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Travel sector’s labor crisis to prolong Europe’s summer of discontent

After 21 years as a service agent at Air France, Karim Djeffal left his job during the COVID-19 pandemic to start his own job-coaching consultancy.
“If this doesn’t work out, I won’t be going back to the aviation sector,” says the 41-year-old bluntly. “Some shifts started at 4 a.m. and others ended at midnight. It could be exhausting.”

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Djeffal offers a taste of what airports and airlines across Europe are up against as they race to hire thousands to cope with resurgent demand, dubbed “revenge travel” as people seek to make up for vacations lost during the pandemic.
Airports in Germany, France, Spain, and the Netherlands have tried offering perks including pay rises and bonuses for workers who refer a friend.
Leading operators have already flagged thousands of openings across Europe. But the industry says European aviation as a whole has lost 600,000 jobs since the start of the pandemic.
Yet the hiring blitz can’t come fast enough to erase the risk of cancelled flights and long waits for travelers even beyond the summer peak, analysts and industry officials say.
The summer when air travel was supposed to return to normal after a two-year pandemic vacuum is in danger of becoming the summer when the high-volume, low-cost air travel model broke down — at least in Europe’s sprawling integrated market.
Labor shortages and strikes have already caused disruption in London, Amsterdam, Paris, Rome, and Frankfurt this spring.
Airlines such as low-cost giant easyJet are cancelling hundreds of summer flights and new strikes are brewing in Belgium, Spain, France, and Scandinavia.
As industry leaders head to a summit in Qatar this week, a major theme will be who bears responsibility for the chaos between airlines, airports, and governments.
“There is a lot of mud-slinging but every side is at fault in not coping with the resurgence of demand,” said James Halstead, managing partner at consultancy Aviation Strategy.
The aviation industry says it has lost 2.3 million jobs globally during the pandemic, with ground-handling and security hardest hit, according to Air Transport Action Group which represents the industry.
Many workers are slow to return, lured by the ‘gig’ economy or opting to retire early.
“They clearly have alternatives now and can switch jobs,” said senior ING economist Rico Luman.
While he expects travel pressure will ease after the summer, he says shortages may persist as older workers stay away and critically, there are fewer younger workers willing to replace them.
“Even if there is a recession, the labor market will remain tight at least this year,” he said.

Low morale

A major factor slowing hiring is the time it takes new workers to get security clearance, in France up to five months for the most sensitive jobs, according to the CFDT union.
Marie Marivel, 56, works as a security operator screening luggage at CDG for around 2,100 euros ($2,200) a month post-tax.
She says shortages have led to staff being overworked. Stranded passengers have been turning aggressive. Morale is low.
“We have young people who come and leave again after a day,” she says. “They tell us we’re earning cashiers’ wages for a job with so much responsibility.”
After much disruption in May, the situation in France is stabilizing, said Anne Rigail, chief executive of the French arm of Air France-KLM.
Even so, Paris’s Charles de Gaulle and Orly airports, where one union has called a strike on July 2, still need to fill a total of 4,000 vacancies, according to the operator.
And in the Netherlands, where unemployment is much lower at 3.3 percent, unfilled vacancies are at record highs and KLM’s Schiphol hub has seen hundreds of cancelled flights and long queues.
Schiphol has now given a summer bonus of 5.25 euros per hour to 15,000 workers in security, baggage handling, transportation, and cleaning — a 50 percent increase for those on minimum wage.
“That’s of course huge, but it still isn’t enough,” said Joost van Doesburg of union FNV.
“Let’s be honest, the last six weeks have not really been an advertisement for coming to work at the airport.”
Schiphol and London’s Gatwick last week unveiled plans to cap capacity during the summer, forcing more cancellations as airlines, airports, and politicians bicker over the crisis.

