped to host up to 170 guests per day for breakfast, lunch and afternoon tea. The three Emirates chalets will display and promote some of Emirates’ most exciting new developments including its recent route expansion in Europe, North and South America and Africa.

Set in a prime location near the airstrip the Emirates chalets are well positioned with the best views of aircraft take-offs, landings and acrobatic displays.

Bangkok Flood Update

9 November 2011 Graham Catterwell in The Nation

"When a General's fighting a losing battle, it's maybe best for him not to say out loud that defeat is inevitable.

There are also many Generals claiming and disclaiming command with the changing tides of good and bad news.

There are also many "experts" providing at least as many prognoses.

In short, it is hard to get a clear picture.

Here's my own view, gleaned from monitoring what sources of hard facts I have been able to muster.

A city-wide deluge is inevitable

After floodwaters entered Bangkok from the North and the Northeast, inflows were stemmed by building the "big bag wall" (so named for its 2.5 MT sandbags, instead of the usual 50 kg ones) and then rebuilding the impaired sluice gate at Khlong Samwa.

Since then, despite maximum pumping efforts, water levels in the initially-flooded areas have risen or at best stabilized. Meanwhile, floodwaters have spread out to extensive new areas. Drainage canal levels have all been steadily rising. All this can only mean that there continues to be a substantial net inflow of water into Bangkok.

Parts of central Eastern Bangkok -- notably (in sequence) Bangkapi, Ramkahhaeng Road, Srinakharin Road, and Phetburi Road -- look sure to be under water by early next week. After Phetburi Road goes under, it will not take long for these waters to flow to Sukhumvit and the rest of downtown Bangkok. Once in downtown Bangkok, this water will await that already steadily flowing down from North and due to pass Victory Monument shortly.

An extended period of high tides begins tomorrow and continues for just over a week. This will not only affect the rate at which water can be pumped out, but bring in additional water as river and then canal banks overflow.

Just as this stage of the flood is becoming entrenched by the end of next week, floodwaters building up behind the "big bag wall" will begin to pour over the top, bringing a second stronger and unstoppable stage to the flood.

No need to analyse the surrounding provinces, as those parts that are not yet under water obviously soon will be.

How deep?

It is hard to say how deep flooding levels will go. My best guess is that the first wave will take all areas to 30-150 cm (depending on contours), and that the second and larger wave will at least double this.

How long?

It's going to be at least another 2-3 weeks before Bangkok floodwaters peak. It's anybody's guess as to how long it will take for this water to flow (mainly) or be pumped (partially) out, but to say 2-3 weeks from the flood peak would probably be over optimistic. It'll be at very least another month before Bangkok is relatively dry, and then it will take some time to clean up.

Economic consequences?

It's too early to assess, but -- with the country's economic heart stopped, a large number of factors out of action, and a severe disruption to logistics - the economic cost must be high.

How's life?

Those supermarkets still open show many empty shelves. Bottled water is hard to find and then expensive. Tap water supplies are still good in many areas, but can't but become tainted as more and more sewers overflow. Garbage collection is not feasible in floodwater deeper than about 50-60 cm. Electricity gets cut off in a zone when water approaches the lowest meter attached to a pole within that zone. For this with toilets that still work, the sewage joins the floodwater; those with toilets that no longer work have to innovate. Telephones work, but become unreliable as the roadside junction boxes flood.

Access to medical attention and drugs is limited.

Large army trucks can plow through a certain depth of floodwater, but a good number have already succumbed. Both the Navy and the Army are able to assist with boats, but resources are already stretched before the worst has come.

Life is not easy, and not going to get easier in the coming weeks.

The aggregate bodyweight of Bangkokians is likely to show a significant decline, if anybody's measuring.

I hope that I am being pessimistic."

The beach police

9 November 2011 - Emirates 24/7

"Dubai Police’s Ports Police Station (PPS) has taken written undertakings from those found inappropriately dressed on Dubai’s beaches, that they will not repeat the offence in future, according to Lt. Colonel Abdullah Al Maziod, Director of PPS.

Lt. Colonel Maziod says people who are over-dressed, as well as those swimming in underwear that is as good as transparent, are both considered inappropriate.

The PPS detected 324 irregularities on the beach during the past 10 months, which included swimming in indecent or transparent underwear and not wearing appropriate swimwear.

During this period, the PPS booked 1,410 people for walking fully clothed on the beach or in places not ordinarily used for walking.

Lt Col Al Maziod said: "In such cases, it is sufficient for policemen to inform offenders of their mistake and take a written undertaking not to repeat the offence in future without imposing any penalty.”

He added: “Some swimmers appear to be not wearing anything when they come out of the water which offends families sitting on the beach. It is true that most beachgoers wearing inappropriate dress do not intend to offend others but women are sometimes offended so we intervene to remove such people after taking a written undertaking from them not to repeat their offence.”

