Against the intense apprehension by local and international observers, Nigeria’s 2015 Presidential Elections turned out peaceful and successful following the incumbent’s concession of defeat prior to the final announcement by the electoral umpire – INEC.
The election, which was keenly contested by All Progressives Congress (APC) – General Muhammadu Buhari (GMB) and Peoples Democratic Party (PDP) – Goodluck Ebele Jonathan (GEJ) saw the emergence of GMB as the President-elect of Nigeria.
The presidential election was over on Saturday, March 28, 2015. It is now a historical document for academic research and street political analysis.
On March 28, CHANGE triumphed over TRANSFORMATION AGENDA, leading to the emergence of General Muhammadu Buhari as President-Elect, Federal Republic of Nigeria.
Professor Akpan Ekpo, Director-General, West African Institute For Financial And Economic Management (WAIFEM) has drawn a 6-Point Economic Plan for the in-coming Buhari Administration sustainable economic renaissance on the back of regime support for the private sector as growth engine of the economy.
The 6-Point Plan is anchored on Reduction of Unemployment, Infrastructure, Human Capital, Diversification, Utilisation of Foreign Reserves and Poverty Reduction.
Today is an indelible Day of History for Business Journal.
It marks the effective and successful transformation of Business Journal from a monthly business magazine to a weekly business/ financial newspaper.
Indeed, we have come a long way from birth in May 2008 as a monthly magazine to what we are today as a weekly newspaper. It has been a divine journey anchored on Professionalism, Enterprise, and Freedom. It is also driven by our resilience and dogged commitment to achieving our overarching dream of advancing the cause of business/financial journalism in Nigeria.
Citing rising level of non-performing loans at 15.7 per cent and commercial banks’ borrowing from their central banks at nine per cent of liabilities in the West African Economic and Monetary Union (WAEMU), the International Monetary Fund (IMF) has strongly advocated increase in banks’ capital adequacy requirements to maintain sound financial stability for regional economic growth.
The World Bank Group announced an additional $100 million funding in its Ebola crisis response to speed up deployment of foreign health workers to the three worst-affected countries in West Africa. The announcement increases the World Bank Group’s funding for the Ebola fight over the last three months in Guinea, Liberia and Sierra Leone to more than $500 million.
In recent weeks, West African and global development leaders have appealed for a massive coordinated reinforcement of international health teams to the three countries in order to contain the epidemic. The health workers are needed to treat and care for patients, boost local health capacity, manage Ebola treatment centers, and resume essential health services for non-Ebola conditions.
Current estimates by the United Nations indicate that about 5,000 international medical, training and support personnel are needed in the three countries over the coming months to respond to the Ebola outbreak, including 700-1,000 foreign health workers to treat patients in the Ebola treatment centers.
“The world’s response to the Ebola crisis has increased significantly in recent weeks, but we still have a huge gap in getting enough trained health workers to the areas with the highest infection rates,” said World Bank Group President Jim Yong Kim. “We must urgently find ways to break any barriers to the deployment of more health workers. It is our hope that this $100 million can help be a catalyst for a rapid surge of health workers to the communities in dire need.”
The World Bank Group’s additional financing will help set up a coordination hub in close cooperation with the three countries; the World Health Organisation (WHO); the United Nations’ main Ebola coordination body in Ghana; and other agencies to recruit, train and deploy qualified foreign health workers.
The hub will be designed and operated in coordination with the Senior United Nations System Coordinator for Ebola and the United Nations Mission for Ebola Emergency Response (UNMEER), with technical support from the WHO and in close collaboration with other partners.
It will resolve key issues blocking the recruitment of significantly more foreign health workers, such as pay and benefits, recruitment and training, safety, transportation, housing, provision of urgent medical care, and/or medical evacuations for any infected staff.
The funding also will strengthen the overall capacity of the three countries toward reaching the 70/70/60 targets established by UNMEER and WHO on October 1, 2014: To isolate and treat 70 percent of suspected Ebola cases in West Africa and safely bury 70 percent of the dead within the next 60 days.
The announcement comes at a time of increased international focus on the need to bring more trained health workers to Guinea, Liberia and Sierra Leone.
At a special meeting on Ebola called on October 28, 2014, in Addis Ababa, Ethiopia, African Union Commission Chairperson, Dr. Nkosazana Dlamini Zuma said her organisation would help deploy 2,000 trained health workers from African countries to the affected nations.
At the meeting, UN Secretary General Ban Ki-moon and World Bank Group President Kim welcomed the pledge and said they would do all they could to help. Also Tuesday, Kenyan health leaders told Kim that 600 health workers in the country have volunteered to go to work in the affected nations.
And earlier this month, Paul Allen, the Co-founder of Microsoft, pledged $100 million to increase the number of foreign health workers, with much of the funding going toward medical evacuation services for foreign health workers if they were to contract Ebola.
The European Commission and the United States earlier this month also pledged to support medical evacuation of infected foreign health workers.
