Part of any start-up, I am afraid. We are working hard to solve the issue for the merit of all stakeholders involved. Article in The National Newspaper. By the way, what's up with all these "expert" comments by travel agents? I would claim that an airline is probably a bettrer choice when airline matters are concerned.
New airline's flight delay
Martin Croucher
Mar 24, 2012
DUBAI // A new domestic airline that promises daily flights between Abu Dhabi and Fujairah may not launch until midsummer.
Eastern Express was expected to start flying in January, but was delayed by the General Civil Aviation Authority's (GCAA) rejection of its plan to lease an aircraft and crew. Instead, it now plans to buy its own aircraft, and has raised extra money from its investors to do so.
"We needed to change our model and raise additional capital, which we have done in recent months," said the chief executive, Alex de Vos. "It's a straightforward process now. I don't see a reason for the GCAA to not accept it. "As soon as we have the approval of the aircraft, as well as our plan of how to inspect it, then we're off."
The company is looking at buying a 29-seater turboprop Jetstream 41, made by British Aerospace. The aircraft, if bought new, costs between Dh22 million and Dh25m, although Mr de Vos declined to confirm that figure. The aircraft are used extensively by the UK-based operator Eastern Airways. The North Lincolnshire firm started with a similar business model by operating domestic flights from Humberside to Aberdeen, before adding other domestic and international routes.
Mr de Vos said his company, which is not associated with the British one, would follow a similar pattern, starting with domestic flights and then adding a daily service to Doha. When it initially announced the service, Eastern Express said the 200 kilometre one-way trip from Abu Dhabi to Fujairah would cost Dh645 plus taxes. However, it remains to be seen what effect the extra cost of having to buy an aircraft will have on the ticket prices.
Gaurav Sinha, a UAE-based travel industry analyst, said the GCAA's stance must have hit Eastern Express hard. "These are things that are there to test the mettle of entrepreneurs," he said. "Some of the best companies start under the most challenging of circumstances.
"If it was easy, everyone would be setting up new airlines. The fact that these challenges exist and they have to abide by these rules and regulations, that's the true test of the entrepreneurial spirit."
Ismail Al Baloushi, the executive director of aviation safety at the GCAA, said the authority was concerned solely with safety. While he had no problem with a company leasing its aircraft, the key question was how it would maintain safety standards. "If you want to lease or buy an airplane, you have to show that you are able to guarantee and sustain a safe operation," he said.
He said that there was potential conflict over the registration of the aircraft in a different country, as well as the possibility that a third party operator ill-suited to the scale of the planned business would have been involved.
Initially, Eastern Express was going to "wet lease" its aircraft, meaning it came with a set of flight and ground crew. Now it will have to hire four pilots, two flight attendants, and three ground engineers, which would itself push back the launch.
"This will require training," he said. "With the application process and slots at the simulators, that will take two or three months. That will make it summer before we see a launch." He declined to comment on the exact date.
Tuesday, March 27, 2012
Nigeria ongoing
... and part 3. A fairly short answer this time since I was exceeding my word count already!
What is currently the ideal corporate structure and industry in order to make the most of business with and in Nigeria?
The following table gives an overview of the recent growth rates of the different industry sectors in Nigeria:
Surprisingly, the hydrocarbon industry, the by far largest sector in Nigeria accounting for 80% of the nation’s GDP is not listed, reducing the credibility of the above source. At best the table presented can be used as a general overview of Nigeria’s industry sectors and their general trends since, as Budina et al. state, oil exports account for a historically fairly stable 90% of Nigeria’s total exports. This together with a Bonny Light market contract price of around US Dollar 120 per barrel, compared to around US Dollar 20 per barrel ten years ago, Nigerian total exports are expected to have increased fivefold over a time span of merely ten years.
From a pure money flow point-of-view, the Nigerian oil and gas sector would therefore seem to be the industry to participate in since it also receives by far the majority of FDI. Though the Nigerian law states that precisely this sector does not allow 100% foreign ownership, partnership with a local entity would generate additional incentives and thus possibly offset any potential direct financial drawbacks by partnering with a local business. However, the Nigerian hydrocarbon industry is plagued with unrest and disputes requiring in-depth expertise of the local and regional socio-economical factors to operate successfully operate within Nigeria.
As an example of the upstream oil and gas trade, a SWOT analysis of Shell Nigeria would look like the following:
Most issues under weaknesses and threats are being faced on a daily basis by hydrocarbon industry corporations all over the world. These issues are not Nigeria specific and thus are part of the common operations of any oil- and gas company, leaving the aspects under strengths and weaknesses to be the deciding factors. Especially the estimated unproven oil and gas resources of the country could swing the economic pendulum into further positive territory, once the framework has been established and will be sustainable.
Many indigenous industries qualify for ‘pioneer status’, a special designation allowing them to take advantage of a tax holiday of up to seven years. Within the hydrocarbon industry sector, the manufacturing of oil well drilling materials, the manufacturing of fertilizers Ammonia and Urea, the re-refining or re-cycling of waste oil, the manufacturing of gas and the distribution thereof, and the mineral oil prospecting and production qualify for the incentive scheme.
In conclusion, I would argue that the hydrocarbon industry is the place to be in Nigeria. With the trade being diversified from large, capital intensive projects, such as oil exploration, to small, specialized operations, such as gasket manufacturing, any corporation should be able to find its prospective niche. Since the oil- and gas trade is prohibited from 1005 foreign ownership, the structure of the company is limited to a joint venture ship of some sort with a local partner.
What is currently the ideal corporate structure and industry in order to make the most of business with and in Nigeria?