Some people walk on the beach fully dressed, instead of using tracks reserved for walking.

Other simple offences for which police obtains written undertakings from offenders include playing ball next to families, playing tape recorders in high volume and sitting close to families even when there are only few people on the beach."

Bangkok doesn't deserve its special protection and privilege

8 November 2011 - Pavin Chachavalpongpun in The Nation

He visited every corner of Bangkok during this critical flood crisis. He is so devoted. I have to remind myself that he is the son of His Royal Highness Prince Paribatra Sukhumbhand, and the great grandson of His Majesty King Chulalongkorn, one of Thailand's greatest monarchs."

This is how a secretary proudly described her boss, MR Sukhumbhand Paribatra, governor of Bangkok, in her Facebook post.

So, Bangkok residents have their own "royal" who is willing to defend their beloved capital. Sukhumbhand is certainly the right man for the right job. A member of the elite himself, Sukhumbhand enthusiastically wants to serve the interests of his Bangkok supporters, who also see themselves as the intelligent upper class. His father was once the Prince of Nakhon Sawan. Today, Sukhumbhand is undoubtedly the "Prince of Bangkok", judging from the way he has handled the flood situation.

The devastating floods have offered Sukhumbhand a chance to prove his authority as the governor of Bangkok. And so far he has done brilliantly by working independently from the government. The priority of Sukhumbhand is obviously different from that of the Yingluck Shinawatra administration. As a result, competition, not cooperation, is the name of the game in defining the relationship between the prime minister and the Bangkok governor.

Under Sukhumbhand, Bangkok is an island unto itself. The capital has been detached from the rest of the country. It seems acceptable for other provinces to remain submerged in water. But Bangkok must be kept dry. It needs to be saved at all costs, even at the expense of intensifying the flood crisis at the national level.

What does Sukhumbhand's Bangkok-centric approach tell us? It reveals that Bangkok is not Thailand, and vice versa. It is a state within a state. This mentality has obstructed the government from implementing an integral solution to the raging floods.

Moreover, Sukhumbhand's ideas of tackling the floods are principally elitist and imperial. With his royal title of Mom Rajawongse - something so anachronistic in other civilised societies - Sukhumbhand performs as an old warrior who is fighting to safeguard the metropolis. But this time, the enemy is not Burmese or Cambodian. It is water. Metaphorically speaking, Sukhumbhand's mission is to preserve Bangkok's "independence".

"We must not lose the capital again," he could have said. The last time Siam lost its so-called independence was in 1776 when Ayutthaya was sacked by foreign adversaries.

But what really are these elitist views? First, Bangkok is supposedly the kingdom's most important city; it is the pride of the nation, the seat of the much-revered monarchy, and the source of economic wealth. This is absolutely an authoritarian view that puts too much emphasis on Bangkok while neglecting other apparently not-so-vital provinces.

Bangkok might be contributing almost 41 per cent to the country's GDP, and analysts have already warned that any substantial damage to the capital may hurt growth even more, but one must not deny that the central region has been under water for months. This area is where major manufacturing plants are located, including car-makers Toyota and Honda, electronic producers Canon, Apple, Sony and Toshiba, as well as hard-disk makers Seagate Technology and Western Digital. The floods have caused great damage to the global supply chains in these industries, thus reaffirming the fact that cities outside Bangkok are equally economically significant.

Secondly, a few months ago, when Bangkok was dry while the rural areas were already heavily flooded, Bangkok residents never expressed their concern, or sympathy, regarding the situation in those affected provinces. So, it seemed that it was all right for those provinces and people to suffer, as long as Bangkok was preserved. Today, Bangkok residents are the ones who complain the loudest. They have become hyper-hysterical about the floods. They stock up food, creating an atmosphere of panic. Ironically, they act as if they no longer have trust and faith in Sukhumbhand, the figure whom they have supported throughout the crisis.

Should such behaviour by the Bangkok residents be perceived as part of the relentless double standards that have prevailed in Thai society? If the answer is yes, then it is fair to say that Sukhumbhand has a role to play in the deepening of the gap between Bangkok and the rest of the country, at a time when Thai society remains frighteningly polarised.

The overwhelming concentration on saving and salvaging Bangkok is a reflection of the persistent concept of centralisation. As always, power and prosperity are the exclusive assets of Bangkok. It is perfectly acceptable to many Bangkok residents to keep other provinces vulnerable and powerless. It is also okay to keep them poor and underdeveloped. On this basis, they deserve to endure the floods.

But isn't this the same attitude that presents one of the root causes of the conflict in Thailand's deep South?

