The UAE is the buckle in China's One Belt, One Road strategy
The chairman of airlines group Emirates recently stated that the “UAE's aviation sector remains a key driver of our economic growth”, This is an excellent point. The important part is to understand that the aviation sector is not just a driver of the UAE economy in terms of per company financials and employment but more so by making the UAE ever more connected globally.
Much of the focus on global aviation recently has been the discussion about short-haul versus long-haul strategies. This is a central strategic issue on a per-company basis. But on a macro-economic level it is clear that long-haul strategies are far superior in adding value by connecting the UAE to the global economy.
Physical meetings are far more powerful for generating new business, entering new markets and developing new partnerships than using only email, phone calls and video calls. In addition, the more business executives who visit the UAE, the more they overcome any sense of fear of the foreign. Anyone can attest to how their first visit to the UAE completely transformed their view of the country.
Aviation is not just about transporting passengers, air freight is also an integral part of the business. The UAE’s central global location makes it a natural hub. Importantly, long-haul routes and large planes able to move higher amounts of cargo means that it is far less costly than using short-haul based airlines. Short-haul based airlines face twin cost barriers in competing with Etihad and Emirates for cargo.
The first is that they will require more stops. The more stops the greater the fuel cost as they keep taking off with the same cargo, and take off is the most fuel inefficient part of the a flight. The second is if there needs to be a plane change. The logistics of unloading cargo, storing it and then re-loading it on the next short-haul flight is expensive.