The following table gives an overview of the recent growth rates of the different industry sectors in Nigeria:
|
Sector
|
Average annual Growth Rate (%)
|
Share of GDP
in 2004(%)
|
|||
2001
|
2002
|
2003
|
2004
|
||
Agriculture
|
4.0
|
5.0
|
5.0
|
6.0
|
51.5
|
Industry
|
2.0
|
1.0
|
1.0
|
3.0
|
20.7
|
Manufacturing
|
0.0
|
-4.0
|
4.0
|
4.0
|
-
|
Building and Construction
|
6.0
|
6.0
|
4.0
|
4.0
|
2.1
|
Wholesale trade
|
1.0
|
3.0
|
2.0
|
2.0
|
11.0
|
Retail trade
|
4.0
|
4.0
|
4.0
|
4.0
|
28.1
|
Surprisingly, the hydrocarbon industry, the by far largest sector in Nigeria accounting for 80% of the nation’s GDP is not listed, reducing the credibility of the above source. At best the table presented can be used as a general overview of Nigeria’s industry sectors and their general trends since, as Budina et al. state, oil exports account for a historically fairly stable 90% of Nigeria’s total exports. This together with a Bonny Light market contract price of around US Dollar 120 per barrel, compared to around US Dollar 20 per barrel ten years ago, Nigerian total exports are expected to have increased fivefold over a time span of merely ten years.
From a pure money flow point-of-view, the Nigerian oil and gas sector would therefore seem to be the industry to participate in since it also receives by far the majority of FDI. Though the Nigerian law states that precisely this sector does not allow 100% foreign ownership, partnership with a local entity would generate additional incentives and thus possibly offset any potential direct financial drawbacks by partnering with a local business. However, the Nigerian hydrocarbon industry is plagued with unrest and disputes requiring in-depth expertise of the local and regional socio-economical factors to operate successfully operate within Nigeria.
As an example of the upstream oil and gas trade, a SWOT analysis of Shell Nigeria would look like the following:
Strengths:
|
Weaknesses:
|
Opportunities:
|
Threats:
|
Most issues under weaknesses and threats are being faced on a daily basis by hydrocarbon industry corporations all over the world. These issues are not Nigeria specific and thus are part of the common operations of any oil- and gas company, leaving the aspects under strengths and weaknesses to be the deciding factors. Especially the estimated unproven oil and gas resources of the country could swing the economic pendulum into further positive territory, once the framework has been established and will be sustainable.
Many indigenous industries qualify for ‘pioneer status’, a special designation allowing them to take advantage of a tax holiday of up to seven years. Within the hydrocarbon industry sector, the manufacturing of oil well drilling materials, the manufacturing of fertilizers Ammonia and Urea, the re-refining or re-cycling of waste oil, the manufacturing of gas and the distribution thereof, and the mineral oil prospecting and production qualify for the incentive scheme.
In conclusion, I would argue that the hydrocarbon industry is the place to be in Nigeria. With the trade being diversified from large, capital intensive projects, such as oil exploration, to small, specialized operations, such as gasket manufacturing, any corporation should be able to find its prospective niche. Since the oil- and gas trade is prohibited from 1005 foreign ownership, the structure of the company is limited to a joint venture ship of some sort with a local partner.
Nigeria part 2
Obviously, one question and answer is not enough for an MBA! So here is part 2:
Is Nigeria currently following appropriate policies to encourage global brands to work with local companies?
The Library of Congress Studies state that in 2008, Nigeria’s age distribution was estimated as follows:
With more than half the population at least approaching a working age, it surely does not come as a surprise that Nigeria ranks 37th out of the 183 economies surveyed for ease of employing workers. Ease of business is further enhanced by English being the official language. In 2004 Nigeria’s adult literacy rate was 69.1 percent on average, with a higher rate for men (78.2 percent) than for women (60.1 percent). Nigeria provides free, government-supported education. In 2007 Nigeria had an estimated labor force of 50.1 million. Unemployment was estimated at 4.9 percent in 2007.
These facts do seem to be beneficial for foreign companies to partner with Nigerian entities in order to reduce import restrictions and to minimize supply chain costs on the one hand, and to find new business opportunities for local organizations on the other hand. Consequences of such partnerships would be the creation of local quality jobs, and a more competitive Nigerian workforce through modern management and skills transfer.
Consequently, Nigeria ranks amongst the three largest FDI recipients in Africa. One could argue, however, that this top three listing is only achieved by being a country rich in natural resources (95% of the state budget is generated by the oil and gas industry).
As the following table shows, the United States of America was Nigeria’s largest trade partner in 2000 with a net trade surplus of close to 16 billion US Dollars. Other main trading partners were as follows:
Country Exports (Mil USD) Imports (Mil USD)
United States 16,615 954
India 5,664 288
Spain 3,390 110
France 2,395 470
Italy 1,615 394
Côte d'Ivoire 1,217 n.a.
Brazil 964 259
Netherlands 366 364
China 203 492
Germany 162 859
United Kingdom 10 1,091
Total: 32,601 5,281
The positive trade balance could indeed be direct result of foreign corporations partnering with local entities. Yet, a few challenges still remain, not the least being the volatility in Nigeria’s inflation history. Over the last thirty years, Nigeria has encountered a 30% yearly inflation on the average, yet the trend seems to be a declining one to a level of the current 12%.
So although the spikes of the 1980s and 1990s seem to be past history, a change ratio of almost 200% in not even a decade makes it very difficult for foreign corporations to plan a suitable financial strategy. The Nigerian government in the form of the Central Bank of Nigeria therefore needs to enforce vigorously stable monetary politics.
If we compare the exchange rate historical data of the Nigerian Naira to the US Dollar over a span of a year, we see that the Naira fluctuates around ± 4% around the mean only. Also, historical data shows that the Naira is fairly stable against the Indian Rupee. Foreign long-term investors should therefore have adequate confidence in a relatively stable currency.
Nigeria currently operates a system called Expatriate Quota for awarding work permits to non-
ECOWAS (Economic Community Of West African States) nationals. Under this system, investors are required to apply for a quota of work permits. However, the website of the Nigerian Embassy in the USA (Embassy of the Federal Republic of Nigeria) states that this system is due to be replaced by a common work permit system under the administration by the NIPC.
Additionally, Nigeria is a member of the World Intellectual Property Organization (WIPO) and a signatory to the Universal Copyright Convention (UCC), the Berne convention, and the Paris Convention. On paper at least, Nigeria is well prepared to protect copyrights, yet, as can be observed in numerous articles, the practical implementation seems to be trailing.
As the Change Nigeria Project reports, it is expected that a number of mainly blue chips companies are in the process of relocating to neighbouring countries. The reasons cited for the relocations are infrastructural decay, poor tariff structure, corruption, and growing insecurity.
