WASHINGTON: The US Department of Justice said it is investigating whether US airlines worked together illegally to keep airfares high by signaling plans to limit flights.
The Justice Department wrote to major US air carriers demanding that they detail decisions to limit the number of seats they offer, and what they’ve said about those plans to investors, securities analysts and the public.
Airlines contacted have been asked to provide “available seat miles on a regional and system wide basis” back to January 2010 and a raft of other data.
The top four US carriers American Airlines Group Inc, Delta Air Lines Inc, United Continental Holdings Inc. and Southwest Airlines Co. control some 80 percent of the domestic air travel market.
The four confirmed receipt of the regulator’s letter and said they are cooperating fully with the investigation. News of the probe sent the Dow Jones US airlines index down 2 percent.
Shares of the US carriers have gyrated in recent weeks as investors questioned whether they were planning to add capacity at a pace faster than overall economic growth, which could put downward pressure on fares.
Southwest fueled investor jitters about declining profit margins in May when it unveiled plans to boost capacity by as much as 8 percent this year from 2014, although it later revised the expected increase to 7 percent.
But carriers have started taking flights off their fall schedules and postponing aircraft deliveries in response to Wall Street concerns that adding more flights and seats could erode fares and margins.
Mergers, new fees imposed on passengers and caution about adding capacity have boosted US airline earnings after a decade of bankruptcies following the September 11, 2001 attacks. In the past year, tumbling oil prices have helped the carriers post billion-dollar profits.
The probe focusing on whether the top US carriers are colluding domestically comes as some of the same airlines complain that foreign rivals are competing unfairly on some overseas routes.
US carriers have asked the Obama administration to freeze access to US airports by three Gulf airlines for allegedly receiving state subsidies. The Gulf airlines deny that they have received subsidies in violation of trade agreements.
The US airlines also have fought plans by low-cost Norwegian Air Shuttle ASA to expand its US flights under an Irish subsidiary, with claims that it will undermine wages and working standards.
Consumer advocates and some lawmakers praised the Justice department action focusing on domestic fares. “This investigation must be tireless and timely to save consumers from the onslaught of price increases in summer fares,” US Senator Richard Blumenthal said in a statement.
The airlines and their defenders say ticket prices have fallen in 2015 while capacity this summer has reached a post-recession high. “Our members compete vigorously every day, and the traveling public has been the beneficiary,” trade group Airlines for America said in a statement Wednesday.
Separately, Connecticut’s attorney general sent letters to the four carriers last week asking whether they have coordinated prices, citing recent statements at an industry conference held last month in Miami.
Ticket price ‘plot’: US airlines face probe
Ticket price ‘plot’: US airlines face probe
Saudi Arabia’s ICT spending surges 20% to $11bn
RIYADH: Saudi Arabia has witnessed a 20 percent year-on-year increase in government spending on information and communications technology in 2023, reaching SR41.87 billion ($11.16 billion), according to new data.
The latest report from the Kingdom’s Digital Government Authority revealed that the increase in spending has contributed to enhancing the efficiency of digital government services and improving the experience of beneficiaries.
Additionally, this investment has had a positive impact on the digital economy, marking a milestone in the Kingdom’s transformation journey.
“ICT spending is one of the supporting factors for innovative and flexible solutions that we aspire to provide to all citizens and residents of Saudi Arabia, ensuring the effectiveness of the immense human wealth that populates the country and achieving a high quality of life,” said Faisal bin Ahmed Bakhshwin, deputy minister for digital transformation at the Ministry of Human Resource and Social Development.
On the other hand, Musaed Al-Otaibi, deputy minister for digital transformation and smart cities at the Ministry of Municipal and Rural Affairs and Housing, emphasized: “Digital transformation is one of the pillars of our work at the ministry. ICT spending has enabled us to provide mature and high-quality services with added value through innovative models for citizens.”
Al-Otaibi stated that the ministry continues to strive to improve services and meet the needs of urban residents by providing services that enrich and facilitate their daily lives.
The deputy minister mentioned the government’s attention and interest in citizens’ feedback, incorporating it into the design of suitable services.
Al-Otaibi explained that the ministry aims to achieve a “higher quality of life and enhance innovation in service development” by using emerging technologies that reduce service implementation time and increase operational efficiency for the sector.
