Goodbye Dubai

[jethrotull]

Dewa, Muncipality

In all of these discourses has anybody given a thought to

1)The cost of untilities in UAE.

2)The fallout on the Locals.

3) Subsequently the cost of doing business in the Dubai.

4) The worst case scenario effect on traffic originating from DXB i.e. EKs breakeven feed.

As we know Dubai was the magnet for locals from other emirates except probably AUH. These guys are paid fancy wages for doing effall. In the next phase of this default, there will be, revenue generation to offset the cost of credit. Cost controls are the first and easy steps to follow.
It will start with deferred wages and then revised wages, which reflects on the retail sector of the economy, another major area of employment.

Next area of revenue generation is Utilities. To start with the utilities in DXB are imported or locally generated - not natural- i.e Gas from Qatar, Water desalinated and Electric generation from oil & gas again imported from Doha or AUH.
These costs will increase, as the supplier will be reducing the credit period and also the quantum of credit. This will lead to higher costs to the Utility producers which get transferred to the local populace, add to this the need to generate higher revenue - yield- rates just ballon.

Now with the decrease in state benefits to the locals, will lead to further demands from the locals for jobs in pvt sector - a la Bahrain since 90s - here then you have a drop in productivity of the pvt enterprise as they have to make do with less skilled and motivated workforce.

All of the above will lead to a rethink, on the part of many corporates housed there to look at alternatives like DOHA or MUSCAT. Leading to further drop in premium traffic travelling in and out of DXB. Construction was the largest employer, with it coming to a standstill, all the indentured labout from the sub-cont stops leading to drop in high yield traffic.

In a depressed global economy, fuel will see a drop which also increases prospects for other sub-cont airlines to start ops atleast to SHJ or RAK. There are plenty of eqpt and crew avail at depressed prices. Further expansion into these markets will be more difficult now, as most of these routes were like a quid prop quo for the labour from the sub-cont getting employment in DXB, Infact with the likely drop in employment there will be greater pressure from the Govts. especially of India, to revise the bilaterals. Now the geography might be the very threat that was seen as an advantage.

EK has a dispropotionate dependence on connecting traffic, as mentioned above the base traffic will see steady drops.

And to top it all, quoting a the chairman of PIMCO on CNBC '' The continued drop in house prices will effect the ability of people to spend on the local economy',' as we all know noe DXB was a purely real estate economy.

Personnally, we all are likely to be affected. I have been unemployed for 2 months now and ME was one of the areas for jobs.

Its only human to feel Schadenfreude at the state of Dubai. There was this overt arrogance that we all have seen and experienced in that part of the world. I only hope all of this leads to a fair and just world for my children.