“Health workers take an oath to treat the sick – and so it’s no surprise to me that many health workers want to go treat Ebola patients at the source of this epidemic,” said Kim, an infectious disease doctor who spent years treating patients in poor countries. “So we need to find all ways possible to remove any obstacle that stops health workers from serving – whether it is pay for workers in developing countries, or the promise of evacuation services. Health workers who treat Ebola patients are heroes, and we should treat them as such.”
Kim also said that the hub could jumpstart the development of a more permanent global health security reserve corps from different countries for rapid and targeted health worker deployment in response to future health crises.
“Even as we focus intensely on the Ebola emergency response, we must also invest in public health infrastructure, institutions and systems to prepare for the next epidemic, which could spread much more quickly, kill even more people and potentially devastate the global economy,” said Kim.
The new funding will come from World Bank Group’s IDA Crisis Response Window, which is designed to help low-income IDA countries respond to exceptionally severe crises in a timely, transparent and predictable way.
Financing from the Crisis Response Window complements UN and other emergency relief efforts by providing immediate crisis response, supporting country efforts to provide care and essential support for affected populations, while helping countries return to a path of long-term development.
The World Bank Group previously announced that it was mobilizing $400 million for the three countries hardest hit by the Ebola crisis, of which $117 million has already been disbursed. This support—coordinated closely with the United Nations and other international and country partners—will assist the affected countries in treating the sick, providing essential food and water to Ebola-affected households, coping with the economic and social impact of the crisis, and starting to improve their public health systems to build up resilience and preparedness for potential future outbreaks.
The World Bank Group also recently released a report that said that if the virus continues to surge in the three worst-affected countries and spreads to neighboring countries, the two-year regional financial impact could reach $32.6 billion by the end of 2015.
The Ebola virus disease outbreak in West Africa has the potential to be the most deadly infectious disease event since the 1918 flu pandemic, according to a new report by catastrophic risk modeling firm RMS.
RMS said the current outbreak will continue to worsen while the deployment of resources is ramped up to meet the caseload.
According to RMS modeling, until a tipping point is reached where the number of new daily cases declines rather than increases, the severity of the outbreak will continue to multiply, with the total number of new cases approximately doubling each month.
RMS said it does not expect this outbreak of Ebola to become a significant mortality threat outside of West Africa.
“Controlling the spread of this Ebola outbreak is more a question of logistics than virology,” said Dominic Smith, Pandemic Risk Expert and Senior Manager of Life Risks at RMS. “The fight against the Ebola epidemic is a race against a moving target; more resources are required as the number of cases increases.”
RMS modeling suggests that, based on current response efforts, the tipping point will be reached in January 2015.
Modeling further reveals a 55 percent chance that by the end of November, at least 1,000 new cases of Ebola will develop daily, and as many as 1,400 per day in a worst-case scenario. There have been more than 9,000 cases reported in total to date.
Adding to the devastation of the Ebola outbreak, overwhelmed medical systems in West Africa have less resources to respond to other diseases and the mortality rate of malaria and yellow fever is on the rise, according to the report. Also, malaria deaths are likely to continue rising as the seasonal height of malaria transmission is reached next month.
RMS modeled the future paths of cases and deaths from the Ebola virus in Sierra Leone, Guinea and Liberia, which were combined with a probabilistic assessment of various international medical and military response scenarios to estimate the timing of the tipping point where cases are controlled such that the disease tapers off.
If effective resources are deployed at a rate that outstrips the pace of increase in new cases, a tipping point can be reached where the number of new daily cases reaches a maximum, allowing response measures to kick in and prevent new infections at a rate that causes the epidemic to subside.
“The way to stop this outbreak is simple in principle and has been demonstrated in Nigeria and in specific cities in the affected region: reduce contacts with infected people by more than half,” said Smith. “The scale and pace of the international response will define how long it takes to reach the tipping point.”
The U.S. Centers for Disease Control and Prevention (CDC) estimates that, even in the absence of treatments and vaccines, the epidemic would be brought under control and eventually come to an end if approximately 70 to 75 percent of cases are in medical care or treatment units, or in environments where there is a reduced risk of disease transmission.
In a realistic scenario based on current response efforts, RMS analysis projects the tipping point will be reached at the end of January 2015, with the outbreak subsiding by June 2015.
When modeling a disease, RMS said it first looks at the reported virulence and the transmissibility of the pathogen responsible for causing Ebola. This virus is extremely deadly, with an estimated case fatality rate of 69 to 73 percent. RMS said this range of estimates for transmissibility is between 1.5 and 2.2, which means on average an infected individual will transmit the virus to approximately two other people in a susceptible population.
RMS then takes into account mitigating criteria, including medical and non-medical interventions. In its modeling, RMS evaluated the current response resources in place in impacted countries, further resources already pledged and a range of estimates of potential additional resources that will be deployed. For each country, RMS used these factors to formulate five scenarios, ranging from very optimistic to very pessimistic, and their associated probabilities.
According to the report, the number of beds for Ebola treatment currently in use is far below what is needed to reverse the outbreak in any of the three effected countries. To reach the tipping point sooner, faster ramp up of mitigating efforts is essential, but subsequently, fewer total beds and resources in general will be required.