Thirdly, as Sukhumbhand continues to clash with the government, this attests to the fact that the elitist class possesses its own mind and the right to define the notion of interest - be it its own interest or that of the nation. This explains why Sukhumbhand has chosen not to listen to the government's instructions.

The floodwater is now creeping into Bangkok. Perhaps this is a symbol of the growing resentment of other provinces, which are ready to attack Bangkok after long years of being mistreated. Bangkok has been far too selfish for far too long. Sukhumbhand has done nothing but consolidate this sense of selfishness among Bangkok's inhabitants.

Whether Sukhumbhand loves Thailand more than those outside Bangkok is difficult to measure. His sole focus on Bangkok unfortunately prevents him from looking at the problem from a wider angle - an angle that is free from political games and cares more about the anguish of fellow Thais, no matter what region they come from.

Pavin Chachavalpongpun is a fellow at Singapore's Institute of Southeast Asian Studies. Follow him at www.facebook.com/pavinchachavalpongpun.

Sinking Bangkok - floods a precursor

7 November 2011 - AFP

The Thai capital, built on swampland, is slowly sinking and the floods currently besieging Bangkok could be merely a foretaste of a grim future as climate change makes its impact felt, experts say.

The low-lying metropolis lies just 30km north of the Gulf of Thailand, where various experts forecast sea level will rise by 19 to 29cm by 2050 as a result of global warming.

Water levels would also increase in Bangkok's main Chao Phraya river, which already overflows regularly.

If no action is taken to protect the city, "in 50 years... most of Bangkok will be below sea level," said Anond Snidvongs, a climate change expert at the capital's Chulalongkorn University.

But global warming is not the only threat. The capital's gradual sinking has also been blamed on years of aggressive groundwater extraction to meet the growing needs of the city's factories and its 12 million inhabitants.

As a result Bangkok was sinking by 10cm a year in the late 1970s, according to a study published last year by the World Bank, the Asian Development Bank (ADB) and the Japan Bank for International Co-operation.

That rate has since dropped to less than 1cm annually, they said, thanks to government measures to control groundwater pumping.

If those efforts continued, the report authors said, they hoped the subsidence rate could slow by another 10% each year.

But Anond disputed their projections, saying Bangkok was still sinking at "an alarming rate" of 1 to 3cm per year.

While scientists may argue over the exact figures, they agree about what lies in store for the sprawling megacity.

"There is no going back. The city is not going to rise again," said the ADB's lead climate change specialist David McCauley.

Faced with the combined threats of land subsidence and rising temperatures and sea levels, the World Bank has predicted that Bangkok's flood risk will increase four-fold from now by 2050.

And the Organisation for Economic Co-operation and Development has classified the Thai capital among the 10 cities in the world facing the biggest potential impact from coastal flooding by 2070.

For now, Bangkok is relying on a complex system of dykes, canals, locks and pumping stations to keep the rising waters at bay.

The flood protection efforts, however, failed to prevent an onslaught of run-off water from the north from swamping at least one-fifth of the capital.

The murky floodwaters, triggered by three months of heavy monsoon rains, are edging in on Bangkok's glitzy downtown area, threatening luxury hotels, office buildings and shopping malls.

Rapid urbanisation is one reason why the inundations are affecting the sprawling city so badly, according to experts.

As the area that needs flood protection gets larger and more built-up, the water "has fewer places to go", said Francois Molle, a water management expert at France's Institut de Recherche pour le Developpement.

Molle said that in the long term, Bangkok would eventually be under water. "The only question is when."

Experts say Thai authorities must address the capital's land use and planning challenges and consider relocating factories or industrial parks in flood-prone areas. Or even moving the entire city.

"It may be appropriate for the people who want to be dry 24 hours a day, 365 days a year, to be setting up a new city," said Anond.

"We do have areas where we can develop a new city that would be completely dry. There's a lot of land in this country," he said.

It may sound like a drastic scenario, but there is little doubt that Bangkok will have to act if it wants to avoid the fate of the fabled sunken city of Atlantis.

"To remain where it is, the city will need better protection," said Robert Nicholls, a professor of coastal engineering at Britain's University of Southampton.

He said he expected Bangkok's current flood misery to "trigger massive investment in defences over the next 10 to 20 years".

Dealing with the phenomenon will be expensive elsewhere too. Across the Asia-Pacific region the ADB has estimated it will cost a minimum of $10bn a year to adapt to climate change.

flydubai starts 45th route to Tbilisi

7 November 2011

flydubai launched direct service to Tbilisi in Georgia last Friday, making it the 45th international destination of the Dubai-based low-cost airline.

