impact of financial crisis on uae airlines industry

In the undermentioned study we highlight the economic system of the UAE and analyse its beginning of capital. We look at the assorted beginnings of income for the Emirates and what function does Tourism and Airlines industry drama in the oil-dominated UAE economic system.

We besides discuss the UAE economic system prior to the fiscal crisis and how it executing in the international market once more, concentrating on the Tourism and Airlines industry in UAE.We so discuss the aftereffects of the fiscal crisis on the full UAE economic system and how it affected the Tourism and Airlines industry which are easy turning out to be major gross bring forthing industries for the UAE. As all the sectors in any economic system are interlinked, so are the Tourism and Airlines industries with all the other major sectors of the UAE economic system and therefore non merely the direct influence of the fiscal crisis, but besides the cumulative consequence needs to be considered.These two industries therefore are affected by the effects of crisis on other sectors of UAE and besides of the full Earth and single states as the clients of these two industries are largely from abroad.

Looking at the brighter side, we analyze the range of the Tourism and Airlines industries in UAE as the fiscal crisis stages passes out and what new chances do these industries have in the station crisis epoch. Finally we conclude the study by supplying the recommendations for farther growing of these two industries based on the analysis conducted. Source of information is provided in the terminal.

United Arab Emirates ( UAE ) is one of the fastest turning economic systems of the universe with GDP growing of over 9.

4 % .The economic system is based on varied facets like energy ingestion per capita, GDP per capita, etc. The GDP of UAE harmonizing to 2008 one-year study is 270 billion US dollars which is 3rd highest in Middle East and ranked 38th all over universe.UAE ‘s Economy:Before acquiring to the fiscal crisis it is of import to cognize the construction of the Dubai ‘s economic system which is one of the most alone and unusual in the universe.

It is divided into free zones setup by the authorities of Dubai. The zones are industry specific with Jebel Ali free zone being the fastest growth in the universe. The zones offer a set of merchandises and services such as: ready to utilize offices, Business centres, mills, Warehouses, substructure ready secret plans etc. Jebel Ali free zone normally referred to as JAFZA is a portion of Dubai based ; a province owned free zone.

It is one of the universe ‘s biggest developers of Economic Zones, Logistics and Research and development driven Industrial Parks. The chief free zones of UAE are Jebel Ali free zone, Dubai Internet City, Dubai Media City, and Dubai Maritime City which are based on the industries they are related with.Peoples have false misconception about UAE ‘s economic system ; they believe that it ‘s chiefly driven by oil and gas. Cleary from the statistics we can see that the oil sector comprises of less than 6 % economic system of Dubai that was chiefly dependent on oil as a chief beginning of gross in the yesteryear.

Although it is true that Dubai ‘s economic system was ab initio build on the grosss generated by its militias of oil and natural gas but with clip the oil militias have reduced significantly and to keep the income, it has concentrated on the touristry industry to bring forth good grosss. Other Emirates are making the same and since oil and natural gas militias are limited, UAE plans to tackle the strength in its touristry industry.All the Emirates realize the future range of touristry industry and have besides invested in their touristry industry and the air hoses industry so as to bring forth foreign hard currency in UAE. Dubai which is the most celebrated Emirate, has managed to transform into a mammoth and brilliant city offering luxury and modernness from a mere desert in few decennaries.

Another big lending sector of Dubai ‘s economic system is the existent estate which forms 22.6 % of the economic system of Dubai. The great success of this industry is owed to the focal point on touristry.The air hose industry, which is really of import sing the economic system which invests in touristry for its bright future chances.

Dubai, which is the most popular emirate of UAE, is now one of the hottest finishs for shopping, trading and travel and touristry industry.The factors which influence touristry for any state are as follows:Infrastructure, Safety and security, Cultural and natural resources, Health and hygiene ; Air, land and sea conveyance, touristry policy and regulations and ordinances, Information and CommunicationNet incomes of around AED98.6 billion in the financial twelvemonth of 2006 are projected to make AED170.7 billion by the twelvemonth 2016 therefore playing a important function in the economic system.

World Tourism and Travel Council ( WTTC ) , a regulative and research organic structure for universe touristry ranked UAE 18th ( universe rankings ) sing international touristry.The importance of touristry is clearly discernible in its GDP portion which is 19 % , 5 % higher than the UK and 7 % than the USA.Over the old ages the authorities of Dubai has concentrated mostly on touristry they have invested big capitals in order to advance their touristry in the procedure they have built sky scrapers, clean and good knit web of roads. The authorities has focused on supplying universe category installations in Dubai in the procedure making architectural designs and edifices which attracts tourers from all around the universe.