For example, in order to reach the tipping point in Sierra Leone, the current number of beds in use needs to be approximately tripled by the end of November. If that fails, the number will need to increase to six times today’s number by the end of December to halt the outbreak.
A large degree of reliance will be placed on beds being rolled out in Ebola treatment centers (ETCs), which cost $5.7 million to set up and run a 50-bed center for one month. Ebola community care units (ECUs) staffed by rapidly trained non-experts rather than medical workers are being set up in some areas, but there is larger uncertainty surrounding their effectiveness.
Treatments might help reduce the case fatality rate, but are very unlikely to have a significant role in halting the spread of the Ebola epidemic. An Ebola vaccine might be available in time to shorten the epidemic, but will not be produced in sufficient quantities to have an active role in halting the spread of the epidemic in the next few months.
RMS said it does not expect this outbreak of Ebola to become a significant mortality threat in other parts of the world. It is possible that it could spread to neighboring countries in West Africa.
This risk can be reduced by appropriate screening of people leaving the impacted region and could be contained with rapid implementation of effective control measures.
In the situation where there are potentially 10,000 new cases per week in West Africa, there will be more cases exported into other countries. This is possible via two routes:
• Foreign workers combating the spread of the virus are likely to be repatriated to their home countries. Currently the United States, United Kingdom, France and Cuba have delivered personnel in significant numbers. RMS does not consider this to be a probable source of escalation as such cases will be monitored and isolated by the public health systems already in place in those countries.
• Infected people traveling to other regions unchecked could transmit Ebola outside of West Africa. However, the capability of most countries to trace contacts is higher than in Liberia and Sierra Leone, and stronger travel control measures could be implemented if case numbers exceeded a prudent limit.
RMS said it will be updating the model with new numbers every few weeks, projecting the course of the event in near real-time.
As fears of an Ebola pandemic spread, many U.S. businesses are wondering if insurance will cover any complications that may arise.
According to experts, the outbreak could potentially impact several insurance lines.
According to Randy Nornes, executive vice president at Aon Risk Solutions, among the lines that could be affected are workers’ compensation, business interruption, supply chain disruption, general liability and directors & officers.
But, he said, since there have been only isolated cases of Ebola in the U.S., it’s too early to tell whether or how the crisis will affect coverage.
Yet the claims potential is there in a number of areas.
“Although it is improbable, widespread transmission in areas with a robust healthcare infrastructure can result in a spike in claims across many insurance segments,” said catastrophe modeling firm AIR Worldwide.
AIR said claims could arise via healthcare coverage, life insurance payouts, workers’ compensation, travel insurance and contingent business interruption.
“Insurance firms at highest risk are smaller niche insurance firms whose insurance pool may have a disproportionate impact relative to their competition or the larger insurance market,” AIR said.
Aon’s Nornes likens this situation to the 2009 H1N1, also known as the swine flu, scare. It was widespread with similar issues as with Ebola. In that instance, Nornes noted that it affected 47 states and there were also shortages of the vaccine.
Nita Madhav, a senior scientist at AIR Worldwide, said that the lack of proper medical facilities and a general mistrust between local populations and the government are contributing to noncompliance in reporting, which has contributed to the spread of the disease in Africa.
“The risk of sustained and widespread infection across multiple continents from this Ebola outbreak remains low. In countries with robust healthcare systems, any imported cases would most likely be contained with few or no transmissions to additional people—provided that cases are rapidly identified and appropriate infection control protocols are followed,” said Madhav.
In August, insurance broker Lockton Global issued a white paper, “Ebola Outbreak: Risk Management and Insurance Considerations,” exploring Ebola coverage implications. According to the author, Logan Payne, senior account manager at Lockton, whether there is coverage will depend on the specific situation.
He notes key policy exclusions that could apply especially in the retail, service and food industry:
Expected or Intended -Injuries that could have been expected are excluded. Carriers may argue that any prudent person would have known there was an increased exposure to Ebola.
Pollution -Pollutants are defined as any solid, liquid, gaseous, or thermal irritant or contaminant, including waste. This exclusion is fairly broad, and in many cases depends upon case law in determining what is considered a pollutant.
Bacteria – Carriers may argue that this exclusion applies. A virus is different in that it includes DNA or RNA in its genetic makeup.
Shareholder suits could be expected where companies were inadequately prepared and the outbreak adversely affected business, according to Lockton.
While D & O policies typically contain exclusions for claims relating to bodily injury, those exclusions would not apply to economic loss claims.
“Shareholders may allege that directors and officers failed to perform the necessary contingency planning and to disclose the risks an Ebola outbreak could have on the company’s business and financial results,” the Lockton author wrote.
According to a number of industry sources, lawsuits targeting airlines, medical providers and employers are possible. Persons contracting Ebola, or their families, could allege that appropriate precautions were not taken or that medical treatment was not sufficient.
