By Isaac Thiga.
One of my relatives traveled to the US in the early days when Emirates launched its first direct flight. The price point at that time compared to the alternatives was very favorable. However, he did not have a very pleasant experience by the time he came back to Nairobi. Fast forward to 2015 and Emirates has emerged as a global player in the aviation industry. Its success has not only galvanized the development of aviation industry within the country, but also established the region as an industry’s global centre. In addition other players have emerged with Etihad and Qatar Airways also raising the regional flag.
This has helped to connect East to West, North to South. Many Kenyans use these airlines to reach their destinations around the world. More so, the three have a high number of employees from Kenya, thanks to the superb training in hospitality matters.
However, all is not lost to the fact that emergence of these airlines has led to a lot of competition within the global aviation. The recent tiff with airlines in the United States only goes to show the level of competition. In case you are not aware, the issue was all about subsidies with American, United and Delta airlines pointing a finger at the gulf carriers because of the government subsidies they enjoy. They airlines further explained that the result of such subsidies has fast-tracked the growth of airlines such as Emirates, and remain profitable.
The airlines, in addition, argued that the undue advantage was contrary to the open skies policies. The policy calls for fair competition by liberalizing the rules for international aviation markets and minimizing government intervention. All in all, the review of Gulf carriers found no effect of subsidies. Seems this had immediate effect as Delta and United announced they will discontinue their direct flights to the region (from Atlanta & Washington respectively) in early 2016.
This only leaves more room for the Gulf carriers to increase capacity. For instance, Emirates currently covers 10 destinations in the US with direct flights from Dubai to: Boston, Chicago, Dallas, Houston, Los Angeles, New York, Orlando, San Francisco, Seattle and Washington. It’s the onward connections to other destinations e.g. Nairobi. And this is what makes the airline quite favorable – the timely connections. With a combined fleet of about 520 planes and over 670 on order, the gulf carriers are geared for a long haul.
The above example highlights some of the dynamics of the region in trying to navigate through the global economy. The emergence of the Dubai, and UAE in general, as a hub for trade and movement has mainly been through a matrix of various factors cutting across three main areas:
- The price sensitive and affordability. This helps traders and business move stuff at an affordable level. Many traders back home had Dubai in mind before the emergence of other competing hubs.
- Quality factor – This is an ongoing process.
- Luxury – The luxury segment that caters for the ultra-rich. This has enabled most of the target consumers from the region to spend within providing a viable alternative to other luxury cities around the world.
Many traders from Africa have used Dubai as a leap board. Many buy varied items and use local agents to ship their stuff. It’s the ease with which traders are able to do this that makes it quite attractive. There are many stories of traders and even people on regular employment in Kenya who visit the Dubai ‘market’ on a weekend. The main weekend day off is Friday in line with the Islamic week – it’s the day for the ‘Ibada’. (the equivalent of Sunday back home). Sunday is a normal working day, and safe to assume that an adherent of the seventh day faith can easily fit in the market.
Given the above, a person with a regular job in Nairobi can take a 5-hour flight on a Friday evening (baada ya kazi), to Dubai; land in the wee hours of Saturday morning, take a shower and a get a much needed nap in order to get ready to take advantage of bargains when the market opens later on Saturday! This person will spend Saturday and Sunday searching for stuff, and later on Sunday afternoon takes a flight back to Nairobi, landing at around 8.00pm. Neighbors in the estate will probably ask ‘habari ya ushago?’ – Well, that’s also applicable only that a container load of stuff is on the way and not just a sack of potatoes.
It is this kind of convenience that has made Dubai quite popular with traders. From a business perspective, Dubai continues to be a hub. Apart from trading, there are also many Kenyans who work in various industries – mainly Aviation (again!) hospitality, retail and services. Some of the best chefs, bartenders and baristas in town are Kenyans. With an estimated population of about 40,000 Kenyans in the UAE, the amount of remittances comes third after the US and UK.
However, in the recent days, the region has been facing immense pressure mainly from two fronts; the low oil prices, which are having an impact on the economy and the geo-political issues. Like any other oil producing economy, the low oil prices are having a negative impact. Diversification has helped in mitigating the effect. For instance, oil contributed to less than 6% of Dubai’s GDP.
The Geo-political situation will be a ‘wait and see’ approach. Its morphs!