The inaugural flight represents an important milestone in the development of relations between the two nations with flydubai the first UAE airline to offer direct flights between the UAE and Georgia.

flydubai Flight FZ713 took off from Dubai Terminal 2 at 2345hrs, landing at Tbilisi International Airport at 0315hrs this morning, expanding the airline’s network in Central and Eastern Europe to 11 destinations; it also spans Russia, Ukraine, Azerbaijan, Armenia and Turkmenistan.

Tbilisi is the largest city in Georgia and a popular tourist destination thanks to its picturesque setting on hillsides either side of the Mtkvari River. Operating as the capital of Georgia since the 5th century, the city is home to several historical attractions including the fourth-century Narikala Fortress, Metekhi Church, sixth-century Anchiskhati Basilica and the sulphar baths of Abanotubani.

FZ713 departs Dubai Terminal 2 at 2345hrs on Mondays and Fridays, landing in Tbilisi International Airport at 0315hrs local time. The return flight FZ714 departs at 0355hrs, arriving in Dubai at 0720hrs.

Inaugural fares for a one-way trip from Dubai to Tbilisi start at Dh 480 and fares from Tbilisi to Dubai start at Dh 519. Fares include one piece of hand luggage weighing up to 7kg and one small laptop bag or hand bag. Checked baggage starts at Dh 50 for 20kgs. A seat with extra legroom costs Dh100 extra.

Big Ambitions for Middle East Airlines

7 November 2011 Jens Flottau for Aviation Week

With the more than 400 wide-body aircraft on firm order by the three largest Middle Eastern carriers, one question is being asked frequently: Is there a market for all of these aircraft? In spite of what European competitors tend to say, the answer is mostly “yes.”

Analysts and experts believe that there are still a lot of international long-haul markets left for Emirates, Qatar Airways and Etihad Airways that have potential for new air services. “By virtue of geography, they are all exposed to many of the current growth markets,” says John Strickland, a London-based airline consultant.

For connections between China and Africa, two strongly growing regions, Dubai is ideally located as a connecting hub. And with ultra-long-haul aircraft like the Boeing 777-200LR available and the increased-gross-weight version of the Airbus A380 around the corner, even more markets can be connected to Middle Eastern hubs that have been out of reach for the regions’ airlines.

The capacity to be deployed is impressive by any standards. Emirates has 188 widebodies on firm order, among them 50 Airbus A350-900s. 20 A350-1000s, 75 A380s and 43 Boeing 777-300ERs. Etihad is awaiting delivery of 20 A320s, 25 A350-1000s, 10 A380s, 10 777-300ERs and 31 Boeing 787-9s. Qatar Airways bought 10 A320s, 20 A350-800s, 40 A350-900s, 20 A350-1000s, five A380s, nine 777-300ERs and 30 787-8s. That adds up to 432 widebodies, only a minority of which will be used to replace existing sub-fleets such as the 28 A330-200s that Emirates has been using much longer than initially planned to cover delays in new aircraft deliveries.

And more is expected to be announced at the Dubai air show this week, not only by Emirates but also by Qatar Airways, from which a large A380 order has been pending for months and was originally expected to be revealed at the Paris air show last June.

The most recent route launches by Emirates are showing a pattern that is likely to continue. It plans to begin services to Rio de Janeiro and Buenos Aires, Argentina, in January; to Lusaka, Zambia, and Harare, Zimbabwe, in February; and Seattle and Dallas, soon after. These destinations lie in three of the major growth regions for the carrier: Latin America, Africa and North America.

Seattle is a particularly interesting choice. Emirates has been lobbying the Canadian government to allow it to fly to Vancouver, but Canada is among the most restrictive countries in allowing more air services, and Emirates now has three weekly frequencies into Toronto. Seattle’s proximity to Vancouver could probably help the airline attract some traffic that would have otherwise gone through the Canadian gateway.

Emirates’ Seattle choice also shows that the U.S. West Coast is an area where the airline will add cities and introduce larger aircraft. Once the higher-gross-weight A380s become available, they will fly Dubai-San Francisco nonstop and later Dubai-Los Angeles. Emirates is using its own weight-reduction program for the aircraft interiors in addition to Airbus’s work to increase range. The airline will replace some magazines with inflight entertainment system content. The amount of water carried is also being looked at, although executives note that the famous onboard showers are not negotiable. Emirates now serves the West Coast with 777s.

Qatar Airways, meanwhile, is focusing on expansion in Europe. The latest addition to its network is Oslo, which followed service launches to six other European destinations this year: Stuttgart, Germany; Venice, Italy; Sofia, Bulgaria; Bucharest, Romania; Budapest, Hungary; and Brussels. The carrier plans to operate to more than 120 destinations with a fleet of 120 aircraft by 2013, up from 100 aircraft and around 100 destinations today. In the next few weeks, it will start services to Entebbe, Uganda; Baku, Azerbaijan; and Chongqing, China.