Because workers’ compensation benefits include payments for medical care and lost income as a result of an illness acquired in the course of work and it also pays death benefits if death occurs as a result of a work-related cause, workers’ comp is the line that could be the most directly affected if the virus spreads within the United States, according to the Insurance Information Institute.
According to Christopher Boggs, Vice President of Education for Insurance Journal’s Academy of Insurance, it’s unlikely many claims related to Ebola would be covered under workers’ compensation coverage.
Though healthcare workers who have greater exposed risk would likely be covered, the Lockton report noted. Additionally, employee liability claims could occur as a result of an infected worker’s spreading the disease to other family members.
Also, Lockton added, increased exposure due to business-related travel or the endemic disease coverage under the foreign voluntary extension of a workers’ comp policy may ultimately trigger coverage for other groups of workers as well.
Business interruption is most likely to occur in mining, agricultural, energy, chocolate and travel sectors that have a strong presence in the affected West African countries, according to AIR. “However, it is unclear what, if any, of these losses are covered by existing insurance policies, especially since business interruption policies typically require physical damage to a location,” the modeling firm added.
Nornes agreed, indicating that the risks are industry specific.
Aon’s Nornes doesn’t anticipate supply chain disruption issues at this time since the affected area in Africa has limited trade.
Besides insurance implications, insurers could see profit losses, according to AIR, noting that insurance firms holding assets of companies with strong ties to West Africa may be adversely affected.
According to catastrophe modeler RMS, the Ebola outbreak in West Africa has the potential to be the most deadly infectious disease event since the 1918 flu pandemic.
RMS said it does not expect this outbreak of Ebola to become a significant mortality threat outside of West Africa.
The CDC has also sad it does not see Ebola spreading widely in this country.
Insurance broker Willis recently launched an Ebola virus disease response center hub on its website to provide resources for companies looking to prepare workplaces for the threat.
“The threat of the outbreak underscores the importance for firms to establish robust emergency preparedness and business continuity plans,” said Marc Hindman, Willis Risk Control and Claim Advocacy Practice leader.
Photo credit: taskinsurance
Business Failure refers to a company ceasing operations following its inability to make a profit or to bring in enough revenue to cover its expenses. A profitable business can fail if it does not generate adequate cash flow to meet expenses.
It is often said that more than half of new businesses fail during the first year of their establishment whilst others fail later.
I am constrained to write on the topic in this edition so that entrepreneurs will be wary of why businesses fail.
Actually, there are so many reasons/factors why businesses fail. In his book entitled; Small Business Management, Ames gave us the following reasons for small business failure: Lack of experience, insufficient capital (money), poor location, poor inventory management, over-investment in fixed assets, poor credit arrangement management, personal use of business funds and unexpected growth.
Gustau Berle in the book, Do it Yourself Business added two more reasons why businesses fail and named them as Competition and Low sales.
Others reasons are; wars, recessions, high taxation, double taxation, high interest rate, excessive regulations, poor management decisions, insufficient marketing, inability to compete with similar businesses or a lack of interest from the public in the business offerings, lack of training, lack of self discipline, lack of focus, inability to adjust to prevailing conditions or circumstances, poor risk identification and complacency.
Some businesses may choose to shut down prior to an expected failure whilst others may continue to operate until they are forced to shut down.
A study published in 2014 by the Turnaround Management Society reveals that most crises are caused by the mistakes of top management. If the strategy of the top management did not work as expected, it may affect the corporate existence of the business as a going concern.
There are many opinions about the most important reason why businesses fail.
Peter Drunker claimed that the most important reason why businesses fail is because management did not ask ‘’what is our business?’’ in a ‘’clear and sharp form.’’
Eric T. Wagner, who has 30 years of experience as a serial entrepreneur says that entrepreneurs fail when developing new products because they ‘’retreat to a cave’’ instead of thoroughly understanding their customers’ needs.
After a business might have shut down, the business may be dissolved and have its assets re-distributed after filing the necessary returns with Corporate Affairs Commission, Abuja.
However, some failing companies may be purchased by a new owner who may be able to run the company better and some are merged with another company that will then take over its operations. Some businesses save themselves through bankruptcy or bankruptcy protection thereby allowing them to restructure.
There is need for an entrepreneur to institutionalise his/her business. After all, in other climes, businesses outlive their founders but in Nigeria, the reverse is the case. Hence, the businesses often collapse or even fail outright before the demise of the founder.
In the 50 Companies that Shaped the World, a book written by Howard Rothman, no Nigerian company was mentioned in the said book. These are the companies that were institutionalised by their founders, not only that they have greatly contributed to the development of the world through state-of-the-art product development, superlative service delivery and they also employed a lot of people.
