New lanes of trade

Dubai airport has grown into the world’s hub for long haul flights. And a growing number of its visitors – tourists and business travellers – are Nigerians. Two Gulf airlines – Emirates and Qatar Airways – each operates 14 flights weekly from Nigeria.

Dubai’s new Terminal 3 can take 30 million passengers. Business travellers and tourists looking for cheap long haul flights and good service can either fly by Emirates to Dubai for trade, financial services or tourism, or to 100 destinations in 60 countries – travellers can make non-stop flights between any of the world’s two big cities.

This strategy is connecting previously neglected but fast-growing cities in emerging economies. A report on global wealth by BCG, a consultancy, notes a shift in wealth creation and profit pools toward developing economies.

BCG estimates that “new world regions [Asia-Pacific, Eastern Europe, Latin America, Middle East and Africa] will account for nearly 70 percent of growth in global private wealth over the next five years”. Dominic Barton, CEO of McKinsey, during a meeting with Nigerian CEOs listed the emerging 2.7 billion middle class in Africa and Asia as one of five forces of global change. Barton expects this concentration of wealth to have an impact 1,000 times greater than the last industrial revolution.

To accommodate this emerging middle class, Emirates new airport, Al Maktoum, due for 2020, is expected to handle 160 million passengers. Currently, Dubai’s Terminal 3 can handle 23 A380s and it is the largest building in the world, in terms of floor space.

Two other Gulf airlines, Qatar in Doha and Etihad in Abu Dhabi, are adding capacity. In a few years Dubai, Abu Dhabi and Doha will have more capacity than Heathrow (London), Charles de Gaulle (Paris) and Frankfurt. Dubai is the leader of this emerging trend that will create the “new Silk Road”.

A similar silk road is rising across the Aegean. Izmir, Turkey, is where “the historical Silk Road meets the Aegean” and, according to a report by DHL, “From a geographic standpoint, the world’s economic centre of gravity has already moved from the mid-Atlantic in 1980 to around Izmir, Turkey, by 2008, and forecasts suggest that it will be on the Chinese-Indian border by 2050.”

Data compiled by the International Air Transport Association (IATA) shows that emerging markets grew the most in 2012; airlines in the Middle East which contributed about 30 percent of international air travel grew the most, by 15.4 percent. Airlines in Africa, thanks to strong domestic markets and economic growth, grew by 7.5 percent, “one of the strongest growth rates for 2012”.

Despite a decline in air freight, airlines in the Middle East and Africa were the exception, growing by 14.7 percent and 7.1 percent, respectively, “supported by new trade lanes and developing trade links between Africa and Asia”. (Dubai and Izmir are among the four cities bidding for Expo 2020; the other two are Sao Paulo and Yekaterinburg [Russia]. Izmir bid for that of 2015 but lost to Milan.)

These new trade lanes or Silk Roads further confirm the global shift to the East coupled with increasing South-South trade. For the second largest economy in Africa, it’s time to work on long-term strategic partnerships using its large domestic market and growing economy as a lever.