Etihad Airways will commence flying to six new destinations in the next half year, including Male, Maldives; Mahe, Seychelles; Shanghai and Chengdu, China; Dusseldorf, Germany; and Nairobi, Kenya. The airline plans to take delivery of four 777-300ERs and three A320s next year to accommodate the increased capacity needs.

A recent in-depth study on the future network of Emirates, compiled by Royal Bank of Scotland (RBS) airline analyst Andrew Lobbenburg, notes that it will be “surprisingly easy” to find markets for the 90 A380s. The study assumes Emirates will generally not grow its share in established markets such as Western Europe to Asia, thus only presenting a “moderate challenge to European flag carriers.” However, the airline will benefit from disproportionate growth in strongly developing markets such as Eastern Europe to the Middle East, North Asia to Africa, South Asia to North America and North Asia to the Middle East. The same pattern is likely to be true for Etihad and Qatar, although most studies focus on Emirates.

Lobbenburg believes Emirates will add 21 new routes by 2015 and 25 more by 2020. Initially, the expansion will be mostly in China, Japan and Europe. Sixty A380s will operate predominantly on routes to Europe, Australia, China, Japan and the U.S., and a higher density sub-fleet will serve India; Jeddah, Saudi Arabia; and Nairobi.

By 2020, the network growth will shift more to North and Latin America, Africa, provincial India and China, and Eastern Europe. The A380s will fly even more frequently to North America and Latin America, although those services will depend on a longer-range version that is currently under development at Airbus. As many as 43 airports could then be being served by Emirates A380s.

In comparison to Qatar and Etihad, Emirates benefits from its relative maturity and huge network. “Emirates can add one new destination or only a new frequency on an existing route that multiplies into hundreds of new itineraries,” Strickland says. “It is a positive domino effect happening all the time.” The carrier has also grown much more slowly than its two rivals in Doha and Abu Dhabi, respectively.

Qatar Airways changed its strategy about a decade ago to reflect the global hub-connecting model, and thus it is still behind in size and corporate development. Etihad did not exist 10 years ago.

These differences among the three carriers are also reflected in their financial performances. With its network power, Emirates can add new routes relatively inexpensively, while Qatar and Etihad have to invest more as well as take more risks. So far, the owners of Qatar and Etihad have been willing to stem the losses, and both airlines have very deep pockets—Abu Dhabi generates $1 billion in oil revenues in a single day. That financial clout is an additional worry to the established carriers in the West. They simply cannot count on money being a limiting factor in the early phase of Qatar’s and Etihad’s build-up. Emirates seems to be well beyond the inflection point and is generating steady profits despite its still aggressive growth mode.

Unlike Emirates, neither Etihad nor Qatar Airways disclose detailed financial results or an annual report. Industry insiders believe start-up losses at Etihad are still enormous, while Qatar claims it is close to sustainable profitability. Etihad says it is targeting a break-even result for this year and has been profitable on an Ebitdar (earnings before interest, tax, depreciation and rent) basis.

While European airline executives in particular are alarmed by the competition from the three Middle Eastern carriers, it is actually not such a large threat. Infrastructure problems in the Middle East have the real potential to slow things down. For example, while Dubai’s much-delayed Emirates-dedicated terminal did ease overcrowding considerably when it opened in 2008, with rapid air travel growth continuing, that new building is often full at peak times, as well. Airport authority Dubai Airports is adding another terminal that will mainly be used for the Emirates A380 fleet and contribute to bringing the airport up to its eventual capacity of 90 million passengers per year. Dubai is also becoming slot-constrained.

The new Al Makhtoum International Airport in Djebel Ali is ready in its initial stage, although Emirates is hesitant to move there because that would require it to move its entire operation at once, a decision the carrier would like to put off well beyond 2020.

At Doha Airport, Qatar Airways’ ambitions are cramped: Passengers are bused to their aircraft, which are often parked on the other side of the runway because there is no space left nearer to the terminal. However, Doha’s new international airport is almost complete and will bring ground processes up to world standards. Abu Dhabi is also expanding its existing airport and has plans to build additional new facilities that will provide a major capacity boost.

The current infrastructure limitations notwithstanding, European carriers have no qualms about fighting their Middle Eastern rivals through politics. For some time, they have been arguing that their Middle Eastern competitors are receiving government subsidies and should therefore not be granted more traffic rights into Europe—even though many European carriers themselves receive government support in some way or another.

However, Strickland says the traffic rights aspect “won’t be unduly limiting” to the network expansion. And Emirates’ senior vice president for public affairs, Andrew Parker, says that “even the most difficult countries are starting to change.” Canada has been reluctant to grant more traffic rights to Middle Eastern carriers, adhering to a much more protectionist aviation policy compared to others such as the U.S., which has an open-skies agreement in place with the United Arab Emirates.