The 50 companies are; (Microsoft, AT&T, Ford, Apple, McDonald’s, America Online, FedEx, CBS, Philip Morris, Wal Mart, General Electric, IBM, Sears Roebuck, General Motors, J.P. Morgan & Co., Union Pacific, RCA, Nike, Intel, CNN, Boeing, Hewlett-Packard, Standard Oil, Sony, USX-US Steel Group, Agence France Presse, Levitt & Sons, The Walt Disney Co., Netscape, Coco-Cola, Thyssen Krupp, Proctor & Gamble, Yahoo, Toyota, People Express, Manpower, Toys ‘’R’’ Us, National Football League, Kellog, Johnson Publishing, Firestone Tire & Rubber, Avon Products, Hilton Hotels, Ben & Jerry’s Homemade, Re/Max, Singer Sewing, Shore Bank Corp, Metro-Goldwyn-Mayer, L.L. Bean and H.J. Heinz).
What should pre-occupy your mind now is how you too can start or sustain your business so that it can also change the world in the foreseeable future. ‘Nothing is impossible’. So take the Bull by the Horn and put in your very best.
The import of this write-up is to draw the attention of entrepreneurs to the dangers of business failure so that they can really understand how to weather the storm in a country such as Nigeria where there are a lot of uncertainties.
But with the 5Ps of success (Passion, Patience, Perseverance, Persistency and Prayer), an entrepreneur will record huge success.
Success shall be yours!
It is well!!!
By Muideen Adebayo Ibrahim, the Founder and CEO of LIBRA CONSULTING and can be reached via [email protected] or 08037221517 (sms only).
The International Air Transport Association (IATA) released its first 20-year passenger growth forecast, projecting that passenger numbers are expected to reach 7.3 billion by 2034. That represents a 4.1% average annual growth in demand for air connectivity that will result in more than a doubling of the 3.3 billion passengers expected to travel this year.
Among the highlights of the report is the expectation that China will overtake the United States as the world’s largest passenger market (defined by traffic to, from and within) by 2030. Both markets, however, are expected to remain the largest by a wide margin.
In 2034, flights to, from and within China will account for some 1.3 billion passengers, 856 million more than 2014 with an average annual growth rate of 5.5%. Traffic to, from and within the US is expected to grow at an average annual growth rate of 3.2% that will see 1.2 billion passengers by 2034 (559 million more than 2014).
The report, the first from the new IATA Passenger Forecasting service, produced in association with Tourism Economics, analyzes passenger flows across 4,000 country pairs for the next 20 years, forecasting passenger numbers by way of three key demand drivers: living standards, population and demographics, and price and availability.
• By 2034, the five fastest-increasing markets in terms of additional passengers per year will be China (856 million new passengers per year), the US (559 million), India (266 million), Indonesia (183 million) and Brazil (170 million).
• Eight of the ten fastest-growing markets in percentage terms will be in Africa with Central African Republic, Madagascar, Tanzania, Burundi and Kuwait making up the five fastest-growing markets.
• In terms of country-pairs, Asian and South American destinations will see the fastest growth, reflecting economic and demographic growth in those markets. Intra-Pakistan, Kuwait-Thailand, United Arab Emirates (UAE)-Ethiopia, Colombia-Ecuador and intra-Honduras travel will all grow by at least 9.5% on average for the next 20 years, while Indonesia-East Timor will be the fastest growing pair of all, at 14.9%.
“It is an exciting prospect to think that in the next 20 years more than twice as many passengers as today will have the chance to fly. Air connectivity on this scale will help transform economic opportunities for millions of people. At present, aviation helps sustain 58 million jobs and $2.4 trillion in economic activity. In 20 years’ time we can expect aviation to be supporting around 105 million jobs and $6 trillion in GDP,” said Tony Tyler, IATA’s Director General and CEO.
While improving living standards, population and demographics, and price and availability create the conditions for improved demand, there is potential for policy-induced obstacles to hinder the development of connectivity. “Meeting the potential demand will require government policies that support the economic benefits that growing connectivity makes possible. Airlines can only fly where there is infrastructure to accommodate them. People can only fly as long as ticket taxes don’t price them out of their seats. And air connectivity can only thrive when nations open their skies and their markets. It’s a virtuous circle. Growing connectivity stimulates economies. And healthy economies demand greater connectivity. The message of this forecast is that there is great potential if all aviation stakeholders—including governments—play their role,” said Tyler.
The aviation industry recognizes that air travel has an environmental impact, and is committed to reducing its carbon footprint. In 2009, the industry agreed three targets which will ensure that aviation plays its part in ensuring a sustainable future.
• 1.5% annual fuel efficiency improvement to 2020
• Capping net emissions through carbon-neutral growth from 2020
• A 50% cut in net emissions by 2050, compared to 2005.
Analysis of the 10 largest air passenger markets defined by traffic to, from and within for the period 2014-2034:
• The United States will remain the largest air passenger market until around 2030, when it will drop to number 2, behind China. Cumulatively over the next 20 years the US will carry 18.3 billion more passengers and China 16.9 billion.
• Currently the ninth largest market, India will see a total of 367 million passengers by 2034, an extra 266 million annual passengers compared to today. It will overtake the United Kingdom (148 million extra passengers, total market 337 million) to become the 3rd largest market around 2031.
• Reflecting a declining and ageing population, Japanese air passenger numbers will grow just 1.3% per year and decline from the 4th largest market in 2014 to the 9th largest by 2033.