Yet, actual trade export and import figures seem to prove the success of the Nigerian model. Clearly the recent spikes in oil prices around the world favour Nigeria’s exports, yet Nigeria’s way of diversifying its portfolio also seems to have the right effect.
Is Nigeria currently following appropriate policies to encourage global brands to work with local companies?
The Library of Congress Studies state that in 2008, Nigeria’s age distribution was estimated as follows:
With more than half the population at least approaching a working age, it surely does not come as a surprise that Nigeria ranks 37th out of the 183 economies surveyed for ease of employing workers. Ease of business is further enhanced by English being the official language. In 2004 Nigeria’s adult literacy rate was 69.1 percent on average, with a higher rate for men (78.2 percent) than for women (60.1 percent). Nigeria provides free, government-supported education. In 2007 Nigeria had an estimated labor force of 50.1 million. Unemployment was estimated at 4.9 percent in 2007.
These facts do seem to be beneficial for foreign companies to partner with Nigerian entities in order to reduce import restrictions and to minimize supply chain costs on the one hand, and to find new business opportunities for local organizations on the other hand. Consequences of such partnerships would be the creation of local quality jobs, and a more competitive Nigerian workforce through modern management and skills transfer.
Consequently, Nigeria ranks amongst the three largest FDI recipients in Africa. One could argue, however, that this top three listing is only achieved by being a country rich in natural resources (95% of the state budget is generated by the oil and gas industry).
As the following table shows, the United States of America was Nigeria’s largest trade partner in 2000 with a net trade surplus of close to 16 billion US Dollars. Other main trading partners were as follows:
Country Exports (Mil USD) Imports (Mil USD)
United States 16,615 954
India 5,664 288
Spain 3,390 110
France 2,395 470
Italy 1,615 394
Côte d'Ivoire 1,217 n.a.
Brazil 964 259
Netherlands 366 364
China 203 492
Germany 162 859
United Kingdom 10 1,091
Total: 32,601 5,281
The positive trade balance could indeed be direct result of foreign corporations partnering with local entities. Yet, a few challenges still remain, not the least being the volatility in Nigeria’s inflation history. Over the last thirty years, Nigeria has encountered a 30% yearly inflation on the average, yet the trend seems to be a declining one to a level of the current 12%.
So although the spikes of the 1980s and 1990s seem to be past history, a change ratio of almost 200% in not even a decade makes it very difficult for foreign corporations to plan a suitable financial strategy. The Nigerian government in the form of the Central Bank of Nigeria therefore needs to enforce vigorously stable monetary politics.
If we compare the exchange rate historical data of the Nigerian Naira to the US Dollar over a span of a year, we see that the Naira fluctuates around ± 4% around the mean only. Also, historical data shows that the Naira is fairly stable against the Indian Rupee. Foreign long-term investors should therefore have adequate confidence in a relatively stable currency.
Nigeria currently operates a system called Expatriate Quota for awarding work permits to non-
ECOWAS (Economic Community Of West African States) nationals. Under this system, investors are required to apply for a quota of work permits. However, the website of the Nigerian Embassy in the USA (Embassy of the Federal Republic of Nigeria) states that this system is due to be replaced by a common work permit system under the administration by the NIPC.
Additionally, Nigeria is a member of the World Intellectual Property Organization (WIPO) and a signatory to the Universal Copyright Convention (UCC), the Berne convention, and the Paris Convention. On paper at least, Nigeria is well prepared to protect copyrights, yet, as can be observed in numerous articles, the practical implementation seems to be trailing.
As the Change Nigeria Project reports, it is expected that a number of mainly blue chips companies are in the process of relocating to neighbouring countries. The reasons cited for the relocations are infrastructural decay, poor tariff structure, corruption, and growing insecurity.
Yet, actual trade export and import figures seem to prove the success of the Nigerian model. Clearly the recent spikes in oil prices around the world favour Nigeria’s exports, yet Nigeria’s way of diversifying its portfolio also seems to have the right effect.
Nigeria business environment study
As part of my MBA, I was asked to conduct a study into the business environment of Nigeria. Not an easy task when you have a few Nigerian classmates looking over your shoulder!
How difficult is it to invest and repatriate profits from Nigeria? Is the context more or less beneficial for certain types of industries?
In 1995, Nigeria adopted a new set of regulations, under which it permitted foreign ownership in local businesses with the exception of the arms and drugs trade, and the petroleum sector, in which foreign participation is only allowed in conjunction with a local partner. At the same time, the Nigerian Investment Promotion Commission Act established the Nigerian Investment Promotion Commission (NIPC). The NIPC has since been the promoter and facilitator of foreign investment in Nigeria.
In 1992, the Nigerian Free Zone Act (NFZA) was passed. These so established Free Zone areas do show improved infrastructure, facilities, and transport while at the same time grant exporting business exemption from export duties, local taxes, and foreign exchange restrictions.
The NFZA grants companies incentives that include:
- No personal income tax
- 100% repatriation of capital and profit
- No foreign exchange regulation
- No pre-shipment inspection for goods imported into the free zone
- No expatriate quota
- Initial tax holidays extension
- Investment capital allowance increase
- All dividends distributed during tax holidays are tax free
The so implemented economical tools to improve investment opportunities have created prosperity, at least to some extent, in Nigeria. This can be also observed when looking at Nigeria’s real GDP growth rate over the last few years, adjusted for inflation:
Nigeria’s GDP growth of an average of around 6% over the last few years does compare favourably to the average world GDP real growth rate of almost 4% (index mundi) and should therefore prove to be an adequate incentive for foreign investment into Nigeria in combination with the stable investment framework provided by the NIPC and NFZA together.
However, policy lapses by the Nigerian government made the International Monetary Fund decide to end its support program in 2001. Furthermore, in 2003, the Nigerian government raised protective tariffs to up to 150% to protect local industry. Hill argues that the implementation of protective tariffs do generally have an adverse affect on the economy. It would therefore seem that the Nigerian government is under internal pressure and hence does not possess the final legislative authority, making it uncertain investment grounds for foreign inflows.