Parker also sees a few African and former Soviet bloc countries that are still resisting opening up their markets. But one of the more immediate threats is India’s efforts to protect financially devastated state-owned Air India from competition. India does not allow any A380 services into the country and is discussing whether it has been too liberal in the past in granting traffic rights to other airlines. Though India’s restrictive attitude affects all foreign airlines, that it will not be a longer-term issue, Parker says.

Bangkok's perfect storm

6 November 2011 Nirmal Ghosh in The Straits Times

It was close to the perfect storm: unusually heavy rain, a large volume of pent-up water pouring in from the north, and high tides, all in Bangkok, a city sitting on a flood plain.

Even in normal years, the only thing that prevents flooding in the Thai capital is the city's battery of 758 submersible pumps, which discharge water mostly into the Chao Phraya River, propelling it out to sea.

What prevents the water from flowing back from the river and major canals--some of which holds water higher than the city--is close to 100km of dykes and flood walls lining the Chao Phraya.

But Bangkok's water drainage system was developed mainly for handling localised flooding caused by heavy rainfall, not massive run-offs from the north--which were exactly what it faced this year.

Adding to the problem, the flood plains around Bangkok which once helped to soak up heavy rainfall have been replaced by much development, putting modern, large-scale urban infrastructure and a bigger human population in the path of water heading from the north towards the sea.

Dense industrial estates and high-rises housing more than 20 per cent of Thailand's population on the flood plains not only increase the risk of flooding, but also raise the stakes when it happens: According to the latest estimates, the cost of damage from this year's floods has hit some US$3 billion.

"Nature can't be blamed for this," said water expert Ganesh Pangare from the International Union for Conservation of Nature (IUCN), a global environmental network of governments, non-governmental groups and scientists.

Added Pangare, who heads IUCN's water programme in Asia: "We've encroached on everywhere. Wetlands have been converted to padi, and padi fields then converted to industry and housing. The drainage is gone. Waste has also clogged much of the drainage. Rivers have to flow. If you don't anticipate this, there is something terribly wrong."

Suvarnabhumi International Airport is one example of development defying nature: The airport is located in wetlands, and in 2008, 80 million baht (US$2.6 million) had to be spent to protect it from flooding.

Bangkok Post columnist Sanitsuda Ekachai made the same point in a piece Thursday.

"The area...used to be a massive swamp that held water during heavy rains, prevented flooding and provided nearby neighbourhoods with all sorts of fish and freshwater vegetables," she wrote. "The rapid transition...mirrors Bangkok's unregulated growth that has destroyed the old web of waterways. The flood chaos has revealed that each community, each business, each individual has been intent on building protective dykes that obstruct waterways and increase the water's ferocity when the dykes break. When they feel they have had enough, the affected communities rise up to stop what they perceive as flood mismanagement."

Indeed, accusations are now flying over many of the measures taken by the government to stem the flow of water.

One was the decision to hold massive amounts of water in reservoirs in the north, even when they were at over 90 per cent of their capacity in the summer. When these filled to the brim, a lot of water inevitably had to be released--altogether, and very quickly.

The huge body of water rolled slowly southwards towards the sea, but was blocked by Bangkok itself, at which point it inundated provinces around the city. Despite desperate, ad hoc attempts to protect the capital, the water is making its way into the city anyway--exposing the inadequacies of both management and drainage infrastructure.

Pangare noted that the reservoirs in the north were almost full because of early rains in the dry season and late rains in the wet.

"Everyone knows you don't wait for a dam to be full before releasing water," he said. "They should have seen it coming. You have to be on your toes. People didn't have time to evacuate. That's the difference between a proper release and a panic release."

But while experts and bureaucrats continue to squabble over data and try to escape the blame game, it is clear that more investment is needed to address a problem that is bound to recur. Scientists have long warned that global warming will likely produce longer droughts and more rain in a shorter period.

Prime Minister Yingluck Shinawatra has pledged a new 'national masterplan' for water management that could cost an initial 800 billion baht to upgrade the system. The government has also indicated that it needs help from foreign experts and companies.

Experts say a key feature of the plan should be a clear management structure. Currently, over half a dozen agencies are involved in various aspects of water management, from the Irrigation Department and the Electricity Generating Authority of Thailand, the utility that runs the big dams in the north, to the Ministry of Natural Resources and Environment and the Bangkok Metropolitan Administration. The result is a collision of different agendas, egos and jurisdictions that creates confusion and paralysis.

Disaster management is even worse: Dozens of agencies are involved in one way or another, with no clear line of authority.

There are also limits to infrastructure and technology. Bangkok's rapid growth and its industrial areas in its north have replaced natural drainage with urban infrastructure, while the pump-assisted drainage installed has failed.