• Germany and Spain will decline from 5th and 6th position in 2014 to be the 8th and 7th largest markets respectively. France will fall from 7th to 10th while Italy will fall out of the top 10 altogether in around 2019.
• Brazil will increase passenger numbers by 170 million and rise from 10th to 5th. Its total market will be 272 million passengers.
• Indonesia will enter the top ten around 2020 and attain 6th place by 2029. By 2034, it will be a market of 270 million passengers.
• Routes to, from and within Asia-Pacific will see an extra 1.8 billion annual passengers by 2034, for an overall market size of 2.9 billion. In relative terms it will increase its size compared to other regions to 42% of global passenger traffic, and its annual average growth rate, 4.9%, will be the joint-highest with the Middle East.
• The North American region will grow by 3.3% annually and in 2034 will carry a total of 1.4 billion passengers, an additional 649 million passengers a year.
• Europe will have the slowest growth rate, 2.7%, but will still cater for an additional 591 million passengers a year. The total market will be 1.4 billion passengers.
• Latin American markets will grow by 4.7%, serving a total of 605 million passengers, an additional 363 million passengers annually compared to today.
• The Middle East will grow strongly (4.9%) and will see an extra 237 million passengers a year on routes to, from and within the region by 2034. The UAE, Qatar and Saudi Arabia will all enjoy strong growth of 5.6%, 4.8%, and 4.6% respectively. The total market size will be 383 million passengers.
• Africa will grow by 4.7%. By 2034, it will see an extra 177 million passengers a year for a total market of 294 million passengers.
Analysis of Domestic Air Passengers Markets
• The fastest-growing domestic market will be China, which will grow at 5.6% per year and by 2034 will account for 1.0 billion passengers (691 million additional domestic passengers compared to today).
• The United States domestic market will expand by 3.2% per year, to 822 million passengers, an additional 384 million passengers annually compared to 2014.
• The Indian and Brazilian domestic markets will grow at 6.9% and 5.4% respectively. India will be adding 159 million extra passengers and Brazil 147 million. Their total domestic air markets will be 215 million and 226 million.
• Indonesia will be the fifth largest domestic market. It will grow at 6.4%, adding an extra 136 million passengers a year by 2034. The total Indonesian domestic market will be 191 million.
• The remaining top ten domestic markets will be Turkey (annual growth of 5.3%), Philippines (5.9%), Mexico (4.6%), Colombia (6.0%), and Vietnam (6.2%).
Explanation of Demand Drivers
The Global Passenger Forecast Report explains future trends in passenger numbers by means of three key demand drivers: living standards, population and demographics, and price and availability.
• Living standards have a known effect on the propensity to fly. Countries on a growth curve up to approximately US$20,000 per capita see correspondingly faster increases in the number of flights taken per person per year.
• Population and demographics reflects not just population trends over the next 20 years but also measures such as the old-age dependency ratio. On these measures, countries such as Japan, Russia, and Ukraine are expected to undergo significant population decline. African nations, on the other hand, are set for rapid population growth. Typically, the nations with growing populations also have younger populations, and working-age groups are more likely to fly than over-65s.
• Price and availability looks to predict future trends of the price of air travel and the extent of future air connectivity. The unit cost of air transport has fallen by a factor of four since 1950. However, the past decade has seen prices bottom out, largely due to the increased cost of oil. In the coming two decades, the downward trend in the real cost of air travel is expected to resume, at a rate of around 1 – 1.5% per year. Air connectivity is expected to increase with the addition of new longer-range mid-size aircraft. Greater liberalization of air markets has the potential to increase global air traffic growth by over 1 percentage point per year.
“In the year that marks the 100th anniversary of commercial air transport, it is fitting that the most comprehensive long-range forecast of future air passenger trends is released. After a century of growth that has taken us from 1 passenger to 3.3 billion passengers this year, air transport is set to generate even more economic growth, employment, and cultural and educational opportunities.
The first century of air travel has seen about 65 billion passengers take to the sky. The next 65 billion will fly in just the next 20 years,” added Tyler.