In addition, Nigeria knows a complex tax system. Corporate tax is set at 32% with numerous tax incentives in place. Nigeria’s legal system is based on a combination of statutory (legislative) law, English common law, customary law, and, in the north, Islamic law (sharia). Nigeria knows a bankruptcy law, yet this is hardly ever exercised.
This mix of different proven, yet not necessarily interchangeable law systems, would seem to be a hurdle for foreign direct investment (FDI). After all, without local legal representation, it becomes an almost impossible task to comprehend the exact rulings on different legal matters since every aspect could be judged from a different legal background. Furthermore, the UNCTAD report shows that agricultural, mining and public transportation assets know especially favourable initial year allowances. These regulations could very well lead to discrimination amongst investors in different sectors, further making potential investors hesitate to put an effort into Nigeria.
This current political-economical climate in Nigeria seems to lead to an uncertain situation with regards to a decision making process on investment issues in Nigeria. While on the one hand the current civilian government of Nigeria is trying hard to establish its nation as a modern, developing country clearly severing its links with the corruption affairs of the past, Nigeria still seems to have a long way to go before it can be truly regarded as a valid alternative to other developing countries, mainly in Asia and South America, for foreign investment.
Yet, Nigeria’s FDI reached USD11 billion in 2009, making the country the nineteenth greatest recipient of FDI in the world. So apparently, the implemented steps by the Nigerian government, such as the “One-Stop Investment Centers (OSIC)” that were set up by the NIPC in March 2006 and provide investors with a single point of contact for all dealings with the Nigerian Government, do have a positive effect on investors’ strategies for Nigeria. Double Taxation Treaties (according to the Blue Book fifteen are signed at present) further enhance the attractiveness of Nigeria as an investment receiving party.
As per the Foreign Exchange Act of 1995, any investor is guaranteed the unconditional transferability of funds in the event of sale or liquidation of the enterprise or any interest attributable to the investment. However, the coverage of the NIPC’s guarantee is limited to investments above Nigerian Naira 10 million (an equivalent to US Dollar 63,543.3 on March 22, 2011), creating an unclear financial legislation. Again, it would seem that Nigeria has a valid and workable framework in place that should attract foreign investment into the country; yet, the political stability of the government still needs to improve in order to satisfy lower risk investment strategies into Nigeria.
In order to compensate this to some extent, the Nigerian government has authorized the following incentives to attract FDI:
- Pioneer Status, providing a tax holiday for eligible companies;
- Tax relief for research & development in Nigeria;
- Tax concession for industries that attain minimum local raw materials utilisation;
- Tax concession for labour intensive productions;
- Tax concession for locally added value to products and services;
- Tax concession for in-house training;
- Tax concession for export oriented companies;
- Tax deductibility for production needed infrastructure works;
- Tax holidays for investment in rural areas;
- No excise duties;
- Re-investment allowance;
- Investment tax allowance.
If we take the above incentives as a guideline, the following sectors would experience wider tax benefits:
- Research and Development
- Production / Engineering / Construction
- Investment / Financial Services
- Import-Export companies
As can be seen from the above map, the one sector that is missing prominently in the incentive scheme of the Nigerian government is the general services sector. This sector usually requires high expertise while at the same time being relatively low resource intensive. With the current lack of higher educated locals, the taken strategy by the Nigerian government seems indeed to be the more adequate one. Yet, by so excluding the tourism sector might work counterproductive since the country itself does provide an abundance of possibilities once the political situation, especially in the Niger Delta region, has been resolved.
Interview in the Low-Fare & Regional Airlines/LARAnews
Another article on Eastern Express during the Dubai Air Show. Sometimes I wonder if life of a CEO consists only of PR-work?
DUBAI 2011: Eastern Express to launch Abu Dhabi services from Fujairah
November 15, 2011
A new, Fujairah-based regional airline, Eastern Express, has announced plans to begin twice-daily turboprop service from its home base to Abu Dhabi, launching in 1st quarter of 2012.
Eastern Express’s CEO Alex de Vos said that he and his team had worked on the project for more than two years. He described the airline as “a regional full-service air carrier” designed to connect the hubs of the UAE. “It is not a state carrier, it is privately funded,” he commented. “Its current owners are three highly regarded businessmen and a crazy Dutchman [a reference to himself].
“We have a projected workforce of 50 people. Our mission is “dedicated to the local community” so will try to employ as many Emiratis as possible,” de Vos added. “And we’ll focus on service – the most important piece of equipment in the toolbag.”
de Vos explained that the Abu Dhabi–Fujairah drive is approximately 3.5-4 hours. So the target will be transit passengers going through Abu Dhabi. “We plan to feed into an existing network and expect to sign a deal in the middle of next year. We’ll begin with an interline agreement and eventually want to move to full codesharing. Before that we have to show the partner the quality of the service,” de Vos noted. “With the proposed timetable, we can reach in excess of 10,000 transit passengers.”
Other destinations are under consideration with Doha the likely second destination, a switch from the original choice of Bahrain.
The airline expects to announce an ACMI deal for its first aircraft shortly. Currently being evaluated are aircraft in the Jetstream 41 class.
Bernie Baldwin, editor, Low-Fare & Regional Airlines/LARAnews.net
Dubai, UAE
DUBAI 2011: Eastern Express to launch Abu Dhabi services from Fujairah
November 15, 2011
A new, Fujairah-based regional airline, Eastern Express, has announced plans to begin twice-daily turboprop service from its home base to Abu Dhabi, launching in 1st quarter of 2012.
Eastern Express’s CEO Alex de Vos said that he and his team had worked on the project for more than two years. He described the airline as “a regional full-service air carrier” designed to connect the hubs of the UAE. “It is not a state carrier, it is privately funded,” he commented. “Its current owners are three highly regarded businessmen and a crazy Dutchman [a reference to himself].
“We have a projected workforce of 50 people. Our mission is “dedicated to the local community” so will try to employ as many Emiratis as possible,” de Vos added. “And we’ll focus on service – the most important piece of equipment in the toolbag.”
de Vos explained that the Abu Dhabi–Fujairah drive is approximately 3.5-4 hours. So the target will be transit passengers going through Abu Dhabi. “We plan to feed into an existing network and expect to sign a deal in the middle of next year. We’ll begin with an interline agreement and eventually want to move to full codesharing. Before that we have to show the partner the quality of the service,” de Vos noted. “With the proposed timetable, we can reach in excess of 10,000 transit passengers.”