The IUCN plans to do a thorough study of the water flow and the topography of the flood plain to develop recommendations for the future.

On Thursday, the organisation said that while large-scale engineering projects may be needed in some cases, solutions making use of natural features and processes were a "cost-effective way of improving flood management", and should be included in long-term plans.

Already, investors are looking at some possibilities, such as building 200km of embankments to protect seven industrial estates that were inundated over the last fortnight. The price tag: five billion baht (US$163 million).

Logistics specialist Chris Catto-Smith, who writes a column for the Bangkok Post, warned that the entire Mekong Delta and Bangkok were subsiding, which would add to the troubles.

"Unless they do something really serious, this problem is going to recur," he said. "It needs significant resources and genuine effort."

And not least, he added: "The money should not be allowed to disappear faster than the floodwaters."

Golf's spoiled brats

6 November 2011

The trouble with professional golf is that it is populated by spoiled brats who are protected by self-serving administrators and hangers-on totally unconnected with the real world.

In the real world if you describe a workplace colleague as a black arsehole you will be fired - quicker than you can retract the words.

That is how it should be.

Except in golf it is not.

Almost 48 hours after the event a joint statement was issued by European Tour chief George O’Grady and PGA Tour commissioner Tim Finchem on behalf of the International Federation of PGA Tours. It said that: “The International Federation of PGA Tours feels strongly there is no place for any form of racism in ours or any other sport. We consider the remarks of Steve Williams, as reported, entirely unacceptable in whatever context. We are aware that he has apologised fully and we trust we will not hear such remarks again. Based on this, we consider the matter closed, and we will have no further comment.”

Pathetic.

In February last year, for instance, the European Tour fined Woods £10,000 for spitting on a green during a tournament in Dubai.

He spat on the green. It was gross. His misfortune was that he did so on camera. But in the scheme of things is pales compared to calling a colleague a black arsehole.

The closed event excuse is not acceptable. These events are never closed. Do you really think that people will only tweet the comments that are favorable?

Golf is a weird sport - there is no other sport which has the contestants have man (or woman) servants to help them. It is like "upstairs, downstairs." Golfers are pampered beyond reason. Private jets, best hotels, sponsors fawning and a servant to carry their bags, clean their clubs and read their putts. All of this seems to have made golfers, their entourage and their administrators totally disconnected from the real world.

Luther's scary brilliance

3 November 2011

This month, Emirates has the first series box set of all six episodes of the BBC drama Luther. It is riveting and rather alarming television.

Part of what alarmed me most about Luther is just how the script writers can create such violence, horror and gore. But then you realise that somewhere out there in the real world there are crimes like that being committed. You also realise that solving them needs brilliant and perhaps tortured minds. The only way to understand the criminal is to be so close to being one yourself. Just where do the bad guys end and the good guys start?

Luther is a crime drama starring Idris Elba as John Luther, a near-genius murder detective in a gritty and grimy modern London, whose brilliant mind can't always save him from the dangerous violence of his passions.

In Luther the monsters are entirely human, it is unsettlingly plausible. We meet the show's main character, DCI John Luther, as he lets a criminal fall to his death. In a subsequent episode in this first season, the distraught wife of a serial killer clubs her husband to death with a hammer.

Something is not right says our investigator. Too right. His world is our world but I don't want to be a part of it. I am happy watching it on TV.

It is bad enough that people can imagine the plot lines in this series; it is truly alarming that we know how easily any of these events can happen.

Dubai Group's growing debt crisis

3 November 2011 - Reuters

Note Dubai Group includes Dubai Holdings - the struggling developer of Business Bay, including Executive Towers.

"Dubai Group, part of a conglomerate owned by the emirate's ruler, has not paid interest on $10bn of debts for more than a year, threatening the profits of Middle Eastern banks, sources involved in the company's restructuring say.

When it announced it needed to renegotiate its debts last year, Dubai Group, part of Dubai Holding, the personal investment arm of Sheikh Mohammed bin Rashid Al Maktoum, said it would continue to service them.

But the company has not paid "hundreds of millions of dollars" in interest since August 2010, one of the sources told Reuters this week.

Dubai Group is working hard towards a consensual agreement with banks and expects to provide further details in the coming months, a spokeswoman said, confirming that interest was being rolled up with the principal.

"Facilities are being defacto rolled over throughout restructuring negotiations so that a consensual agreement can be reached to the benefit of all stakeholders," she added.

But without a solution before year-end, the 44-member bank group, consisting mostly of lenders based in the Gulf and Egypt, according to sources, will have to fully provision for the amounts owed, which will significantly hurt future profits.

Dubai's largest bank Emirates NBD would be hit hardest. This could also undermine faith in Dubai's recovery after the emirate's debt crisis, which was caused by Dubai World, another government-related entity.