The report revealed that government ICT expenditure between 2019 and 2023 totaled an estimated SR120.15 billion, reflecting an overall upward trend. This indicates growth in the field and investment in transformational projects within this vital sector.
The DGA data revealed that over a five-year period, the health and social development sector accounted for the highest portion of government ICT spend, totaling SR20.14 billion or 17 percent of the total expenditure.
Moreover, the military came next as the Kingdom’s technology spending in the sector reached SR19.92 billion from 2019 to 2023, accounting for 17 percent of the total expenditure during the period.
The infrastructure and transportation sector followed, with ICT expenditure totaling SR18.22 billion during the period, reflecting 15 percent of the total amount.
According to the report, over the past five years, Saudi Arabia has witnessed a significant and sustained increase in expenditure on cloud computing and emerging technologies such as artificial intelligence, big data, and the Internet of Things.
This growth reflects the Kingdom’s aspirations to become a global hub for technological innovation and digital services, as envisioned in the pillars of Vision 2030.
Middle East IPO market set for continued growth in 2024: PwC
RIYADH: Initial public offerings in the Middle East are poised for continued positive aftermarket performance this year, following significant post-IPO gains in the first quarter, a new report stated.
PwC’s latest IPO+ Watch report highlighted the Saudi Stock Exchange’s emergence as a dominant force in Gulf Cooperation Council equity market launches activity, hosting the majority during the quarter, underscoring the region’s attractiveness to investors seeking dynamic opportunities.
“Tadawul is reported to remain the most active exchange in the GCC with all but one IPOs taking place on either Tadawul main market or the Nomu parallel market,” the report stated.
On the primary market, three IPOs garnered a combined total of $667 million, while on the secondary market, six offerings raised $57 million in total.
Notable among the recent successes are MBC Group Co. and Avalon Pharma, both witnessing substantial market gains.
However, the report noted that the market’s attention has been captured by the demand for Dubai Parking, which set a new record for subscription levels at the Dubai Financial Market, being oversubscribed by 165 times.
The offerings landscape in the Middle East during the first three months of this year was characterized by activity across various sectors, showcasing a diverse range of investment opportunities.
From consumer markets with companies like Parkin Co. and Modern Mills for Food Products Co., to health industries represented by Avalon Pharma, and technology, media, and telecommunications with MBC Group Co., the IPO wave has touched multiple sectors.
Additionally, smaller-scale market debuts were observed in the financial services, industrials, manufacturing, and automobile sectors.
Muhammad Hassan, capital markets leader at PwC Middle East, expressed optimism, citing Parkin’s oversubscription and double-digit post-IPO gains as indicators of sustained positive momentum.
“We expect the privatization agenda across the GCC, combined with the ambition of private family businesses to go public, will continue to drive issuance supporting positive momentum in GCC IPO activity in 2024,” he added.
Looking ahead, the report anticipated continued strength in the public flotation landscape for the remainder of 2024, buoyed by a robust pipeline.
Private sector companies seeking liquidity and access to capital are expected to drive much of this activity, with Saudi Arabia and the UAE leading the charge. Nevertheless, there’s growing momentum in markets like Oman and Qatar, signaling a broader regional expansion of IPO activity.
Qatar Investment Authority commits to supporting France’s semiconductor sector
RIYADH: Qatar will venture into France’s tech industry as a major investment body announced its intent to anchor a financial commitment in Ardian Semiconductor.
This move marks the Qatar Investment Authority’s participation in a pioneering thematic fund designed to enhance the semiconductor industry in Europe. It highlights its role as a preferred financial partner in key technology subsectors, including supply chain developments.
QIA’s strategic focus on this sector reflects its belief in the critical role semiconductors play in driving digital and green transformations across vital industries such as artificial intelligence, mobility, and consumer technology, according to an official release.
This initiative is part of QIA’s broader investment strategy to engage with leading businesses at the forefront of innovation.
Notably, QIA’s interest in the semiconductor value chain includes a recent minority stake in Japan’s Kokusai Electric Corp., a leader in semiconductor manufacturing, taken in June 2023, underscoring its ongoing commitment to significant investments in this area globally.
Furthermore, on May 13, QIA announced its plan to significantly expand its investment partnership with Bpifrance by as much as €300 million ($323 million), reinforcing their joint commitment to stimulating economic growth and innovation in France.