Other destinations are under consideration with Doha the likely second destination, a switch from the original choice of Bahrain.
The airline expects to announce an ACMI deal for its first aircraft shortly. Currently being evaluated are aircraft in the Jetstream 41 class.
Bernie Baldwin, editor, Low-Fare & Regional Airlines/LARAnews.net
Dubai, UAE
Interview on Dubay Eye 103.8
I was actually interviewed on the The Business Breakfast http://dubaieye1038.com/thebusinessbreakfast show with Brandy Scott and Malcolm Taylor. Obviously, Brandy was my preferred interviewer so the radio station graciously agreed to have her interviewing me by herself!
Listen here to the clip:
Listen here to the clip:
Article on Eastern Express during the Dubai Airshow 2011
An article on Eastern Express that appeared in the local press Alrroya during the Dubai Airshow 2011. There was even a nice picture of me that made me look 10 years younger but I seem to be unmable to copy/paste it into the blog!
New UAE airline to fly out of Fujairah in Q1 2012
Tuesday, 15 November 2011 at 16:45, By Criselda E. Diala, Dubai
Despite a relatively challenging business climate, a new private carrier is expected to debut in the UAE skies early next year to serve the untapped travel and tourism market of Fujairah, a company
executive announced on Tuesday.
High fuel prices have undoubtedly taken a big chunk out of airlines’ profits and uncertain economic
conditions continue to dampen travel trends, but Alex de Vos, Chief Executive Officer of Eastern
Express, is confident their business model has the potential to drive passenger traffic growth in and out of their hub.
“I agree it’s not the best of situations, but to be honest, we probably entered at the right time. We can
get aircraft at reasonably low cost and utilise airports at lower cost. Obviously the fuel price would
affect us as well. But then again, the Turboprop aircraft that we are going to fly are purpose built for
short routes and uses just about a third of the fuel consumed by a smaller jet,” De Vos said.
The company has not set a specific date for their maiden flight next year, but the Eastern Express CEO said they are expecting their first aircraft to be delivered towards the end of 2011. The airline will initially fly using one aircraft twice daily between Fujairah and Abu Dhabi, adopting a feeder or
“commuter carrier” concept.
As it does not prove economical for larger airlines to fly to smaller hubs, commuter airlines exist to fill the gap. According to De Vos, the business model is used in various regions worldwide, but has not yet been adopted in the Middle East.
The feeder carrier concept basically involves a “purpose-built regional aircraft” collecting passengers
from a destination not served by major airlines to larger hubs for onward journeys on board national or international carriers.
“That is basically a win-win situation for everybody because in the end, the [bigger] carrier gets more
passengers and exposure to larger audience [while] the passengers in smaller hubs have now the option of choosing between a car and an aircraft [when going to the larger airport],” he explained.
De Vos also disclosed that Eastern Express is also in talks with at least three carriers – one from the
UAE and two from GCC countries – for possible partnership. At the moment, however, no formal
partnership agreement has been signed by the airline with any party.
Not a national carrier
Asked whether the Fujairah government has any stake in the airline, De Vos said not in the financial
sense. Eastern Express will operate as a private carrier and not as a UAE national airline such as
Dubai’s Emirates and flydubai, Abu Dhabi’s Etihad Airways and Sharjah’s Air Arabia.
“We’ve obviously got tremendous support from the Fujairah airport and the government, but we’re a
privately funded airline, not state funded. We are not going to be the Fujairah national carrier,” De Vos emphasised.
The Eastern Express top executive also discounted the possibility of feeding passengers through Dubai, which is closer to the northern emirate of Fujairah. “By road it will take you about 90 minutes from airport to airport and that’s already a very short timeframe. The added value for passengers to step on Fujairah and fly to Dubai [and then] fly somewhere else, is probably not as gaining as it will be with Abu Dhabi or other destinations,” he said.
Likewise, the completion of the reportedly Dh1.5-billion ($480 million) 80-kilometre Sheikh Khalifa bin Zayed Highway that will connect Dubai and the rest of the northern emirates will significantly reduce the travel time by road to and from these destinations.
Taking a conservative approach
Considering the current market conditions, De Vos was quick not to sugarcoat their market outlook and instead reiterate their cautious stance in delivering their operations. “We have put a very conservative model in place just to be sure basically. I believe for the first year [of our operations], we calculated around 5,000 passengers that we can transport, which is nothing really so anybody that is willing to fly with us and increase the number beyond 5,000 will probably get a very good deal with us,” he said.
Eastern Express’ entry into the UAE aviation market is expected to help boost Fujairah’s tourism
potentials. According to the country’s General Civil Aviation Authority, air traffic movements at the
Fujairah International Airport was at 328 in August.
Air traffic movement in the UAE in general has been growing steadily with August witnessing a 4.8 per cent increase from July, buoyed mainly by strong figures from Dubai International Airport.
New UAE airline to fly out of Fujairah in Q1 2012
Tuesday, 15 November 2011 at 16:45, By Criselda E. Diala, Dubai
Despite a relatively challenging business climate, a new private carrier is expected to debut in the UAE skies early next year to serve the untapped travel and tourism market of Fujairah, a company
executive announced on Tuesday.
High fuel prices have undoubtedly taken a big chunk out of airlines’ profits and uncertain economic
conditions continue to dampen travel trends, but Alex de Vos, Chief Executive Officer of Eastern
Express, is confident their business model has the potential to drive passenger traffic growth in and out of their hub.
“I agree it’s not the best of situations, but to be honest, we probably entered at the right time. We can
get aircraft at reasonably low cost and utilise airports at lower cost. Obviously the fuel price would
affect us as well. But then again, the Turboprop aircraft that we are going to fly are purpose built for
short routes and uses just about a third of the fuel consumed by a smaller jet,” De Vos said.