Dubai World completed its own $25bn restructuring in March, having shocked the world in November 2009 by revealing that it was struggling to repay its debts.

In contrast with Dubai World, which got $9.3bn of new capital from the Dubai authorities to assist its restructuring, bankers say they are surprised no help has been offered to Dubai Group from either the government or its parent company.

"For many of the boards of banks in the Arab world, they just see the ruler of Dubai and that is the end of the story," a second source said. "They just can't see why he wouldn't support his personal investment vehicle."

"The banks need to agree what they are doing but will only do that once they know how big the pot is. However, Dubai Group has said it won't discuss anything without bank agreement," said the first source.

The two sources said there was no formal standstill on the interest payments, with the company just halting payments and leaving the banks with the only option of trying to add due interest to the overall settlement.

Of the $10bn debt, $6bn is due to bank creditors, split between a secured and an unsecured grouping, with the remaining $4bn classed as inter-company debt, such as loans from key shareholders.

Unlike Western restructurings, inter-company debt in Dubai takes precedence over banks, putting them under more pressure.

Talks over the last year at bank level have made some progress, according to those close to the negotiations, but a conclusion is not in sight.

The situation is further complicated by splits among the creditors. With two separate lender groupings, the banks have been jostling for position to ensure their claims are protected as much as possible, with one secured creditor said to have been holding out, according to the second source.

He said that while secured lenders have some collateral pledged against their debt, the unsecured want to keep any other assets free so they can attempt to claim them should the company be broken up.

"Under insolvency rules, the secured positions are valued and that is given priority, with the rest of the assets tipped into a pot which the unsecured get. This hadn't been accepted by one particular creditor but they have now seen the light."

This complex inter-creditor negotiation is why progress has been slow. In the Dubai World restructuring, there were more banks involved but everyone had the same position - meaning all energies were concentrated on the talks with the company, instead of how each of the banks should be treated.

The situation is also complicated by the fact Dubai Group has many strands and its assets are concentrated in financial services, producing very little cashflow, making viable exits to raise funds extremely tricky at the present time.

At current market prices, Dubai Group's assets could be worth as little as $2.5-3bn, the first source said.

Therefore, any solution is likely to involve a long debt extension to allow for asset valuations to recuperate.

The first source said something similar to Dubai World's agreement - which saw new five and eight-year loans put in place - was possible, with tenors stretching as long as ten years.

The new loans would be structured with bullet repayments - meaning the main amount would not be due until the end of the term - and interest rates would also be low so as not to burden the group's cashflow with interest payments, the source added.

Time is running out for a deal before banks will have to book full provisions on the debt, based on market values.

"The banks' provisioning deadline is December 31, which is immovable," the second source said.

Last month, Hussain al Qemzi, the chief executive of Noor Islamic Bank, one of Dubai Group's creditors, said he hoped a deal could be reached by year-end.

If the banks are forced to provision, it is expected to complicate negotiations.

"People could become more aggressive as they have nothing to lose. When they've already said the stake is worth nothing, it becomes about what the banks can get so there is the potential for more to hold out for a better deal for themselves," a restructuring source said.

Meanwhile, full provisioning would also significantly hit the full-year numbers of the banks involved.

ENBD is a co-chair of the unsecured tranche - along with Royal Bank of Scotland - a role which traditionally means they have some of the largest exposures.

Mashreq Bank and Natixis SA's Nexgen unit are co-chairs of the secured tranche.

ENBD warned last week that provisioning was likely to impact its fourth-quarter results. What could make matters worse for ENBD is its recent takeover of Dubai Bank, an Islamic bank which was 70 percent owned by Dubai Group until it was nationalised in May by the Dubai government.

According to its 2009 results, the last available accounts, Dubai Bank had AED4.1bn of exposure to parent entities - equivalent to 23.6 percent of its loan book and nearly 20 percent of Dubai Group's $6bn of bank debt.

"ENBD expects no impact on its non-perfoming loans or profit and loss as a result of the Dubai Bank acquisition," its spokesman said.

"We don't know the exact details on Dubai Bank but, usually, a bank won't move a loan to the NPL column unless it has been restructured so if the debt is currently not classed as NPL then ENBD will have to take that provision," said Ankur Shah, director of equity research at Arqaam Capital.

"They have said there will be no losses from Dubai Bank's NPL. This is the existing book of loans though so if they have new impairments on the book then ENBD will have to provision."

If provisioning is required, the same 20 percent impairment taken on Dubai Holding debt in the last quarter would equate to around AED820m for the Dubai Bank exposure alone, before ENBD takes account of its own Dubai Group debt."

Pakistan and England in the UAE 2012 schedule

3 November 2011