Blame game

Luis Felipe de Oliveira, head of global airports association ACI, told Reuters airports are being unfairly blamed and airlines should work harder to address queues and rising costs.
Willie Walsh, head of the International Air Transport Association, the global airline industry group meeting in Qatar, has dismissed talk of a breakdown in air travel as “hysteria.”
Walsh in turn blames part of the disruption on the actions of “idiot politicians” in places like Britain where frequent changes in COVID policy discouraged hiring.
The June 19-21 IATA meeting is expected to signal relative optimism about growth tempered by concerns over inflation.
Such gatherings have for years portrayed the industry as the positive face of globalization, connecting people and goods at ever more competitive fares.
But the European labor crisis has exposed its vulnerability to a fragile labor force, with the resulting rise in costs likely to push fares higher and add pressure for restructuring.
In Germany, for example, employers say many ground workers have joined online retailers such as Amazon.
“It’s more comfortable packing a hair dryer or a computer in a box than heaving a 50-pound suitcase crawling into the fuselage of an airplane”, said Thomas Richter, chief of the German ground-handling employers’ association ABL.
Analysts say the labor squeeze may raise costs beyond the summer but it is too early to tell whether the industry must step back from the pre-pandemic model of ever-rising volumes andcost-cutting, which generated new routes and kept fares low.
For some departing employees, however, Europe’s torrid summer signals a wake-up call for passengers and bosses alike.
“I personally think the very cheap flying…I just don’t know how they can really keep up with that,” said a former British Airways cabin crew member, 58, who has taken redundancy.

Read more:

UK transport minister says it will work with aviation industry to solve travel chaos

IATA says post-pandemic airport chaos around the world will get fixed

London’s Heathrow says despite pick-up, full travel recovery at least five years away

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Abu Dhabi Overtakes Oslo for Sovereign Wealth Fund Capital in Global SWF’s First City Ranking

Today, industry specialist Global SWF published a special report announcing a new global ranking of cities according to the capital managed by their Sovereign Wealth Funds (SWFs). The findings show that Abu Dhabi is the leading city that manages the most SWF capital globally, thanks to the US$ 1.7 trillion in assets managed by its various SWFs headquartered in the capital of the UAE. These include the Abu Dhabi Investment Authority (ADIA), Mubadala Investment Company (MIC), Abu Dhabi Developmental
Holding Company (ADQ), and the Emirates Investment Authority (EIA). Abu Dhabi now ranks slightly above Oslo, home to the world’s largest SWF, the Government Pension Fund (GPF), which manages over US$ 1.6 trillion in assets. Abu Dhabi and Oslo are followed by Beijing (headquarters of the China Investment Corporation), Singapore (with GIC Private and Temasek Holdings), Riyadh (home to the
Public Investment Fund), and Hong Kong (where China’s second SWF, SAFE
Investment Corporation, operates from). Together, these six cities represent two thirds
of the capital managed by SWFs globally, i.e., US$ 12.5 trillion as of October 1, 2024.
For the past few decades, Abu Dhabi has grown an impressive portfolio of institutional
investors, which are among the world’s largest and most active dealmakers. In addition
to its SWFs, the emirate is home to several other asset owners, including central banks,
pension funds, and family offices linked to member of the Royal Family. Altogether, Abu
Dhabi’s public capital is estimated at US$ 2.3 trillion and is projected to reach US$ 3.4
trillion by 2030, according to Global SWF estimates.
Abu Dhabi, often referred to as the “Capital of Capital,” also leads when it comes to
human capital i.e., the number of personnel employed by SWFs of that jurisdiction, with
3,107 staff working for funds based in the city.
Diego López, Founder and Managing Director of Global SWF, said: “The world ranking
confirms the concentration of Sovereign Wealth Funds in a select number of cities,
underscoring the significance of these financial hubs on the global stage. This report
offers valuable insights into the landscape of SWF-managed capital and shows how it is
shifting and expanding in certain cities in the world.”

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AM Best Briefing in Dubai to Explore State of MENA Insurance Markets; Panel to Feature CEOs From Leading UAE Insurance Companies

AM Best will host a briefing focused on the insurance markets of the Middle East and North Africa (MENA) on 20 November 2024, at Kempinski Central Avenue in Dubai.
At this annual regional market event, senior AM Best analysts and leading executives
from the (re)insurance industry will discuss recent developments in the MENA region’s
markets and anticipate their implications in the short-to-medium term. Included in the
programme will be a panel of chief executive officers at key insurance companies in the
United Arab Emirates: Abdellatif Abuqurah of Dubai Insurance; Jason Light of Emirates
Insurance; Charalampos Mylonas (Haris) of Abu Dhabi National Insurance Company
(ADNIC); and Dr. Ali Abdul Zahra of National General Insurance (NGI).
Shivash Bhagaloo, managing partner of Lux Actuaries & Consultants, will his present
his observations in an additional session regarding implementation of IFRS 17 in the
region. The event also will highlight the state of the global and MENA region
reinsurance sectors, as well as a talk on insurance ramifications stemming from the
major United Arab Emirates floods of April 2024. The programme will be followed by a
networking lunch.
Registration for the market briefing, which will take place in the Diamond Ballroom at the
Kempinski hotel, begins at 9:00 a.m. GST with introductory comments at 9:30 a.m.
Please visit www.ambest.com/conference/IMBMENA2024 for more information or to
register.
AM Best is a global credit rating agency, news publisher and data analytics
provider specialising in the insurance industry. Headquartered in the United
States, the company does business in over 100 countries with regional offices in
London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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Future of Automotive Mobility 2024: UAE Leads the Charge in Embracing Digital Car Purchases and Alternative Drivetrains