The company has not set a specific date for their maiden flight next year, but the Eastern Express CEO said they are expecting their first aircraft to be delivered towards the end of 2011. The airline will initially fly using one aircraft twice daily between Fujairah and Abu Dhabi, adopting a feeder or
“commuter carrier” concept.
As it does not prove economical for larger airlines to fly to smaller hubs, commuter airlines exist to fill the gap. According to De Vos, the business model is used in various regions worldwide, but has not yet been adopted in the Middle East.
The feeder carrier concept basically involves a “purpose-built regional aircraft” collecting passengers
from a destination not served by major airlines to larger hubs for onward journeys on board national or international carriers.
“That is basically a win-win situation for everybody because in the end, the [bigger] carrier gets more
passengers and exposure to larger audience [while] the passengers in smaller hubs have now the option of choosing between a car and an aircraft [when going to the larger airport],” he explained.
De Vos also disclosed that Eastern Express is also in talks with at least three carriers – one from the
UAE and two from GCC countries – for possible partnership. At the moment, however, no formal
partnership agreement has been signed by the airline with any party.
Not a national carrier
Asked whether the Fujairah government has any stake in the airline, De Vos said not in the financial
sense. Eastern Express will operate as a private carrier and not as a UAE national airline such as
Dubai’s Emirates and flydubai, Abu Dhabi’s Etihad Airways and Sharjah’s Air Arabia.
“We’ve obviously got tremendous support from the Fujairah airport and the government, but we’re a
privately funded airline, not state funded. We are not going to be the Fujairah national carrier,” De Vos emphasised.
The Eastern Express top executive also discounted the possibility of feeding passengers through Dubai, which is closer to the northern emirate of Fujairah. “By road it will take you about 90 minutes from airport to airport and that’s already a very short timeframe. The added value for passengers to step on Fujairah and fly to Dubai [and then] fly somewhere else, is probably not as gaining as it will be with Abu Dhabi or other destinations,” he said.
Likewise, the completion of the reportedly Dh1.5-billion ($480 million) 80-kilometre Sheikh Khalifa bin Zayed Highway that will connect Dubai and the rest of the northern emirates will significantly reduce the travel time by road to and from these destinations.
Taking a conservative approach
Considering the current market conditions, De Vos was quick not to sugarcoat their market outlook and instead reiterate their cautious stance in delivering their operations. “We have put a very conservative model in place just to be sure basically. I believe for the first year [of our operations], we calculated around 5,000 passengers that we can transport, which is nothing really so anybody that is willing to fly with us and increase the number beyond 5,000 will probably get a very good deal with us,” he said.
Eastern Express’ entry into the UAE aviation market is expected to help boost Fujairah’s tourism
potentials. According to the country’s General Civil Aviation Authority, air traffic movements at the
Fujairah International Airport was at 328 in August.
Air traffic movement in the UAE in general has been growing steadily with August witnessing a 4.8 per cent increase from July, buoyed mainly by strong figures from Dubai International Airport.
Business Plan for a corporate shuttle project
As part of my MBA studies, I drafted a comprehensive business plan of an air corporate shuttle project under the fictitious name majlis aviation. The project formed actually part of my former company Gulf Executive Aviation but never materialized so I thought it to be a good idea to revive the project. If interested, you know where to reach me!
executive summary
majlis aviation (MA) was established in February 2005 by the author to perform quality and safe air charter and aqviation consulting services for internationally operating companies and frequent flyers from and to Bahrain, Qatar, and Saudi Arabia. All current services offered by MA are operational.
The author is the current sole owner of the company and handles all operational and administrative tasks with the exception of business development matters. The author is a commercial pilot and is educated to university level. He possesses 10 years of aviation experience, including senior positions with private charter companies. Business Development is managed by Mr. ABC. Mr. ABC holds a Master’s degree and possesses more than 25 years of aviation experience, mostly in senior business development and quality positions.
The company has a number of business objectives, including:
- To achieve a turnover of USD 40,000 per month for the first 6 months;
- To sell 300 flight hours of in-house charter flights per year (these flight hours compare to approximately 6 flights per month);
- To attract funding to lease/manage a business jet (a potential agreement is in the process of being signed and does not form part of this fund raising plan);
- To be the primary contact for internationally operating companies in Saudi Arabia, Qatar, and Bahrain regarding travel arrangements for their employees;
- To be recognized as the number one aviation consultant in the Middle East; and
- To be awarded with a contract to operate a weekly corporate shuttle.
MA is seeking to attract USD 150,000 in debt to establish a corporate shuttle project. A corporate shuttle is a semi-scheduled flight for a number of businessmen who are regularly traveling the same route. At least 4 petrochemical plants in Saudi Arabia are looking into possibilities to operate such a shuttle service. MA has approached all four companies and has found sound interest in the project, which, once materialized, would guarantee a minimum turnover. The aircraft would be leased under a lease agreement from an existing operator including its crew. MA faces no regional competition for corporate shuttle services as indicated in this plan.
Pay-back of the loan would start after 12 months at a monthly rate of USD 5,000 till the loan has been amortized. MA proposes a 10% effective interest rate, to be paid yearly. Even under the worst-case scenario the risk that the loan cannot be paid back on schedule is negligible. Collateral will be the guaranteed income from the corporate shuttle contract.
The general aviation market in the Middle East and especially in the GCC countries is still at an early stage of development. As yet, only a few charter companies are established locally and the region relies completely on outer region expertise for the aviation consulting market resulting in a vast market for our services.
Marketing Plan for a boutique hotel in Switzerland
As part of the MBA Marketing Management course, I created a marketing plan for a boutique hotel in Zurich, Switzerland. The exercise was far from being just a concept. Since I have lived almost 20 years in Switzerland, I know that there is a market out there for such niche hotels. Contact me if you want to take this further!
Metropolitan Village Hotel
The Metropolitan Village Hotel offers its lifestyle savvy guests on a budget a unique lounge experience while providing a suitable relaxation background for the clubbing die-hards.