This enhancement marks a pivotal development in their collaboration, initially established through the Future French Champions joint venture.
The first phase of this partnership, concluded in 2021, effectively channeled almost €300 million into supporting job creation, economic development, and particularly bolstering the French small and medium-sized enterprises sector.
Building on these achievements, both entities progressed to the second phase of their collaboration in January 2023, committing an additional €300 million.
They now plan to embark on a third phase, pledging up to another €300 million once the current funds are fully deployed.
The renewed partnership will focus on strategic priorities such as artificial intelligence, semiconductors, quantum computing, healthcare, aerospace, and energy transition.
These investments are intended to advance technological capabilities, enhance competitiveness across various sectors, and promote sustainable growth, reflecting both parties’ commitment to driving significant innovations and supporting France’s long-term economic objectives.
OPEC sticks to oil demand view, sees improvement in global economy
RIYADH: The Organization of the Petroleum Exporting Countries stuck to its forecast for relatively strong growth in global oil demand in 2024 on Tuesday and said there was a chance the world economy could do better than expected this year.
In its monthly report, OPEC said world oil demand will rise by 2.25 million barrels per day in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
Demand for members of the Organization of Economic Co-operation and Development is projected to expand by nearly 0.3 million bpd, while the non-OECD is forecast to grow by about 2 million bpd.
This is the last report before OPEC and its allies, known as OPEC+, meet on June 1 to finalize output policy. The oil alliance, in its report, sounded an upbeat tone on the economic outlook.
“Despite certain downside risks, the continued momentum observed since the start of the year could create additional upside potential for global economic growth in 2024 and beyond,” OPEC said.
The world economic growth forecasts for 2024 and 2025 remain unchanged at 2.8 percent and 2.9 percent, respectively.
The report slightly revised up the US growth forecast for 2024 and 2025 to 2.2 percent and 1.9 percent respectively.
“The economic growth forecast for the eurozone remains at 0.5 percent for 2024 and 1.2 percent for 2025,” it added.
It kept China’s economic growth forecast at 4.8 percent in 2024 and 4.6 percent in 2025. Russia’s economic growth for 2024 is revised up slightly to 2.3 percent, while the forecast for 2025 remains at 1.4 percent.
According to the report, refinery margins in April continued to trend downward as the recovery in refinery processing rates and stronger product output weighed on product markets.
ITFC’s new initiative promises to boost economic and trade growth in Central Asia
RIYADH: Economic and regional integration among the six Organization of Islamic Cooperation member countries is set to grow with a new program from the International Islamic Trade Finance Corp.
The Trade Connect Central Asia+ Program, also known as TCCA+, was launched recently by ITFC, a member of the Islamic Development Bank Group, during the third Tashkent International Investment Forum. It is poised to enhance economic growth in Kazakhstan, Kyrgyzstan, and Tajikistan, as well as Turkmenistan, Uzbekistan, and Azerbaijan.
The region, which boasts one of the world’s largest energy resources and significant production capacities in energy and agriculture, currently lacks the trade markets needed to harness its full potential, according to a press release.
In a statement at the launch, Hani Sonbol, CEO of ITFC, said: “We are immensely proud to launch the TCCA+ Program, which represents a significant step forward in enhancing economic cooperation and boosting trade across the Central Asia region and beyond.”
He stated that this initiative is designed to unlock the vast economic potential of the region by facilitating increased regional trade and investment.
“With a focus on the energy and agriculture sectors, we are committed to fostering sustainable economic growth and regional integration that benefits all member countries involved,” added Sonbol.
Focused on boosting regional trade and expanding the export base toward higher value-added products, the TCCA+ Program is anticipated to foster inclusive and sustainable economic growth, alongside promoting regional economic integration among the six targeted countries, the release added.
This objective will be accomplished through the enhancement of export and investment capabilities, the reinforcement of competitiveness, and the facilitation of trade initiatives and regional value chains.
For his part, Uzbekistan’s Minister of Investments, Industry and Trade Laziz Kudratov was quoted in the statement saying: “We are honoured to host the launch of this transformative economic initiative, following the development and progress made at last year’s Forum. We are united with ITFC in our shared goal to unlock the immense investment potential in Uzbekistan, and strongly support their efforts to drive economic prosperity across the wider region.”
