From hero to zero

Six months after ITP decided he was the Middle East’s ‘CEO of the Year’, Omar Ayesh, boss of Tameer Holdings has stepped down. It wasn’t the only one to look stupid, Ernst & Young had picked Tameer as a finalist in its Middle East ‘Entrepreneur of the Year’ awards.

The government of Umm Al Quwain says Tameer’s excuses for the failure of its flagship Al Salam City project are “lies that aim to impair the emirate's reputation”. Sources within the company say Tameer pressed on with Salam City sales despite having no plan to provide water and electricity to the development. The Umm Al Quwain government, with enough on its plate, had made it clear to Tameer that it would not be sorting the utilities.

Ayesh says he is stepping down to allow the company’s executive managers to take the reins; it is hard to believe Ayesh’s head of the price Tameer has to pay to extract itself from the do-do. His replacement, Abdallah Hageali, is a Tameer man, so it’s no new broom.

So it’s tough times for Tameer, but, if this is a case of executive responsibility, it’s good news for UAE business. Poor performance should be punished – hopefully one day Gulf company’s can admit as much. And who knows, Ayesh might remake himself as the Comeback Kid.

Premium airlines will fail if they sell on price

Eos couldn’t make all-business work from London to New York, Silverjet is struggling with New York – London – Dubai, but a new operator hopes to drive a profit from a premium class airline flying within the Middle East.

Elite Jets, in partnership with Jet Aviation, says it can compete with legacy carrier’s first class offers, running smaller jets off-schedule from points around the Gulf, Egypt and Lebanon. It says its hourly rate, with seven people on board, comes in under a first class fare.

They may be right, and the venture has our best wishes, but at this level of the market it’s best not to hark on about price. The target audience – VIPs, CEOs and corporate execs – is much sought after, but doesn’t often pay for travel out of its own pocket. Who cares it it’s cheap, is it good? Plus, the legacy carriers’ loyalty schemes and air miles can be a lock-in.

Much better to promote the uniqueness of the service - the speed, the connectivity, the convenience, the club-like feel of being a airline industry pioneer. All the things the legacy carriers can’t buy.

What would oil at $200 mean for Dubai?

The cost of a barrel of oil is currently topping $130. There is now no shortage of experts who says $200 is on the horizon, claiming new supplies can’t (and won’t) ever match runaway demand. If it’s not $200, then most experts will agree that the era of cheap oil is over. It is an easy line to trip out, but what will it mean?

The impact could be huge, but here are a couple of points. Your thoughts are welcome.

Firstly, the world may just get a little more local as transport costs head north. It will be more expensive to ship people, food and goods; greater expense is usually a deterrent.

If travel costs double, discretionary travel is sure to take a hit. Holidaymakers may chose to holiday closer to home, or off set long haul flights by going to places that offer a cheap cost of living. Those budget airline, weekend city breaks may become a rarity. Worryingly, Emirates has a lot of A380 superjumbos to fill.

The city will need to be more compact, with better public transport links. There will be a clash as demand for city center (or Zone A) office and residential space butts up against the need for less wealthy workers to live near to work. By car, the 80km commute will be expensive.

Ideally, internet connectivity will step into the breach, hooking up businesses around the world. If face to face time is at a premium, business will need to find ways of doing things online. This is not just a question of connection speeds, but of changing the way business uses technology.

Humans are usually pretty good at dealing with sudden changes. Their adaptability is a key. It will be the same for business.

Radio advertising: cheap doesn’t mean value for money

Radio advertising in the UAE offers the best value for money compared to other parts of the world, says the Arabian Radio Network. Well, they would, wouldn’t they? Emirates Business, owned by the Arab Media Group, says a radio spot on ARN, also owned by Arab Media Group, is as low as Dh275 to Dh500.

Unfortunately there is a difference between cheap and value for money. As radio in the UAE has no way of knowing how people are listening, Dh275 for one spot could be expensive. If there is only one listener it would be better value for money for the advertiser to drive round to his house, knock on his door and explain the product face to face.

There is no doubt radio is great media. It can create immediate, engaging content on a daily basis. It can involve the listener, and the spoken word encourages listener imagination in a way that billboards or magazine ads can’t match. But without solid listenership figures, running a radio station in the UAE is a hobby, not a business. Advertisers will pay what they can get away with. If radio stations really believed in the value of their listener, they’d price their ads higher than Dh275.

Good business shouldn’t tolerate missed deadlines

It is telling that the ‘revelation’ only one in five construction projects is likely to finish on time does not come as a shock. Shortages of materials and skilled workers (plus reams of red tape) are the official excuse, but the public has long since abandoned belief in deadlines being met.

As we’ve mentioned here before, as long as property prices continue to rise, investors are not too fazed by these delays. An investment that has doubled in value tends to soften the blow. But what damage does this do to Dubai’s reputation as a can-do business center?

There is a danger that missed deadlines breeds an acceptance of tardy work. Who cares if you’re going to deliver late, everyone’s still making money, right? This applies to pizza deliveries to magazine publishing dates to nail appointments to real estate handovers. In boom times, even bad business can make money.

Dubai’s reputation, in part, has been built on being the best place to do business for a thousand miles in any direction. Delivering on time is a big part of that boast. It would be great to think those that deliver on time are remembered when the boom times flatten out.

Low-cost needs innovation, not bullying

Qatar Airways is hinting it may launch a low-cost carrier. The airline says it may need to respond to threats to its revenues from existing low-cost rivals; it could be operation in three months. Emirates has committed to its own low-cost airline within the year.
Lower fares and more competition should be a good thing, but not if these low-cost excursions are only used to squash private competition. Air Arabia and Jazeera Airways, the specialists, have got off to solid starts and have big plans for the future. Emirates and Qatar Airways, with orders for a huge numbers of planes and ritzy new terminals being built, have enough clout to run a spoiler operation.
It is to be hoped that the big boys bring something new to the market. Low-cost is now a mature sector, it could benefit from category innovation. Emirates converting some of its A380s to carry 1,000 passengers might be a new trick; as might once a week long haul specials. Dubai to Sydney for Dh1,000, say.

Interfering RTA plans background checks for carpooling

The hyper-active RTA has another bee in its bonnet. Motorists must now register for a special license to carpool, with the RTA doing background checks on drivers and passengers. The aim, apparently, is to crack down on unlicensed taxis, but it smacks of the RTA exerting another level of control.

It is another case of the sledge hammer being used to crack a nut. Carpooling is already a harmless reality, one that should be encouraged rather than stigmatized. Does the RTA seriously expect thousands of commuters to go and register - and wait on another layer of bureaucracy?

A straw poll in this office suggests at least one in four have shared a lift with colleagues, around 10 per cent do so every day. Payment is often nothing more than a morning coffee.

Dubai’s traffic is already enough of a headache, RTA meddling is no pain relief.