Executive Summary
The Metropolitan Village Hotel (MVH) is a new lifestyle concept situated in the Niederdorf quarter in Zurich, in the heart of the city next to the main train station, the universities, the art museum, and the main theater. The hotel is in its planned phase. The Niederdorf is one of the main leisure centers of Zurich, sporting a range of pubs, restaurants, clubs, and fashion boutiques. The hotel is non-classified, relieving the design and daily operations of stringent rules imposed by the regulatory body. It features a small kitchen for breakfast, snacks, and finger food, yet extensive meals need to be consumed at third party establishments.
The target audience of the hotel is the young and contemporary lifestyle savvy, ranging from 16 to 28 years old. With prices of the hotel slightly above two star facilities in the region, household income of the targeted guest base figures in the mid to higher mid region.
In order to offer a contemporary, trendy and hip lifestyle environment, the hotel interior will be designed by upcoming artists and architects. It features a 24/7 chill-out lounge where our guests have the opportunity to meet before hitting the clubs and to relax after a long club night. Rooms focus on youth lifestyle gadgets, such as I-pod docking stations, electronic game consoles, and wireless internet facilities. These amenities also feature in the chill-out lounge in order to attract group activities and thus increase lounge/bar turnover. The bar strictly adheres to Swiss legislation on alcohol consumption.
Additional amenities of the hotel are a tanning room, sauna, and gym. Since the Niederdorf is pedestrian only, the hotel offers exclusive shuttle services to/from the main train station and airport. In addition, these transport facilities can also be booked to tour the city or as transport means to/from one of the leisure spots within the quarter. In order to distinguish the hotel from the competition, these means of transport comprise of exclusive stretched limos, horses and carriages, and tricycles.
The MVH derives its name from the metropolis Zurich, by far the largest town in Switzerland, and from the physical location, the Niederdorf, which translates into low village. It also reflects the fact that we do things differently, so is this the first youth lifestyle hotel in town. The hotel is a boutique hotel, not affiliated with any major chain. Yet, sister hotels in Zurich West, Geneva, and Basel are planned, upon which the concept will go public with an IPO. Current funding is received by private investors who also have made available a first year marketing budget of EURO 100,000.
Other stakeholders are the Swiss train company, restaurants, pubs, and clubs in the Niederdorf. These affiliates provide the MVH with additional guests inflows based on discounted offers when regularly visiting/using the affiliates’ facilities and vice versa. As an example, any youth holder of the Halbtax Abo of the Swiss train company SBB is eligible for a discounted room rate at our hotel. Promotional activities focus on gaming and youth cultural events as well as internet social media.
We expect an initial average room occupancy rate of around 60% (15% below industry average), which would generate around EURO 725,000 based on normal room rate. An increase of 8.25% in room occupancy rate would off-set the first year promotions budget.
Metropolitan Village Hotel
The Metropolitan Village Hotel offers its lifestyle savvy guests on a budget a unique lounge experience while providing a suitable relaxation background for the clubbing die-hards.
Executive Summary
The Metropolitan Village Hotel (MVH) is a new lifestyle concept situated in the Niederdorf quarter in Zurich, in the heart of the city next to the main train station, the universities, the art museum, and the main theater. The hotel is in its planned phase. The Niederdorf is one of the main leisure centers of Zurich, sporting a range of pubs, restaurants, clubs, and fashion boutiques. The hotel is non-classified, relieving the design and daily operations of stringent rules imposed by the regulatory body. It features a small kitchen for breakfast, snacks, and finger food, yet extensive meals need to be consumed at third party establishments.
The target audience of the hotel is the young and contemporary lifestyle savvy, ranging from 16 to 28 years old. With prices of the hotel slightly above two star facilities in the region, household income of the targeted guest base figures in the mid to higher mid region.
In order to offer a contemporary, trendy and hip lifestyle environment, the hotel interior will be designed by upcoming artists and architects. It features a 24/7 chill-out lounge where our guests have the opportunity to meet before hitting the clubs and to relax after a long club night. Rooms focus on youth lifestyle gadgets, such as I-pod docking stations, electronic game consoles, and wireless internet facilities. These amenities also feature in the chill-out lounge in order to attract group activities and thus increase lounge/bar turnover. The bar strictly adheres to Swiss legislation on alcohol consumption.
Additional amenities of the hotel are a tanning room, sauna, and gym. Since the Niederdorf is pedestrian only, the hotel offers exclusive shuttle services to/from the main train station and airport. In addition, these transport facilities can also be booked to tour the city or as transport means to/from one of the leisure spots within the quarter. In order to distinguish the hotel from the competition, these means of transport comprise of exclusive stretched limos, horses and carriages, and tricycles.
The MVH derives its name from the metropolis Zurich, by far the largest town in Switzerland, and from the physical location, the Niederdorf, which translates into low village. It also reflects the fact that we do things differently, so is this the first youth lifestyle hotel in town. The hotel is a boutique hotel, not affiliated with any major chain. Yet, sister hotels in Zurich West, Geneva, and Basel are planned, upon which the concept will go public with an IPO. Current funding is received by private investors who also have made available a first year marketing budget of EURO 100,000.
Other stakeholders are the Swiss train company, restaurants, pubs, and clubs in the Niederdorf. These affiliates provide the MVH with additional guests inflows based on discounted offers when regularly visiting/using the affiliates’ facilities and vice versa. As an example, any youth holder of the Halbtax Abo of the Swiss train company SBB is eligible for a discounted room rate at our hotel. Promotional activities focus on gaming and youth cultural events as well as internet social media.
We expect an initial average room occupancy rate of around 60% (15% below industry average), which would generate around EURO 725,000 based on normal room rate. An increase of 8.25% in room occupancy rate would off-set the first year promotions budget.
Article on the launch of Eastern Express in Air Transport Intelligence
Surely one of the serious magazines out therre. And once again, they have been reporting only the truth!
Air Transport Intelligence news
Fujairah airline targets early 2012 launch
By Alan Dron
Details of a new Arabian feeder airline are due to be announced imminently - possibly later this week - as it targets a start to operations early in 2012.
The new carrier will be based in Fujairah, the most easterly of the seven states that make up the United Arab Emirates. Local news outlets have tentatively named it Al Hajjar Air, although the embryo airline's chief executive Alex de Vos declined to confirm this prior to the official announcement.