• Airline profit expectations for the year ahead are positive and there has been an improvement in recent performance, according to IATA’s quarterly survey of airline CFOs and heads of cargo in October;
• Recent past financial performance has started to improve again compared to a year ago, after no gains in Q2, and the outlook remains positive which suggests there will be further growth in profitability;
• The survey indicates that falling inputs costs and stronger growth in traffic volumes are responsible for better recent financial performance as well as the positive outlook;
• Respondents reported seeing a decline in input costs in Q3, largely due to a fall in crude oil prices over recent months, and expect the trend to continue during the year ahead, which is consistent with the positive outlook for profitability;
• Both passenger and cargo volumes were reported to have expanded during Q3, reflecting improvement in the demand environment after weakness in early 2014;
• There is also confidence that air transport volumes will continue to expand over the next 12 months, supporting the expectation for profit improvements during the next 12 months;
• Although respondents continue to report declines in yields, downward pressure eased in Q3 for both businesses, and no further weakness in yields is expected for the year ahead;
• Airline employment activity is reported to have been stable in Q3 compared to a year ago, and no growth is expected for the year ahead
• Q2 financial results show continued improvement, driven by US carriers;
• But worldwide airline share prices fell 4% in September, reflecting investor concerns over weak economic data in some regions and the spread of the Ebola virus;
• Jet fuel prices eased further in September as increased supply and a fragile demand outlook pushed crude oil prices down to levels not seen since mid-2012;
• US passenger yields remain up on a year ago, but weakness continues in other regions;
• Air travel volumes continue to expand strongly and the trend in air freight volumes remains positive, supported by improving conditions in Asia and the US, including a rebound in trade volumes;
• Growth in available seats slowed further in August to an annualized rate of 3.5%, below expansion in demand;
• Passenger load factors rose on the back of strong expansion in volumes, but air freight load factors eroded some of the improvement in previous months with a 0.4% fall in August compared to July
• Growth in international air passengers improved in August with a rise of 4.5% compared to a year ago, up on the July result of 2.6%. Premium and economy passenger numbers rose at the same rate, 4.5%;
• There was also a strong expansion in passenger numbers between August and July, which counters the negative trend seen in previous months;
• The expansion in passenger numbers is consistent with signs of improving business conditions, after a period of weakness in international trade and business confidence earlier in the year;
• The improvement in international passenger numbers has been supported by strong growth on markets like Europe – Far East (6.7%) and North and Mid Pacific (7.1%). The recent weakening of the Eurozone economy is yet to have an obvious impact on air travel growth;
• By contrast, air travel within Far East and markets connected to South America continue to show weakness;
• Economic and political turmoil in Thailand has damaged tourism demand over recent months and Malaysia air travel has been impacted by tragedies related to the flag carrier;
• The North America – South America market has been hit by capacity cuts to Venezuela as well as weakness in key economies like Brazil and Argentina.
The development of new, unconventional energy sources, such as shale gas, tight oils, coal seam gas and oil sands, are driving a shift in the global energy industry that will require rethinking traditional energy supply chain models, according to a white paper by logistics company DHL based on research by Lisa Harrington, associate director at the Supply Chain Management Center of the Robert H. Smith School of Business, University of Maryland.
With the ongoing shift in geographies of energy production and demand, the need and desire to explore and develop new technologies to reach and extract unconventional gas reserves is growing, spurring the need for energy companies to adjust their approach to supply chain management. The new approach will be highly integrated, according to the research, to drive down logistics costs and enhance profit margins.
From a supply chain perspective, both conventional and unconventional energy companies face challenges.
“Supply chains supporting conventional energy markets are still developing as companies have had to expand into ever more inaccessible and remote locations to support the growth in global demand,” said Jonathan Shortis, vice president, energy sector EMEA (Europe, the Middle East and Africa), DHL. “In such areas, conventional energy faces the same challenge as unconventional, and that is to establish and maintain a robust infrastructure to support production in undeveloped and/or remote geographies.”
Executives interviewed for the research admit that energy companies often struggle to deal with the complexity of the supply chain and are challenged by a lack of visibility and predictability when they are working with multiple stakeholders at numerous drilling locations.
“To address this issue, leading companies are adopting an end-to-end supply chain operating model, instituting a data-driven, integrated solution that connects all stakeholders in the chain,” said Shortis. “This solution blends state-of-the-art visibility and analytics with best-practice process management to achieve bottom line results.”
The new C-class wagon is helping to boost Mercedes sales
Daimler said vehicle sales at its Mercedes-Benz Cars unit, which includes the Mercedes and Smart brands, rose 8 percent to 146,112 in October.
The sales volume was a record for the month, boosted by strong demand in China, the company in a statement.
Mercedes marketing and sales boss Ola Kaellenius said the new C-class wagon and the S-class coupe have proved popular among customers. “We started the fourth quarter with a sales record in October,” he said in the statement.
Mercedes brand sales grew 12 percent last month to 140,941 units while Smart sales were down 40 percent to 5,171 as customers await a new generation of the ForTwo.
The division’s volume grew by 33 percent in China and 10 percent in Europe, offsetting a 5 percent drop in the United States.
Mercedes said it sold 8,397 units of its flagship S-class sedan in October, up 60 percent. A year after the launch of the new S class in all its core markets, the company has already delivered more than 100,000 units, Daimler said.
The division’s 10-month sales are up 11 percent to 1.41 million, also a record. Mercedes brand’s volume increased by 12 percent to a 1.34 million while smart sales fell 13 percent to 72,041.
Western European new-car sales rose 6 percent in October as demand picked up in all major markets except France. Registrations increased despite deepening uncertainties over the region’s economic outlook.
Registrations last month increased to 1.03 million cars from 974,640 a year earlier, based on data compiled by consulting firm LMC Automotive.
That lifted the October selling rate to 12.6 million cars annually, a 3 percent increase from the previous month on a seasonally adjusted basis.