As the existent estate industry is closely related to the touristry industry it has developed as a major industry in Dubai and contributes greatly to its economic system.From the facts mentioned above it can be ascertained that there has been a displacement in Dubai ‘s economic system from being entirely dependent on oil to development of other sectors by utilizing the big sums of money coming from the oil to development of other sectors like touristry.The advantages such as strong economic growing and the centralised location coupled with a really dynamic leading have backed the investings made by the UAE in the Tourism Industry.Aviation industry in the Middle East makes up about 20 % of their GDP.

Tourism industry therefore plays a major function in the UAE economic system as Airline industry, which serves as a complimentary industry to it has such a immense portion in its GDP.The capacity that the Airline Industry of UAE offers as compared to its counter-parts is much higher hence income generated is besides high every bit far as the comparing ratio is concerned.A fleet of more than 500 aircrafts and about 250 more are about to be added. The consolidation of the Airline Industry in the Middle East has to travel a long manner and its portion in the state ‘s economic system is for certain to lift.

UAE has been a great topographic point to be visited by the tourers in the past decennary. The Emirates has been working really hard to go the Centre of international finance and trading. . High degree featuring events, resorts and luxury hotels has built its modern in front of times image.

The major sites of involvement are Palm Islands, World Islands, Burj Al Arab hotel ( the first seven leading hotel to be build ) , Burj Dubai etc. Dubai is now one of the hottest finishs for shopping, trading and travel and touristry industry. Dubai ‘s authorities realizes the future range of touristry industry and has besides invested in the same so as to bring forth foreign hard currency in Dubai.The status of the air power sector has besides been assuring.

In last 10 old ages the usage of air travel has increased at the rate of 7 % per twelvemonth. Travel for both concern and leisure activities have grown drastically around the universe.Middle East Airline Industry is known of its cordial reception and leisure air travel and hence has been able to pull tourers every bit good as investors from round the Earth.The traveling due to concern intents has besides increased due to globalisation ( i.

e. international growing in footings of demand, supply, production and clients ) . The rapid growing of international direct investing policies and universe trade besides has contributed to increase in going.UAE has many free trading ports and hence going due to concern and trade has seen exponential rise.

Serving as a trade centre for the universe, UAE enjoys its economic system ‘s growing by supplying such AIDSs to the nucleus industries. For illustration: air travel gross generated from connectivity between the different trade zones ant the beginning and the market.UAE therefore enjoyed the flourishing advancement made on the immense gross generated by the oil and associated industries and injected its grosss in the Tourism and Real Estate sectors, seeing it as a major beginning of income in the hereafter and the results were as per programs until the fiscal crisis hit UAE.The rapid development of the UAE was a consequence of the focal point of the authorities on touristry therefore advancing the existent estate sector with the aid of grosss coming from export of oil and natural gas.

With the largest existent estate company of Dubai Emaar belongingss going insolvent in the United States and vaDubai proposal to detain the refund of all its debt ‘s for a period of 6 months on November 26, 2009 the fiscal crisis in Dubai was exposed in forepart of the universe which had bad effects on states around the universe.The debts were every bit big as $ 59 billion doing a halt to the investing rhythm of Dubai for 6 months. The Dubai ‘s existent estate industry and touristry was based on immense loans which they expected to pay through the grosss they earn from them but with recession hitting the industry severely their programs failed.In the early period of planetary fiscal system Dubai ‘s fiscal construction, dynamic building and touristry industries and relished revenue enhancement free inducements seemed to be a great advantage for it and many people even expected it to stay free from any kind of recession.

A major factor that created this semblance in the heads of people was the continuation of investing activities and building at a hectic gait even when there was a deficiency of capital in all other parts of the universe.Dubai which is governed by Sheikh Mohammed Bin Rashid Al Maktoum borrowed approx 80 billion US Dollars in a period of 4 old ages of building for dining the building market of economic system of regional touristry as their chief focal point was on touristry as they expect that it would take to a concrete beginning of income for them even when their oil militias get exhausted.Emirates suffered a immense loss in the universe ‘s steepest belongings slack as a consequence of planetary recession. The place monetary values dropped by 50 per centum from their value in 2008 go forthing Dubai in a state of affairs where they were non able to bring forth equal money in order to refund the debts that they had taken in order to advance the touristry industry.