-UAE scores show highest percentage among the region in willingness to purchase a car
completely online
– Openness to fully autonomous cars has grown to 60% vs previous 32%.
– More than half of UAE respondents in the survey intend to move to hybrid cars during
next car purchase, while less than 15% intend to move to fully electric car.
– UAE sees strong use of new mobility services such as ride-hailing (Uber, Careem, Hala
Taxi)
– The perceived future importance of having a car is not only increasing in UAE but is
higher than any other major region globally, even China

Arthur D. Little (ADL) has released the fourth edition of its influential Future of Automotive Mobility (FOAM) report, presenting a detailed analysis of current and future trends in the automotive industry. This year’s study, with insights from over 16,000 respondents across 25 countries, includes a comprehensive focus on the United Arab Emirates (UAE). The report examines car ownership, electric vehicles,
autonomous driving, and new mobility services within the UAE.

“The UAE is at the forefront of automotive innovation and consumer readiness for new mobility
solutions,” said Alan Martinovich, Partner and Head of Automotive Practice in the Middle East
and India at Arthur D. Little. “Our findings highlight the UAE’s significant interest in
transitioning to electric vehicles, favorable attitudes towards autonomous driving technologies,
and a strong inclination towards digital transactions in car purchases. These insights are critical
for automotive manufacturers and policymakers navigating the evolving landscape of the UAE
automotive market.”
Key Findings for the UAE:
1. Car Ownership:
o Over half of UAE respondents perceive that the importance of owning a car is
increasing, with the study showing the increase higher than any other major
region, including China.
o Approximately 80% of UAE respondents expressed interest in buying new (as
opposed to used) cars, above Europe and the USA which have mature used
vehicle markets

2. Shift to Electric and Hybrid Vehicles:
o While a high number of UAE respondents currently own internal combustion
engine (ICE) vehicles, more than half intend that their next vehicle have an
alternative powertrain, with significant interest in electric and plug-in hybrid
(PHEV) options. Less than 15% plan to opt for pure battery electric vehicles
(BEVs).

3. Emerging Mobility Trends:

o Ride-hailing services are the most popular new mobility option among UAE
residents, with higher usage rates than traditional car sharing and ride sharing.
The study indicates a strong openness to switching to alternative transport modes
given the quality and service levels available today.

4. Autonomous Vehicles:
o UAE consumers are among the most open globally to adopting autonomous
vehicles, with a significant increase in favorable attitudes from 32% in previous
years to 60% this year versus approximately 30% in mature markets. Safety
concerns, both human and machine-related, remain the primary obstacles to
broader adoption.

5. Car Purchasing Behavior and Sustainability:
o The internet has become a dominant channel for UAE residents throughout the car
buying process, from finding the right vehicle to arranging test drives and closing
deals. UAE car buyers visit dealerships an average of 3.9 times before making a
purchase, higher than any other region in the world, emphasizing the need for
efficient integration of online and offline experiences.
o Upwards of 53% of respondents from the region would prefer to ‘close the deal’
and complete the purchase of their car online, which is the highest for any region
in the world.
o Sustainability is a key factor cited by UAE consumers as influencing car choice.
The UAE scored among the top half of regions, highlighting the importance of
environmental considerations.

“Our study confirms the promising market opportunities for car manufacturers (OEMs) and
distributors in the UAE” commented Philipp Seidel, Principal at Arthur D. Little and co-Author
of the Global Study. “Consumers in the Emirates show a great and increasing appetite for cars
while being among the most demanding globally when it comes to latest vehicle technologies
and a seamless purchase and service experience.”
The comprehensive report, “The Future of Automotive Mobility 2024” by Richard Parkin and
Philipp Seidel, delves into global automotive trends and their impact on various regions,
including the UAE. This study is an invaluable tool for industry stakeholders seeking to navigate
and leverage the dynamic changes driving the future of mobility.

 

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