“Despite the increasingly gloomy economic outlook for western Europe, the car market posted a solid improvement,” LMC analyst Jonathon Poskitt said.
European auto demand has picked up in 2014 after a six-year slump but remains well short of its peak before the financial crisis. A weakening economy is making itself felt in France, according to the data — an aggregation of monthly registrations published in each country.
France, which published a 4 percent sales decline, was the only major market where the annualized selling rate fell, dropping 6 percent from September’s pace, LMC said.
The annualised rate rose 4 percent in Germany, 4 percent in the UK, 9 percent in Italy and 12 percent in Spain.
“After a fairly strong result for September by recent standards, the French market slipped back in October, reflecting the wider stagnation of the French economy,” LMC’s Poskitt said.
The UK, which today posted a 14 percent year-on-year surge in October car registrations, “remains the key growth market this year,” Poskitt added.
‘Those restrictions on exports were borne, as was the Department of Energy and the Strategic Petroleum Reserve, on oil disruptions. There are lots of issues in the energy space that deserve some new analysis and examination in the context of what is now an energy world that is no longer like the 1970s.’
‘Some may see this as a choice between keeping American oil within US borders for reasons of economic security and allowing the US to generate billions of dollars in new export revenues. But market realities suggest a far simpler decision ahead: either US crude is shopped abroad or its stays in the ground.’
‘We need to act before the crude oil export ban causes problems in the US oil production, which will raise price and therefore hurt American jobs.’
‘I would support lifting the ban if the scientific data shows that we should. And I think that’s what the data is showing.’
‘An energy independent and net exporter of energy as a nation has the potential to change the security environment and the world, notably in Europe and in the Middle East.’
‘If lower gasoline prices for the US consumer are a desired aim, the US should be exporting crude, and lowering Brent and hence global gasoline prices in the process.’
‘It is incontrovertible that if the US exported crude the price of gasoline would be lower. And it is incontrovertible that the trading interests of the United States have become increasingly dominated by energy.’
‘Energy Secretary Moniz was simply stating the obvious when he noted that circumstances have changed and the controls and might deserve a review…The ban ensures domestic crude oil prices remain below world levels because producers cannot arbitrage the difference. But no such restrictions apply to refined products, so the price paid by US consumers for gasoline, heating oil and diesel is linked to world levels.’
‘The rules that were established to be able to handle the exports of those hydrocarbons were all established back in the shortage days. In the olden days, these laws and rules didn’t make any difference, Now in a world of exports, they do.’
‘The booming US energy industry is on pace to produce more oil than Saudi Arabia by next year, but it can’t sell a drop of that crude overseas…Disco music, wide lapels and other 1970s artifacts have been out of fashion for a long time. It’s time for that era’s energy policy to join them on the scrap heap of history.’
‘[U]nrestricted exports, in combination with increased investments in infrastructure, are expected to provide a boom for domestic oil production, generating income, jobs and taxes along the production chain.’
‘Our basic finding is that the efficiency of global refinery operations would be improved a little if the ban on US exports of crude oil were to be lifted. And, accordingly, gasoline production would go up and its price in the US would fall, anywhere from 3 – 7 cents per gallon once the economy could adjust to lifting the ban. This range could be a bit broader depending on assumed price elasticises of supply and demand and other factors.’
‘Opponents of exporting oil claim that lifting the ban would raise US gasoline prices, but that misunderstands that oil is a global market. US pump prices would continue to rise or fall with world oil prices regardless of exports. But lifting the ban would lead to more domestic production, which means more jobs in oil drilling and services and everything that goes along with such growth…the best protection for America’s energy supply is more domestic production that exports would induce…The oil export ban is an example of self defeating resource nationalism that hurts US investment and the living standards of American workers. It was a bad idea in the 1970s, and today it is merely one more obstacle to America’s energy renaissance.’
‘The United States again is one of the world’s great energy powers…Yet some politicians remain unwilling to let the country reap the full benefits of this boom…Refineries, not drivers, buy crude oil and then make it into gasoline and other products. These products trade on world markets and generally reflect the world crude price…If anything, the United States’ continuing export restrictions diminish the country’s credibility when it asks other nations to adopt rational policies that rankle economic nationalists. Congress should let the country participate fully in the international oil market.’
Healthcare focused smartphone interfaces launched by Samsung and Apple will be instrumental in propelling the global healthcare accessory hardware market to $3 billion by 2019, according to a report from Juniper Research.
The report argues that greater visibility and availability of healthcare smartphone platforms will encourage independent device manufacturers to launch a wider array of increasingly sophisticated mHealth products. Such devices include blood pressure cuffs, oximeters for diabetes and sleep monitors for sleep apnoea.
However, the report observes that although Apple’s HealthKit and Samsung’s SAMI (Samsung Architecture for Multimodal Interactions) user interfaces will popularise consumer digital health, they could also impact the opportunity for bespoke remote patient monitoring devices.
The Report author, Anthony Cox noted that “As health platforms support more ‘medical’ devices, rather than just today’s fitness trackers, they will usurp the territory occupied by chronic disease monitoring companies.’
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