The new airline would focus on regional services and act specifically as a feeder carrier for one of the Gulf's existing airlines, said De Vos. He declined to name the larger airline, but said that it was providing administrative support to help get the new operation off the ground.
The Fujairah airline would not be a low-cost carrier, he added, but would aim to provide as much of a full-service environment as its short-haul flights allowed. Initially it would wet-lease a single 30- to 50-seat turboprop.
No passenger airlines currently operate scheduled services from Fujairah International Airport, which mainly handles cargo flights - predominantly to Africa and the CIS countries. "Other airlines have tried a few times to establish a passenger service [from Fujairah] but with a different business model," said De Vos, "usually based on immigrant labour traffic to and from the Indian sub-continent. It doesn't make economic sense to try that again as there are enough carriers in the Gulf Cooperation Council (GCC) doing that." The GCC is composed of Kuwait, Saudi Arabia, Bahrain, Qatar, the UAE and Oman.
Fujairah has a population of just 130,000 but De Vos said that three factors would give his airline a good chance of success. One was the distance between Fujairah and the federal capital of Abu Dhabi, at least three hours' drive away. "Since the UAE is a federal state, basically there are government departments in all the emirates, so there's quite a lot of traffic between Abu Dhabi and Fujairah. That's one part of our target."
The second opportunity was Fujairah's effort to establish its tourist industry, with several new hotels due to open shortly. The third was local residents using the new service from Fujairah to connect with long-haul services.
De Vos said that the new airline had gained its AOC and was in final discussions about its initial aircraft. A publicity campaign to create awareness among the local population was intended to lead to a major announcement at November's Dubai Air Show.
De Vos began his career as a commercial pilot in the US before moving into airline management in Germany then heading to the Gulf as a consultant and latterly setting up aviation consulting and air charter company Gulf Executive Aviation in Bahrain.
Air Transport Intelligence news
Fujairah airline targets early 2012 launch
By Alan Dron
Details of a new Arabian feeder airline are due to be announced imminently - possibly later this week - as it targets a start to operations early in 2012.
The new carrier will be based in Fujairah, the most easterly of the seven states that make up the United Arab Emirates. Local news outlets have tentatively named it Al Hajjar Air, although the embryo airline's chief executive Alex de Vos declined to confirm this prior to the official announcement.
The new airline would focus on regional services and act specifically as a feeder carrier for one of the Gulf's existing airlines, said De Vos. He declined to name the larger airline, but said that it was providing administrative support to help get the new operation off the ground.
The Fujairah airline would not be a low-cost carrier, he added, but would aim to provide as much of a full-service environment as its short-haul flights allowed. Initially it would wet-lease a single 30- to 50-seat turboprop.
No passenger airlines currently operate scheduled services from Fujairah International Airport, which mainly handles cargo flights - predominantly to Africa and the CIS countries. "Other airlines have tried a few times to establish a passenger service [from Fujairah] but with a different business model," said De Vos, "usually based on immigrant labour traffic to and from the Indian sub-continent. It doesn't make economic sense to try that again as there are enough carriers in the Gulf Cooperation Council (GCC) doing that." The GCC is composed of Kuwait, Saudi Arabia, Bahrain, Qatar, the UAE and Oman.
Fujairah has a population of just 130,000 but De Vos said that three factors would give his airline a good chance of success. One was the distance between Fujairah and the federal capital of Abu Dhabi, at least three hours' drive away. "Since the UAE is a federal state, basically there are government departments in all the emirates, so there's quite a lot of traffic between Abu Dhabi and Fujairah. That's one part of our target."
The second opportunity was Fujairah's effort to establish its tourist industry, with several new hotels due to open shortly. The third was local residents using the new service from Fujairah to connect with long-haul services.
De Vos said that the new airline had gained its AOC and was in final discussions about its initial aircraft. A publicity campaign to create awareness among the local population was intended to lead to a major announcement at November's Dubai Air Show.
De Vos began his career as a commercial pilot in the US before moving into airline management in Germany then heading to the Gulf as a consultant and latterly setting up aviation consulting and air charter company Gulf Executive Aviation in Bahrain.
Article on name change of UAE regional airline
There was quite some speculation about our name. Some of the 'journalists' even put us under a completely wrong name, based at Sharjah Airport as a low cost carrier! Fortunately, some journalists actually do enquirre with us before publishing!
www.arabiansupplychain.com
Name revealed for forthcoming Fujairah airline
ASC Staff August 14th, 2011
The latest airline to be launched in the United Arab Emirates will commence operations during the first quarter of 2012 from Fujairah International Airport, it has been confirmed.
Eastern Express will be operated as a private company by Al Hajjar Aviation in partnership with Abulhoul Aviation and prominent local businessmen from Dubai and Abu Dhabi.
According to CEO Alex de Vos, it will be the first airline in the Middle East region to introduce the air feeder concept, which is already well established in Europe and the United States. “Eastern Express will operate double daily flights linking Fujairah to the world through Abu Dhabi initially and later through other GCC destinations. It will use safe, modern regional turboprop aircraft that are specifically designed for high reliability and comfort on short, high frequency routes,” he said.
“Fujairah is rapidly developing with huge growth in industry and tourism and Eastern Express will capitalise on the need for passengers whether tourists and businessmen to connect to this emerging emirate.”
www.arabiansupplychain.com
Name revealed for forthcoming Fujairah airline
ASC Staff August 14th, 2011
The latest airline to be launched in the United Arab Emirates will commence operations during the first quarter of 2012 from Fujairah International Airport, it has been confirmed.
Eastern Express will be operated as a private company by Al Hajjar Aviation in partnership with Abulhoul Aviation and prominent local businessmen from Dubai and Abu Dhabi.
According to CEO Alex de Vos, it will be the first airline in the Middle East region to introduce the air feeder concept, which is already well established in Europe and the United States. “Eastern Express will operate double daily flights linking Fujairah to the world through Abu Dhabi initially and later through other GCC destinations. It will use safe, modern regional turboprop aircraft that are specifically designed for high reliability and comfort on short, high frequency routes,” he said.
“Fujairah is rapidly developing with huge growth in industry and tourism and Eastern Express will capitalise on the need for passengers whether tourists and businessmen to connect to this emerging emirate.”
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