The planetary fiscal crisis during 2008-09 resulted in major ruin of Dubai ‘s existent estate market. It led to decelerate down of the economic system of Dubai. The economic gross generated was non coming every bit efficient as before which greatly hindered Dubai ‘s growing and as most of its programs were based on money borrowed by investing companies and there were no programs to confront any downswings in the economic system it became hard for them to refund that loan.As the chief purpose of Dubai ‘s economic system was the touristry industry a slack in the planetary markets was ever bound to impact the economic system of Dubai.

Furthermore the UAE economic system and its of import sectors such as Airlines Industry and Tourism Industry, on which UAE hopes to depend extremely in close hereafter, are regulated by the authorities which does non promote the foreign investors and hence handiness of lone was a tough undertaking at the clip of recession.Emirates ( authorities owned group ) suffered a immense loss in the universe ‘s steepest belongings slack as a consequence of planetary recession. The place monetary values dropped by 50 per centum from their value in 2008 go forthing Dubai in a state of affairs where they were non able to bring forth equal money in order to refund the debts that they had taken in order to advance the existent estate and the touristry industry.The foreign investing of Emaar ( existent estate and Construction Company of Dubai ) claimed to be the 2nd largest builders in United States.

They finally went belly-up because of the recession and / or filed for chapter 11, which allows reorganisation of a company under the Torahs of bankruptcy for United States.The bankruptcy of Emaar belongingss was a large daze for people around the universe and even bigger for the people in Dubai as it acted as a intimation of the fiscal crisis that had begun in Dubai which was considered to be one of the booming economic systems of the universe.Dubai has built one of the finest substructures of the universe and it is rather natural for investors to be attracted towards such a topographic point which lead to the initial success of Dubai in a period when the universe was confronting recession and missing investings but its overdependence on debts caused the fiscal crisis.Although Dubai is soon enduring with a fiscal crisis there are still possibilities that it will retrieve from this crisis.

Abu Dhabi the capital of the United Arab Emirates which is besides the richest state of the United Arab Emirates is the brightest beam of hope for UAE and Dubai.Dubai has already asked Abu Dhabi to bail it out of the crisis. The hope even increases as Abu Dhabi has helped Dubai in the yesteryear when Dubai was in Crisis although the demand is much higher than the yesteryear.A recent study by HSBC which says that Abu Dhabi has the hard currency liquidness to back up its ain companies and Bankss is even more positive response as Dubai ‘s point of position.

International Air Transport Association ( IATA ) has forecasted that despite the station fiscal crisis stage, the international air industry is expected to turn by around 6.6 % . UAE excessively will bask some growing but like India, Middle East is besides a extremely regulated market and authorities plays a important function in nucleus sectors such as air power. This de-motivates the foreign investors and hence consolidation is slow.

There exist programs to spread out the air hose industry and so besides the touristry industry. These programs are provided with great support from the several authoritiess.Dubai has emerged as a major tourer topographic point and competes with the best tourer finishs round the Earth. This ensures that as the touristry industry regains its gait shortly after the recession, topographic points like Dubai will profit the most.

Analyst said that the premier ground for the fiscal crisis in Dubai was the misdirection or the incorrect determination of Sheikh Mohammed. He invested all his every bit good as the Dubai authorities wealth in the existent estate market in United State and had no programs to cover with any sorts of dazes faced in their route to success such as recession.He thought that Dubai would ne’er be stuck with any kind of recession which was a consequence of deficiency of equal planning for bad stages during their journey.The debts were every bit big as $ 59 billion doing a halt to the investing rhythm of Dubai for 6 months.

The Dubai ‘s existent estate industry was based on immense loans which they expected to pay through the grosss they earn from them but with recession hitting the industry severely their programs failed.Therefore the Dubai ‘s fiscal crisis to a big extent can be said to be a effect of existent estate bubble explosion in Dubai.With the U.A.E cardinal bank demoing positive marks by corroborating that its board has discussed programs for back uping touristry concern by imparting Dubai every bit good as staying United Arab Emirates has increased the chances of recovery for Dubai and the UAE to a great extent.The advantages such as strong economic growing and the centralised location coupled with a really dynamic leading have backed the investings made by the UAE in the Tourism Industry.

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